Intel to spin off networking group, stepping back from battle with Nvidia
The Network and Edge Group (NEX) generated $5.8B in 2024 but lost strategic weight this year.
Intel has confirmed that it plans to spin off its Network and Edge Group (NEX). The move signals a shift in Intel’s strategic priorities, narrowing its focus and reducing direct competition with Nvidia in the communications chip arena.
NEX develops networking and communications chips similar to those produced by Mellanox, the Israeli company acquired by Nvidia in 2019 for $6.9 billion. Mellanox became a cornerstone of Nvidia’s operations in Israel and plays a critical role in the company’s broader strategy to deliver an integrated AI hardware and software platform. By spinning off NEX, Intel is effectively stepping back from the pursuit of a parallel strategy.
The NEX division employs thousands globally, including approximately 400 in Israel. In 2024, the group generated $5.8 billion in revenue, a modest 1% year-over-year increase, representing around 10.9% of Intel’s total revenue. However, since Q1 2025, Intel has ceased reporting NEX revenue as a separate line item, an early indication of the reduced strategic importance the company now places on the group.
On Thursday, CRN reported on an internal memo Intel sent to clients, in which the company outlined plans to establish NEX as an independent business. The memo, signed by NEX General Manager Sachin Katti, appointed earlier this year as Intel’s chief technology and AI officer, describes the new company as a “new, independent entity focused exclusively on delivering leading silicon solutions for critical communications, enterprise networking and ethernet connectivity infrastructure.”
While no timeline was given for the spinoff, the memo emphasized that Intel remains committed to supporting existing customers. “Backed by Intel, this new, independent company will be positioned to accelerate its customer-facing strategy and product road map by innovating faster and investing in new offerings,” Katti wrote.
Intel also confirmed its intention to seek outside investors for the new entity. “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,” Intel said in a statement. “Like Altera, we will remain an anchor investor enabling us to benefit from future upside as we position the business for future growth.”
