According to a recent internal memo reported by Dylan Martin of CRN, Intel is planning to spin off its Networking and Edge (NEX) business unit. This move aligns with earlier reports from Reuters indicating that Intel was considering a sale of this division. The reorganization comes as Intel has already begun to divest some of its key products from the NEX unit, including various edge processors and interconnect technologies.
Intel’s Altera business, which also serves networking and edge markets, has been involved in a sale to Silver Lake, with the transaction expected to close later this year. For some time now, industry analysts have highlighted the difficulties faced by Intel’s NEX business, particularly focusing on challenges following major acquisitions such as Barefoot Networks and QLogic’s InfiniBand assets, which have not generated the expected returns.
The emergence of AI technology has shifted the dynamics in networking, accelerating the demand for advanced network switches and NIC solutions. Companies like NVIDIA and Broadcom are capitalizing on this trend, while Intel has reportedly lagged behind, illustrated by its release of less competitive NICs in the market. For instance, while Intel has launched newer NICs, competitors have already been marketing higher bandwidth solutions.
Intel’s traditional market share in networking may face further erosion, as the company attempts to adapt to the evolving landscape. The firm has primarily catered to lower-speed NICs in various server environments, leading to high-volume sales despite lagging innovation relative to competitors.
The eventual fate of Intel’s NEX business will depend on whether it can secure a buyer or investor interested in revitalizing the division. Speculation indicates that Intel may retain a minority stake post-sale, which could support gradual growth and innovation within the unit.
Related Links:
- Intel’s Networking Strategies
- Silver Lake Acquires Majority Stake in Altera
- NVIDIA’s Networking Success
- New Intel Networking Chip Releases
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