Intel Plans to Spin Off Network and Edge Business, Seeking Outside Investors

Intel is planning to spin off its Network and Edge business (NEX) into a standalone entity, with outside investors to fund the transition. Intel will remain an anchor investor and NEX will focus on silicon solutions for critical communications, enterprise networking, and ethernet connectivity infrastructure. The move aims to improve how Intel serves customers and help NEX move into new markets more easily.

Intel is undergoing a significant transformation under the leadership of CEO Lip-Bu Tan, which includes spinning off its Network and Edge Group (NEX) as a standalone business. This move follows a series of aggressive restructuring efforts aimed at streamlining Intel's core operations and aligning the company with its AI-first strategy.

Intel's latest quarterly earnings report revealed a $2.9 billion loss, prompting a 15% reduction in its workforce. The NEX spin-off is part of a broader strategy to divest non-essential business units and focus on core competencies. The move was confirmed through a customer memo reported by CRN and later corroborated by The Register [1].

The new entity, NEX, will focus on critical communications, enterprise networking, and ethernet connectivity infrastructure. Intel will remain an anchor investor, similar to its role with Altera, which it acquired in 2015 and partially sold earlier this year. By spinning off NEX, Intel aims to accelerate its customer-facing strategy and product roadmap, allowing the new company to innovate faster and invest in new offerings [1].

CEO Lip-Bu Tan has described Intel as "overextended and inefficient," citing a workforce reduction to 75,000 employees and a pivot away from foundry expansion plans. Even Intel's crown jewel, its process technology roadmap, is on the chopping block. Tan warned that Intel's next-generation 14A (1.4nm-class) node could be canceled if a major external customer is not secured, potentially surrendering the cutting-edge process race to TSMC and Samsung [1].

The core CPU roadmap remains on track, with Panther Lake, built on the 18A node, still planned for late 2025. However, the NEX spin-off aims to tighten Intel's focus on critical markets while cutting off segments that dilute margins. The parallels to Altera's spin-off are evident, with NEX potentially thriving as an independent entity free from Intel's corporate bureaucracy [1].

Intel stock took an 8% hit following its earnings report, underscoring the aggressive restructuring under Tan. Whether these bold moves will pay off depends on Intel's ability to execute on its AI roadmap, deliver competitive x86 products, and find partners to keep its process technology ambitions alive [1].

References:
[1] https://www.tomshardware.com/tech-industry/intel-spins-off-network-and-edge-group-as-standalone-business-after-posting-usd2-9b-loss-seeking-investors-for-nex-division-amid-massive-internal-restructuring