Ericsson is rumored to be investing in Intel’s Network and Edge Group (NEX).

Bloomberg reported the European telecom giant is in talks to “invest hundreds of millions of dollars” in the networking infrastructure business.

Intel had made clear its plans to remain an anchor investor in the division when revealing last week it would be spinning out the NEX unit. Ericsson’s possible investment would make it a minority stakeholder in the business, with Intel rumored to be speaking with other potential investors to join the telecom firm for a stake in the business.

SDxCentral has contacted Ericsson for comment.

Why Ericsson?

Prior to the reports, Ericsson had been touted by some as a possible buyer of Intel’s networking unit.

Networks were the main driver of the Swedish vendor’s latest earnings, and any potential acquisition would look to maintain that growth.

A report from Ericsson published earlier this year suggests that a considerable portion of the cloud RAN market relies on CPUs using Intel’s x86 architecture, acting as an “efficient and reliable solution for building commercial-grade cloud RAN products.”

As a RAN vendor, Ericsson relies on Intel chips for its RAN systems, powering, for example, the company's 5G efforts in Japan, which were expanded this week.

2023 saw Ericsson agree to use Intel’s upcoming 18A processes to power its Cloud RAN solutions, with Intel manufacturing custom 5G system-on-chips (SoCs) designed to increase network capacity.

As SDxCentral reported earlier this week, an acquisition of NEX would benefit Ericsson by securing its supply of segment-related hardware and potentially allowing it to dominate the market for RAN-optimized hardware – though the RAN market is projected to flatten with carriers expected to shift from expanding network footprints to increasing capacity.

What happened to NEX?

Intel confirmed its exit from networking this month by announcing it would be dismantling NEX, having previously been floated as a potential divestiture in March of this year.

Intel has already shifted its Edge business into its Client Computing Group (CCG), while the NEX unit was dismantled, with its networking elements integrated into both CCG and Data Center and Artificial Intelligence group (DCAI). Cisco would then go on to poach NEX CTO Pere Monclus in July as its VP of engineering.

In a recent message to Intel staff, CEO Lip-Bu Tan said the company was focused on priority areas like the firm’s foundry business, a revised AI roadmap, and “clean and simple architectures” for its data center and client segments.

The beleaguered chipmaker added it had completed a majority of its recently announced plans to cut 15% of its workforce in a reduction that will see its global workforce slashed from approximately 116,500 employees in mid-2024 to around 75,000 employees later this year.

Intel’s shift away from networking comes amid the shuttering of proposed factory plans in Europe and the closure of its automotive business.

Additional reporting by Ben Wodecki.