Intel to Spin Off Network and Edge Group as Independent Company to Refocus Core Business

 Intel will spin off its Network and Edge Group (NEX) into a standalone company, according to a report published Friday evening on the CRN website. The company has already notified its clients of the move in an internal memo and is now seeking external investors to support the new entity. A timeline for the spin-off has not yet been disclosed.

This marks the latest in a series of divestitures by Intel, following previous spin-offs of Mobileye, Altera, and RealSense—moves that are part of CEO Lip-Bo Tan’s broader strategy to streamline Intel’s business and focus on its core strengths: semiconductors, data centers, and chip manufacturing.

Intel Confirms Plans, Will Retain Significant Stake

Intel confirmed the CRN report and shared the following statement:

“We plan to establish the core components of the networking and communications business as an independent company, and we have already begun the process of identifying strategic investors. Similar to the move made with Altera, we will remain a major investor.”

The NEX division focuses on the development of data communication chips and smart networking solutions, primarily for communications infrastructure and data center markets. It employs several thousand people globally, including approximately 400 staff in Jerusalem and Petah Tikva, Israel. These teams handle both hardware and software, and local operations are led by Sharon Almoznino-Almog.

Strategic Shift to Boost NEX’s Competitiveness

According to sources familiar with the matter, spinning NEX off will allow it to operate more independently and grow faster in a highly competitive market currently dominated by companies like Nvidia, Broadcom, and Marvell.

“Right now, NEX is a side business within Intel,” a source said. “As an independent company, it will finally get the opportunity to flourish and enter new markets.”

Intel believes the new structure will offer NEX more agility and a sharper market focus. The decision also comes after the company restructured NEX internally by transferring some of its projects to other divisions. For instance, edge computing responsibilities were moved to the PC processor group, while silicon photonics was reassigned to the data center unit.

Financial Background and Market Context

In 2024, NEX generated $5.8 billion in revenue—a modest 1% year-over-year growth. Earlier this year, Intel ceased reporting NEX’s results as a standalone business unit, folding it into its broader product group reports. It was previously rumored that Intel was exploring a potential sale of the division.

The announcement comes amid broader turbulence at the chip giant. Just yesterday, Intel issued a disappointing earnings forecast for the current quarter, contributing to investor unease. The company is also undergoing global layoffs and facing mounting pressure from analysts to demonstrate a clear path to profitability.