Intel to separate networking unit as new CEO Tan overhauls business

[BENGALURU] Intel is planning to separate its networking and communications unit into a stand-alone company and has begun the process of identifying investors, the chipmaker said on Friday (Jul 25), as new CEO Tan Lip-Bu looks to streamline its operations.

Tan’s plan to rejuvenate the once-iconic chipmaker focuses on shedding non-core assets and reducing expenses by scaling back major investments and cutting workforce numbers.

Reuters reported in May that Intel was considering divesting its network and edge businesses, previously called NEX in its financial reports.

“Like Altera, we will remain an anchor investor enabling us to benefit from future upside as we position the business for future growth,” the company said.

In April, Intel agreed to sell a majority stake in its Altera programmable chip business to buyout firm Silver Lake at a valuation of about US$8.75 billion, or nearly half of what it had paid for the business in 2015.

Tan has been given the challenge of revitalising the chipmaker after years of missteps and high-capital manufacturing strategies led to growing losses, all while the company grapples with establishing a foothold in the burgeoning artificial intelligence market.

Intel’s shares were down 9 per cent on Friday after the chipmaker warned of exiting chip manufacturing if it failed to secure a major customer. It also reported a surprise second-quarter adjusted loss and forecast a bigger-than-expected loss in the third quarter.

In the latest first quarter, Intel made NEX a part of its data centre and PC group and does not report its results as a separate segment.

The unit, which makes chips for telecom equipment, generated revenue of US$5.8 billion in 2024, securities filings show. That constituted about 11 per cent of the company’s total sales. REUTERS