Intel Corp. plans to spin off its NEX networking business into an independent company with help from external investors.
CRM reported today that Sachin Katti, the unit’s senior vice president and general manager, announced the move to employees on Thursday. Intel confirmed the plan in a statement. The planned spinoff is part of a broader restructuring initiative that will also see the chipmaker scale back its presence in several other markets.
Intel’s NEX unit makes chips for data center networking equipment. One of its flagship offerings is the Atom P7000 central processing unit series. The CPUs in the product family ship with an integrated switch that can process up to 100 gigabits of traffic per second across 8 ports.
NEX also competes in the telecommunications market with a base station chip series called the Atom P5900. It combines a CPU with a switch similarly to the P5700, but offers considerably more throughput. The most advanced chip in the product series can manage up to 400 gigabits of traffic per second.
Both the P5900 and P5700 ship with a built-in cybersecurity accelerator. It’s optimized to encrypt and decrypt data traffic, a task that requires significant computing resources. The accelerator offloads the process from the CPU to which it’s attached and thereby makes more computing capacity available for applications.
NEX generated $5.8 billion in revenue during Intel’s most recent fiscal year. The company stopped breaking out the unit’s revenue in the first quarter. A few months later, rumors emerged that the company was seeking to sell the business.
“While Intel will remain an anchor investor in the new company, we have begun the process of identifying additional strategic and capital partners to support the growth and development of the new company,” Katti wrote in an internal memo on Thursday.
Intel has taken a similar approach with Altera, a maker of field-programmable gate arrays that was until recently a fully owned subsidiary. The chipmaker sold a 51% stake in the business to Silver Lake earlier this year for $4.46 billion. The size of the NEX stake that Intel plans to sell and the timing of the spinoff have not yet been disclosed.
Katti wrote in the memo that spinning off NEX will “accelerate its customer-facing strategy and product road map by innovating faster and investing in new offerings.”
On Thursday, Intel disclosed that it plans to reduce its headcount by 15% more this year in a bid to boost financial performance. The company expects to end 2025 with 75,000 employees, down from 99,500 in 2024. Intel will also scale back investments in its foundry business.
Photo: Thomas Cloer/Flickr
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