Is Intel's telco business headed toward a sale?Is Intel's telco business headed toward a sale?

Intel announced it's now on the hunt for a new CEO. That has led to speculation that the company is preparing to sell off parts of its business, including potentially a telecom operation that counts customers like Ericsson.

Early Monday morning, Intel said CEO Pat Gelsinger retired from the company and stepped down from the board of directors. Intel's David Zinsner and Michelle (MJ) Johnston Holthaus will be the company's interim co-CEOs while Intel's board conducts a search for a new CEO.

Bloomberg reported that the Intel board had soured on Gelsinger's efforts to turn the company around. Gelsinger became Intel's CEO in 2021 and instituted an ambitious plan to become a major chip-manufacturing company.

Gelsinger, for his part, has rejected calls for Intel to split apart its business. "We believe distinct, but better together, is the strategy," he told Bloomberg last month.

Analysts including Patrick Moorhead of Moor Insights & Strategy speculated that the Intel board of directors might want to separate the company's chip design business from its foundry chip-manufacturing business. Or, in a less-likely scenario, the board might want to sell off various parts of the company.

Rising troubles

Intel has been under pressure for months as rivals like AMD and Nvidia make progress in areas such as AI. Indeed, in its latest earnings report, Intel said its Gaudi-branded AI chips won't generate $500 million in revenues this year, as company officials had hoped.

In response, Intel is cutting 15% of its workforce, or around 18,000 positions.

Amid its floundering, companies including Qualcomm and Apple have been rumored as interested in a possible takeover of Intel. However, Bloomberg recently reported that Qualcomm's interest in pursuing an acquisition of Intel has cooled. The complexities associated with acquiring all of Intel has made a deal less attractive to Qualcomm, according to the publication.

The wireless business

Intel's wireless business hasn't grown as the company had hoped. In 2020, in the early days of 5G, Intel said it was eyeing a 5G silicon market worth $25 billion by 2023. But the entire market for radio access networking (RAN) products generated revenues of just $40 billion last year, according to Omdia, a Light Reading sister company.

Importantly, Light Reading recently reported that Nokia is substituting Arm-based chips for Intel silicon in its latest 5G products. One source, who spoke on condition of anonymity to Light Reading, estimated Intel's wireless division is losing about $300 million a quarter.

Ericsson, however, remains a major Intel customer. It's not clear whether Ericsson might be interested in purchasing Intel's wireless business. After all, Ericsson has been struggling with its own revenue shortfalls.

For its part, Intel recently moved its Edge and Automotive operations out of its NEX business unit and into its Client Computing Group (CCG) business unit. That, according to the company, will allow it to "refocus" on the networking and telecom operations that remain inside its NEX business unit.

In its latest quarterly report, Intel said revenues in its NEX business unit rose by double digits "as elements of this business start to recover off a cyclical bottom." The unit recorded revenues of $1.5 billion.