- Ericsson is reportedly in talks to buy into Intel's NEX unit
- Analyst Jack Gold noted that Intel was already working on a customized chip for Ericsson
- Gold said that Nokia or Samsung could also buy into spin-off
When Intel said it will remain an anchor investor in its spin-off Network and Edge (NEX) business, which produces the company’s x86-based 5G chips, but reports say Ericsson is already in talks to invest, and analysts told Fierce Network that they aren't the only company interested.
Ericsson in the NEX mix
Ericsson is likely to invest rather than buy, according to the analysts that Fierce talked to. Ericsson and Intel were working on a customized chip for Ericsson’s needs, so they have a vested interest in making sure the NEX business continues, noted Jack Gold, president of J.Gold Associates. “Whether or not they buy them is a question. I think it’s more likely that Ericsson invests in the group along with Intel, rather than buy them outright,” Gold said.
Gold notes that any outright NEX buyer would need to acquire an x86 license from Intel. “By having a joint venture with Intel as an investor, it relieves that requirement, and keeps Intel in the loop for making sure products work well and can be manufactured effectively in Intel fabs (although this is less of an issue as they could go outside if needed),” he said in an email.
Recon Analytics Analyst Daryl Schoolar stated that Ericsson has “a deep relationship” with Intel, with Intel products showing up in Ericsson virtualized RAN (vRAN) and custom products. “It makes sense that Ericsson would invest in NEX to keep it going, but Intel or some other neutral party would need to have controlling interest to not alienate other Intel users,” the analyst noted.
“I don't know if Ericsson will push for a controlling interest but perhaps they might do that to preserve their vRAN/cRAN capabilities,” said Roy Chua, principal at AvidThink. “There are other routes too that don't involve taking a big stake in Intel's assets."
Chua added that Ericsson could also partner with AMD or go for ARM alternatives “with Nvidia or others”, or lean more into ASICs “if they believe that's feasible.” However, that route less likely as it would require some serious redesigns on the Ericsson side, which would cost both time and money.
Other contenders include ...
“As for Nokia and Samsung, I’m sure they are also exploring what this means for their use of Intel chips in their products,” analyst Jack Gold mentioned. “They may also ultimately decide to invest in a NEX spin out along with Intel. I don’t think Intel wants to simply unload the entire group. Much like they did with Altera and Mobileye, they retain partial ownership and wait for an IPO down the road to get their investment back.”