Intel has decided to retain its networking and communications unit after a strategic review, reversing earlier plans to spin it off as part of a broader restructuring effort.
Intel announced on Wednesday that it will retain its networking and communications unit, known as NEX, following a comprehensive review of strategic options for the division. This decision comes after the company had previously considered selling various assets in an effort to enhance its financial standing.
In an emailed statement to Seeking Alpha, Intel explained, “After a thorough review of strategic options for NEX — including a potential standalone path — we determined the business is best positioned to succeed within Intel.” The company emphasized that keeping NEX in-house would facilitate tighter integration between silicon, software, and systems, ultimately strengthening customer offerings across artificial intelligence (AI), data centers, and edge computing.
As part of this decision, Intel has ceased discussions with Ericsson AB regarding a potential stake purchase in NEX, according to a spokesperson for the company. This reversal was reported earlier on Wednesday by Bloomberg. In July, Intel had indicated plans to spin off its networking and communications business as a separate entity, which was part of CEO Lip-Bu Tan’s strategy to divest non-core operations.
However, Intel’s decision to retain the unit was influenced by a financing package that includes $8.9 billion from the U.S. government in exchange for an 8.9% stake, along with $2 billion from SoftBank Group and $5 billion from Nvidia.
NEX is responsible for developing and manufacturing processors for networking and edge applications, infrastructure processors (IPUs), Ethernet controllers, Wi-Fi controllers, switching gear, and programmable connectivity hardware. These products are utilized across a broad spectrum of applications, ranging from personal computers to telecom infrastructure and data centers.
Intel does not disclose NEX’s financial results separately. In the first quarter of 2025, the company reorganized its structure by integrating NEX into its Client Computing Group (CCG) and Data Center and AI (DCAI) segments, which has made it difficult to ascertain the unit’s profitability. However, the last time Intel reported NEX’s results separately, in the fourth quarter of 2024, the unit generated $1.6 billion in sales and $300 million in operating income.
Recently, Intel announced that CEO Lip-Bu Tan will take direct charge of the company’s artificial intelligence initiatives following the departure of its chief technology officer, Sachin Katt, who has joined OpenAI, the creator of ChatGPT. Katt had been instrumental in aligning Intel’s chip development with the evolving demands of AI. Sources close to the company indicate that Tan is focused on streamlining decision-making processes and attracting new partnerships, although tangible results may take time to materialize.
This strategic pivot reflects Intel’s commitment to strengthening its core business areas while navigating the complexities of the technology landscape.
According to Bloomberg, the decision to retain NEX marks a significant shift in Intel’s approach to its restructuring efforts.