Intel decides to keep networking business after all

After exploring its options, Intel has cancelled plans to divest itself of its Network and Edge Group, commonly referred to as NEX.

CEO Lip-Bu Tan has been on a mission to divest Intel of all non-core technologies, and the NEX business was the largest group scheduled for divestiture. But after a few months of shopping it around, either Intel couldn’t get the deal it wanted or changed its mind, it will not say what really drove the decision to keep the business.

An Intel spokesperson said it was a “deliberate and strategic decision as networking is a critical part of Intel’s data center strategy, especially as we work towards becoming focused on systems and platforms.”

Intel’s official statement read   :

“After a thorough review of strategic options for NEX—including a potential standalone path—we determined the business is best positioned to succeed within Intel. Keeping NEX in-house enables tighter integration between silicon, software and systems, strengthening customer offerings across AI, data center, and edge. We remain focused on delivering for customers and creating long-term value.”

Some NEX resources will move into Intel’s Central Engineering Group, led by Srini Iyengar, to help further define and enable this approach.

That doesn’t explain why Intel made the decision to pursue spin-off in the first place. In July, NEX chief Sachin Katti issued a memo that outlined plans to establish key elements of the Networking and Communications business as a stand-alone company. It looked like a done deal, experts said.

Jim Hines, research director for enabling technologies and semiconductors at IDC, declined to speculate on whether Intel could get a decent offer but noted NEX is losing ground. IDC estimates Intel’s market share in overall semiconductors at 6.8% in Q3 2025, which is down from 7.4% for the full year 2024 and 9.2% for the full year 2023.

Intel’s course reversal “is a positive for Intel in the long term, and recent improvements in its financial situation may have contributed to the decision to keep NEX in house,” he said.

When Tan took over as CEO earlier this year, prioritized strengthening the balance sheet and bringing a greater focus on execution. Divest NEX was aligned with these priorities, but since then, Intel has secured investments from the US Government, Nvidia and SoftBank that have reduced the need to raise cash through other means, Hines notes.

“The NEX business will prove to be a strategic asset for Intel as it looks to protect and expand its position in the AI datacenter market. Success in this market now requires processor suppliers to offer a full-stack solution, not just silicon. Scale-up and scale-out networking solutions are a key piece of the package, and Intel will be able to leverage its NEX technologies and software, including silicon photonics, to develop differentiated product offerings in this space,” Hines said.