Intel Reportedly Weighs Sale Of Network And Edge Units As CEO Lip-Bu Tan Refocuses On Core Chip Business

Intel is reportedly looking to offload its network and edge businesses as it revamps itself under new CEO Lip-Bu Tan. 

Tan has not been shy about stating that he wants Intel to focus on the areas of business where it has historically thrived—PC and data center chips. “That’s something we’re going to expand and build on,” he told executives in Taipei on Monday at Intel’s 40th anniversary.

According to a report by Reuters, this means shaving off the network and edge businesses, which used to be called NEX in Intel’s financial results. 

Intel stopped reporting NEX as a standalone segment in the current fiscal year's first quarter (Q1), integrating its financials into the company’s data center and PC groups. Securities filings show the group brought in $5.8 billion in revenue last year.

Sources familiar with the matter told Reuters that Intel has evaluated the timing and strategy for exiting its NEX group and has held discussions with third parties potentially interested in a deal.

While no formal deal has been reached yet, Intel has been approaching investment bankers to select an adviser for the sales process in recent weeks, the report said. 

It added that the decision to sell stemmed from the telecom equipment and networking businesses no longer being helpful to Intel’s core strategy and from competition from other companies, like Broadcom (AVGO), which already have a considerable market share in those segments. 

The report also said that since the discussions are at an early stage, it’s possible that Intel could instead partner with another company if it makes strategic sense.

Intel has already begun shedding some lines of business. In April, it sold a majority stake in its Altera unit to SilverLake for $4.46 billion to help fund the revival effort.

Intel has not yet commented on the report.

The shares edged 0.14% lower in pre-market trade on Tuesday. Intel’s stock has gained more than 5% this year but has fallen over 32% in the last 12 months as of Monday’s close. 

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