Report: Intel examines the sale of its network and edge division

The US chip company Intel is considering selling its network and edge division, as the company wants to divest itself of business units that the new CEO does not consider crucial. This was reported exclusively by the news agency Reuters on Tuesday, citing three sources familiar with the matter.

According to the report, the talks about the possible sale of the division, which is abbreviated as NEX in Intel's annual reports, are part of new Intel CEO Lip-Bu Tan's strategy to focus on the areas in which the company has been successful in the past: PC and data center chips. According to Tan, Intel has a share of around 68 percent of the PC chip market and 55 percent of the data center market. This will be expanded, said the Intel CEO on Monday in Taipei at a celebration of the company's 40th anniversary.

Initial talks

Intel has been considering when and how to divest its network and edge division, a source familiar with the matter told Reuters. Companies that could be interested in a takeover have also been contacted. In 2024, Intel's NEX division generated revenue of 5.8 billion US dollars, according to the annual report. By comparison, the Client Computing division (CCG) and the Data Center and AI division (DCAI) generated revenues of USD 30.3 billion and USD 12.8 billion respectively.

However, a formal sales process for the NEX unit has not yet been initiated. According to two of the sources, no bidders have yet been approached. However, Intel has held talks with investment bankers in recent weeks to select an advisor for the sales process, according to one of the sources. However, no banker has yet been hired by Intel, said another of the sources.

The background to the intention to sell the NEX division is therefore a change in strategy for Intel that Tan is considering. The unit, which manufactures chips for telecommunications equipment, is becoming less important for Intel's core strategy against this background, said one source. And Intel's networking business is also a candidate for sale, as competitors such as Broadcom have a firm grip on key parts of this market, another source said. According to the report, Intel has been discussing its portfolio of businesses with the overall goal of deciding whether it would make strategic sense to partner with another company or sell off holdings. Discussions within Intel are reportedly at an early stage. The Group could also decide to take further measures in addition to the sale of the NEX businesses, according to reports.

Strategy for streamlining

Intel has already begun to divest itself of some business areas. In April, the ailing chip company sold a majority stake in the FGPA specialist Altera to the US private equity firm Silver Lake for 4.46 billion US dollars. The deal is part of Tan's strategy to streamline the group. Tan also confirmed a further wave of redundancies when the latest business figures were announced at the end of April.

Lip-Bu Tan returned to Intel in March. He not only took over the CEO position, but also a seat on the Board of Directors again. “I see significant opportunities to reshape our business to better serve our customers and create value for our shareholders,” he said on the occasion of his appointment.

Intel has been in troubled waters for years, not least because the company has fallen behind the world's leading chip manufacturers when it comes to state-of-the-art manufacturing processes. The company has repeatedly been in the red. To cut costs quickly, the struggling semiconductor company resorted to drastic job cuts. Intel then retired its CEO Pat Gelsinger at the beginning of December 2024. He had invested billions in Intel Foundry, the ailing company's contract manufacturing business, to establish it as a competitor to Taiwanese industry leader TSMC. This put a strain on Intel's finances, but did not bring the hoped-for success. Intel's interim co-chief executives have mothballed the planned AI chip. The new boss now wants to streamline the company.

(akn)