Intel Eyes Ericsson Partnership for $Billion NEX Investment

Intel Corporation is reportedly in discussions with Ericsson to invest in its Network and Edge business, known as NEX. The potential investment, which could amount to several billion dollars, would make Ericsson a minority stakeholder in the newly spun-off division. This business unit has long been a supplier of chips for Ericsson's wireless access network hardware.

Intel has been actively streamlining its operations and divesting non-core assets to bolster its financial health. Recently, the company announced plans to separate its Network and Infrastructure Group into an independent entity. In April, Intel agreed to sell a 51% stake in its programmable chip division, Altera, to Silver Lake Management. Intel has stated that it is seeking strategic investors for the NEX division, similar to its approach with Altera. The company intends to remain the primary investor in the new entity to benefit from future growth opportunities.

Ericsson, a long-standing customer of Intel, has relied on Intel's chip designs for its mobile network equipment. The two companies have strengthened their partnership in recent years, with Ericsson announcing in early 2023 that its future infrastructure would be built on Intel's Xeon Next-Gen processors to achieve higher speeds and better energy efficiency.

Intel's decision to spin off the NEX division is part of a broader strategy to focus on its core strengths while exploring new avenues for growth. The new company will concentrate on chips for communication, networking, and Ethernet connectivity. Intel will retain a significant stake in the new entity, ensuring continued involvement in its development and success.

This move by Intel comes as the company faces intense competition from rivals such as Taiwan Semiconductor Manufacturing Company and Samsung Electronics. The previous CEO, Pat Gelsinger, was ousted by the board last year due to the failure of a costly initiative aimed at transforming the company into a chip manufacturer for other enterprises. The initiative did not yield results quickly enough, leading to his dismissal.

Intel's efforts to streamline its operations and divest non-core assets are aimed at improving its financial health and focusing on its core competencies. The company's decision to spin off the NEX division and seek strategic investors is a strategic move to ensure its long-term success in the competitive semiconductor industry. The new entity will focus on chips for communication, networking, and Ethernet connectivity, areas where Intel has a strong track record and expertise.