Intel on Tuesday officially announced the shutdown of its automotive division, which designed chips for over 50 million vehicles globally. These chips were integral to infotainment systems, electric vehicle management, and advanced driver assistance technologies. The closure comes as part of a comprehensive restructuring initiated under CEO Lip-Bu Tan, who has indicated that "several months" of layoffs are to be expected as the company aims to achieve $17 billion in savings in 2025.
Automotive Exit Reflects Strategic Shift
Intel informed employees of the division's closure in an internal memo on Tuesday morning, as reported by The Oregonian/OregonLive. The company affirmed its commitment to honoring existing contracts with vehicle manufacturers, but the unit responsible for developing its automotive platform will be dissolved. In a statement, Intel declared, "We are refocusing on our core client and data center portfolio to strengthen our product offerings and meet the needs of our customers." This decision is notable, coming just six months after the automotive business showcased new technology at CES 2025 in Las Vegas.
It's important to note that this shutdown does not impact Mobileye, the Israeli autonomous driving company. Intel acquired Mobileye in 2017 for $15.3 billion and later spun it off as a public company, while maintaining majority control.
Broader Workforce Reductions Underway
The closure of the automotive division is just one component of Intel's extensive job cuts. Regulatory filings in California reveal that Intel will eliminate 107 positions across four Silicon Valley facilities starting July 15. Furthermore, manufacturing divisions are bracing for workforce reductions of up to 20 percent.
Intel has also outsourced its marketing operations to Accenture, which has led to additional layoffs. The company's total headcount has already decreased from 125,000 in 2023 to approximately 109,000 currently.
Financial Pressures Mount
This ongoing restructuring is a direct response to a prolonged financial downturn for Intel. The company reported a net loss of $821 million in the first quarter of 2025 and anticipates losses nearing $1.4 billion in the second quarter. In 2024, Intel recorded an $18.8 billion loss on revenues of $53 billion.
Naga Chandrasekaran, Intel's vice president of manufacturing, stated in a company-wide memo, "These are difficult actions but essential to meet our affordability challenges and current financial position of the company." Intel has been losing ground to competitors such as Nvidia in artificial intelligence chips and faces stiff competition from rivals like IBM and Samsung in traditional semiconductor markets. Under CEO Tan's leadership, the company's new policy dictates that it will only develop chips with potential gross margins exceeding 50 percent.
Impact on Automakers
Automakers most likely to experience significant supply chain disruption due to Intel's exit are those whose vehicles currently rely on Intel's automotive chips for infotainment, electric vehicle management, and driver assistance technologies. Given that Intel's automotive division was based in Munich, Germany, close to key European customers, major European automakers are particularly susceptible to these disruptions.
While Intel has committed to fulfilling existing contracts to ensure a smooth transition, the cessation of its automotive chip unit - which was crucial for designing chips integrated into electric and software-defined vehicles - will undeniably affect manufacturers that depend on these Intel chips for vehicle performance optimization and driver information systems. Although Intel has not publicly disclosed specific automaker names or the precise extent of the disruption, the division's close collaboration with prominent European automakers suggests that the region could feel substantial supply chain effects. Mobileye, however, is not directly impacted, continuing its independent operations. In essence, the primary supply chain disruptions will be borne by automakers utilizing Intel's chips in their electric and connected vehicles, especially in Europe, as Intel phases out this division.
