Intel $INTC ( ▲ 3.16% ) slid in early trading Thursday after the company revealed it will keep its networking division instead of spinning it off or selling a stake. The unit, called NEX, builds infrastructure processors that handle system “housekeeping” and networking components like switches and controllers that direct data traffic to Intel’s CPUs.
The announcement followed a lengthy strategic review in which Intel explored a potential separation and even held talks with Ericsson about selling a stake. Those discussions are now over. Intel said NEX is better off staying inside the company because tighter integration across chips, software, and systems strengthens what it can offer in data center, AI, and edge computing markets.
The decision marks the latest shift in CEO Lip-Bu Tan’s turnaround plan. Since taking over in March, he has been trimming operations, cutting jobs, and exploring divestitures to refocus Intel’s business. The company no longer needs to rely as heavily on selloffs for cash after receiving a financial boost this year, including a 10 percent equity investment from the US government and billions more from SoftBank and Nvidia. Intel shares have more than doubled over the course of 2025.
Ericsson had been interested in investing to ensure steady access to Intel-designed chips that power many of its mobile network products. The two companies deepened their partnership last year when Ericsson committed to using Intel’s next-generation Xeon processors for future infrastructure.
Intel has spent the last several years trying to regain ground on major competitors like TSMC and Samsung. Former CEO Pat Gelsinger’s push to make Intel a leading contract chip manufacturer fell short of expectations, prompting a strategic reset and a renewed effort to shed non-core businesses. The NEX division had been one of the units most likely to be spun off, until now.