Intel explores sale of networking and edge unit, sources say

TaiPei/ San Francisco/New York: Intel has considered divesting its network and edge businesses as the chipmaker looks to shave off parts of the company its new chief executive does not see as crucial, three sources familiar with the matter said.

Talks about the potential sale of the group, once called NEX in Intel’s financial results, are a part of CEO Lip-Bu Tan’s strategy to focus its tens of thousands of employees on areas in which it has historically thrived: PC and data center chips.

"That’s something we’re going to expand and build on," Tan told executives in Taipei on Monday at a celebration of Intel’s 40th year, adding that the firm had a share of about 68% of the PC chip market and 55% of that for data centers.

Intel has considered when and how to exit its NEX group and engaged third parties who may be interested in a deal, one of the sources familiar with the matter said.

But it has not yet launched a formal deal process for the NEX unit, or solicited bidders, said two of the sources. All three spoke on condition of anonymity as they were not authorized to discuss confidential matters with the media.

The company interviewed investment bankers to select an adviser for the sales process in recent weeks, one of the sources said. But Intel has not yet hired a banker, another of the sources said.

Intel declined to comment.

Intel is exploring the idea of a sale because the businesses in its former NEX group no longer appear as relevant to the focus Tan has adopted for the company, said two of the sources.

The unit which makes chips for telecom equipment will no longer help Intel’s core strategy, one source said.

And Intel’s networking business too may be sold, because companies such as Broadcom have a tight grip on crucial portions of that market, another source said.

Intel has discussed the portfolio of businesses with the general aim of deciding if it would make strategic sense to partner with another company or sell a stake in it, one of the sources said.

The discussions within Intel are at an early stage and the company could decide to make other arrangements besides a sale for the NEX businesses.

In the year's first quarter, Intel moved the NEX financial results into its data center and PC groups and now does not report the segment separately. The NEX group generated revenue of $5.8 billion in 2024, securities filings show.

Intel has already moved to shed some lines of business. In April, it sold a majority stake in its Altera unit to SilverLake for $4.46 billion to help fund the revival effort.

Before the SilverLake sale, the company had been preparing to spin out Altera through a public offering under former CEO Pat Gelsinger, as it did with Mobileye in 2022.

Though Tan has told investors Intel plans to focus efforts on core operations that have historically been its largest revenue generators, the company has suffered significant losses in its share in the data center and PC areas.