Intel said on Wednesday it will be keeping its networking and communications unit in the company following a review of strategic options for the unit. The company had previously explored selling various assets while it weighed options on how to improve its financial position.
“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 said in an emailed statement to Seeking Alpha.
“Keeping NEX in-house enables tighter integration between silicon, software and systems, strengthening customer offerings across AI, data center, and edge. We remain focused on delivering for customers and creating long-term value,” per the statement.
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As part of the decision, Intel ended talks with Ericsson AB regarding buying a stake in NEX, an Intel spokesperson told Bloomberg, which reported the reversal earlier on Wednesday. Intel had previously said in July that it planned to spin off its networking and communications business as a standalone company.
The spin off was part of CEO Lip-Bu Tan’s plans to shave off non-core businesses. However, the company decided to keep the unit after it obtained a financing package that includes $8.9 billion from the U.S. government in exchange for an 8.9% take, plus $2 billion from SoftBank Group and $5 billion from Nvidia.
Intel’s NEX develops and builds processors for networking and edge, infrastructure processors (IPUs), Ethernet controllers, Wi-Fi controllers, switching gear, and programmable connectivity hardware used in a wide range of applications, starting from PCs and client systems, to telecom infrastructure and data centers.
Intel does not report NEX results separately: in Q1 2025, the company reorganized by integrating NEX into its Client Computing Group (CCG) and Data Center and AI (DCAI) segments, then updated its reporting structure accordingly. Because of that, it is not known whether NEX remains a profitable unit. Yet, when Intel reported NEX results separately for the last time in Q4 2024, the unit generated $1.6 billion in sales and $300 million in operating income.
Intel recently announced that Tan will take direct charge of the company’s artificial intelligence initiatives following the departure of its chief technology officer, who has joined OpenAI, the maker of ChatGPT. The former CTO Sachin Katt who had been steering Intel’s artificial intelligence strategy since a company-wide management shakeup in January, played a key role in aligning the firm’s chip development with emerging AI demands. People close to the company say Tan is pushing to streamline decision-making and attract new partners, but results will take time.