Intel’s exploration of a potential divestiture of its Network and Edge (NEX) unit marks a significant strategic shift for the semiconductor giant under the leadership of new CEO Lip-Bu Tan.

According to multiple reports, including Reuters, the company is considering selling this division as part of broader efforts to refocus on its core competencies and improve financial performance.

Strategic Refocusing Under New Leadership

The potential sale of the NEX unit appears to be aligned with CEO Tan’s vision to concentrate Intel’s resources and attention on what the company has historically done best: manufacturing PC and data center chips. This strategic pivot comes as Intel faces intense competition in the semiconductor market and aims to regain lost market share, particularly in the rapidly evolving AI landscape that is transforming the data center market.

As Telecoms.com reports, the NEX division generated $5.84 billion in revenue in 2024, representing approximately 11% of Intel’s total revenue of $53.1 billion. Despite this substantial figure, the unit’s operating income was a relatively modest $931 million, which may not be considered significant for a company of Intel’s size and scale.

Financial Considerations

The consideration to sell the NEX unit comes amid broader cost-cutting measures at Intel. According to Capacity Media, this potential divestiture represents a continuation of Intel’s efforts to streamline operations and reduce costs. The move follows other recent portfolio adjustments, including the sale of a majority stake in its Altera unit, as noted by Nasdaq.com.

Intel’s annual report filed with the SEC revealed that while the company saw higher network and edge sales, these gains were offset by lower 5G revenue due to inventory reduction among telecommunications customers. This mixed performance may have contributed to the decision to explore divesting the unit.

Technical Implications and Complexities

The potential sale of the NEX unit presents interesting technical considerations. As Telecoms.com points out, Intel’s virtual Radio Access Network (vRAN) solutions are based on the same Xeon architecture that powers its servers—an integral component of Intel’s forward strategy. This raises questions about whether a potential sale would include these elements.

There’s speculation that Intel might reorganize the NEX division to retain its valuable vRAN technology while divesting other components. This would allow the company to maintain its foothold in the evolving telecommunications space, where networks are increasingly adopting cloud-native approaches. Intel has already invested significantly in optimizing Xeon processors for vRAN, including the introduction of its vRAN Boost integrated accelerator in 2023.

Industry Context

This strategic move comes at a time when the semiconductor industry is undergoing significant transformation, with AI computing driving major shifts in the data center market. By potentially divesting the NEX unit, Intel appears to be doubling down on what CEO Tan views as the company’s core strengths.

According to Mobile World Live, the exploration of this sale is specifically part of Tan’s effort to refocus the company. While preliminary discussions have reportedly taken place, Intel has not yet launched a formal sales process or solicited bids for the unit. When approached for comment, the company declined to address the reports.

For industry observers, this potential divestiture represents another chapter in Intel’s ongoing transformation as it navigates competitive pressures and technological shifts in the semiconductor landscape. The outcome of these deliberations will likely have significant implications for Intel’s future direction and its position within the global technology ecosystem.