Intel is making big changes to focus on its main businesses, especially chips for computers and artificial intelligence (AI). The company announced it will spin off its Network and Edge Group (NEX), which makes chips for networking and communication, into a separate company. This move comes after Intel reported a $2.9 billion loss in one quarter and plans to cut 15% of its workers, about 15,000 jobs.
The NEX group brought in $5.8 billion in 2024, but Intel wants to put its energy into its core areas: PC and data center chips, plus AI. By making NEX its own company, Intel hopes it can grow faster on its own while Intel focuses on its main goals.
Intel will keep a small share in the new NEX company and is looking for outside investors to help it grow. This is similar to what Intel did with its Altera unit, where it sold part but kept some ownership.
Intel’s boss, Lip-Bu Tan, says the company was trying to do too much and needs to simplify. He’s pushing for better results in making chips and competing in AI, where rivals like NVIDIA and AMD are strong. Intel is still working on its new Panther Lake chip, which will focus on AI and is set to launch in late 2025. However, there are challenges.
Intel’s stock dropped 8% after the loss was announced, and there’s worry about whether the company can keep up with competitors.
The NEX spin-off could help Intel save money and focus, but it’s a big risk. If NEX does well on its own, it could prove this was a smart move. For now, Intel is betting on AI and its core chip business to turn things around.
