Intel to jettison networking business NEX • The Register

Intel isn’t just laying off employees and closing plants in a bid to cut costs – it’s also reportedly planning to get rid of its entire Network and Edge Group (NEX) to help right the ship. 

Chipzilla, which reported its Q2 earnings yesterday alongside news that it was shedding 15 percent of its workforce and closing chip manufacturing sites in Poland and Germany, told customers in a memo that it planned to jettison NEX and was looking for investors to help carry some of the group’s weight. 

News of the plan was first reported by CRN. The Register has confirmed the move with Intel. 

“We plan to establish key elements of our Networking and Communications business as a stand-alone company and we have begun the process of identifying strategic investors,” an Intel spokesperson told us. “Like Altera, we will remain an anchor investor enabling us to benefit from future upside as we position the business for future growth.”

Altera, for those who don’t recall, is a PLC manufacturer that Chipzilla acquired in 2015. The rapidly shrinking company sold its majority stake in Altera earlier this year, retaining minority control.

Who’d buy? It’s hard to say, as published portions of the customer letter don’t include any mention of buyers beyond Intel having “begun the process of identifying” potential partners. In other words, this might take a while, especially considering it’s not exactly a new consideration for the flailing chip maker.

Reuters first reported in May that Intel was seeking buyers for the NEX division, citing sources familiar with the matter. The company had not yet launched a formal process to find buyers at that time, but it appears that things have moved forward since then.

Intel stock dropped more than 8% Friday after a flat earnings report on Thursday evening which saw the company’s net losses grow to $2.9 billion compared to $1.6 billion in Q2 of last year.®