Intel will retain its Networking and Edge (NEX) division after reviewing its strategic options. The chip giant had considered selling various parts of the business, but has now concluded that keeping NEX in-house offers advantages for the integration of hardware, software, and systems.
Intel announced on Wednesday that the networking group will remain within the company. The decision is based on an evaluation of the strategic options for various business units. Earlier this year, a spin-off of NEX still seemed a serious possibility, but those plans are now off the table.
This seems to mark the end of Intel’s downsizing for the time being. After rounds of layoffs and the divestment of other divisions, such as the venture capital arm, the company must now prioritize the remaining divisions. There are still many of them, and it remains to be seen whether they will actually receive the investments needed to remain competitive. Consider the GPU division for both data centers and consumer PCs, where Intel had just made a cautious start after previous flops.
During the presentation of the third-quarter figures, CFO Dave Zinsner pointed to an improved liquidity position. This is easily explained. Over the summer, Intel secured an investment of $8.9 billion from the US government for a 10 percent stake. In addition, $2 billion came in from SoftBank Group and $5 billion from Nvidia.
Strategic considerations
According to Intel, retaining NEX will benefit customers. By keeping the networking group within the company, it can achieve closer integration between silicon, software, and systems. This would strengthen its offering for AI, data centers, and edge computing, the chipmaker says.
Earlier this year, Intel explored plans to spin off NEX as part of CEO Lip-Bu Tan’s strategy to divest non-core businesses. Ericsson also expressed interest in acquiring a minority stake in the division. Those talks have since ended.
Broader context
Third-quarter figures showed revenue of $13.7 billion, an increase of 3 percent year-on-year. However, networking hardware sales fell by 28 percent.
Intel has now decided to no longer view NEX as a potential sales division. Instead, integration with other parts of the company should contribute to a stronger product for customers in the data center, AI, and edge markets.