Intel to Shut Down Automotive Business, Leading to Major Layoffs

Intel has revealed plans to dismantle its automotive division, which will result in layoffs for a significant number of employees in that sector. This comes on the heels of a considerable reduction in factory staff announced earlier, yet the company still faces challenges ahead.

A report noted that Intel informed its staff on Tuesday morning about the decision. The message conveyed that “Intel is planning to eliminate its Automotive Architecture Business.” Although the company committed to fulfilling existing customer obligations, it mentioned that the layoffs would impact “most” employees in the automotive group.

In a statement shared with the report, Intel said, “As previously mentioned, we are redirecting our focus towards core clients and data center operations to improve our offerings and meet customer demands. Consequently, we have chosen to eliminate the automotive segment within our client computing division.”

While automotive tech isn’t a primary focus for Intel, the company claims its processors are featured in over 50 million vehicles. They assert that their chips will assist in enabling electric vehicles, supplying crucial information to drivers, and optimizing vehicle performance.

Intel has a significant stake in Mobileye, a firm that develops self-driving car technologies. Nonetheless, the closure of Intel’s automotive division doesn’t appear to directly impact Mobileye’s operations.

This announcement follows a caution from the new CEO, Lip-Bu Tan, who had alerted employees in April about anticipated layoffs due to declining sales and a bleak revenue forecast. Though Tan has yet to share comprehensive strategies for turning Intel around, he appears to advocate for a leaner, more innovative approach.

Reports from earlier this month indicated that Intel is exploring substantial cuts, potentially laying off between 15% and 20% of its factory workforce. Naga Chandrasekaran, the vice president of Intel Manufacturing, communicated this to employees recently.

These downsizing efforts are poised to significantly impact Intel’s plants globally, particularly in Oregon, where they employ around 20,000 people—more than any other company in the state.

In addition to these cuts, Intel alerted marketing employees that marketing duties would be outsourced to a consulting firm, leading to further layoffs next month. The company seems to believe that AI-driven contractors will better enhance their marketing efforts.

Although these cuts are expected to streamline Intel’s expenditures and restructure operations, the company has not clarified how it plans to maintain competitiveness against rivals like AMD and ARM Holdings, who have gained market share in the PC and data center sectors amid these cost-saving measures.