Intel has begun a sweeping corporate restructuring that includes shutting down its small automotive division and initiating large-scale layoffs, as it refocuses on core businesses such as client computing and data center products.

On June 24, Intel informed employees that it would wind down its automotive unit and lay off the majority of staff in that department. While the company claims its chips are used in 50 million vehicles, automotive has remained a non-core business and lacked sufficient momentum against competitors like Qualcomm and NVIDIA.

Intel stated that the decision aligns with its strategic goal to streamline operations and concentrate resources where it holds the strongest market position. The company will honor existing commitments to automotive customers during the transition.

The closure comes alongside other cost-cutting measures. New CEO Lip-Bu Tan, who took office in April, previously warned of upcoming layoffs. Intel's manufacturing division is expected to lose 20% of its workforce beginning in July, and the company plans to outsource many marketing functions to Accenture. Most affected marketing employees will be notified by July 11.

Reports suggest that Intel's July layoffs will begin at its Santa Clara headquarters, impacting over 100 employees and triggering California's Worker Adjustment and Retraining Notification (WARN) requirements. Cuts span a wide range of roles, including AI engineers, cloud specialists, and physical design managers.

In total, the restructuring could affect up to 20,000 employees—about 20% of Intel's workforce—building on a prior 15% reduction in August 2024. Intel aims to slash $1.5 billion in operating expenses over two years, targeting $17 billion in 2025 and $16 billion in 2026.

While Intel did not disclose revenue or headcount figures for the shuttered automotive unit, it clarified that the move will not impact Mobileye, its majority-owned autonomous driving subsidiary.

Intel's earlier automotive efforts included the acquisition of Silicon Mobility, a French startup specializing in EV powertrain SoCs, and the launch of AI-enabled software-defined vehicle platforms. The company's automotive SoCs were adopted by Chinese EV makers such as Zeekr, but failed to gain broad traction in a competitive market dominated by more established automotive chipmakers.

The restructuring signals Intel's intent to refocus on profitability and reassert its leadership in the AI and data center markets, where it faces growing pressure from rivals.