Intel quietly "retreats" from the automotive sector

Author | Chai Xuchen

Editor | Zhou Zhiyu

Three months ago at the Shanghai Auto Show, chip giant Intel, which had just launched its SoC products and announced a series of strategic partnerships, has now unexpectedly decided to "abandon" its automotive business.

Recent news indicates that Intel has announced internally that it will shut down its automotive business and lay off most of the employees in that department to accelerate cost reductions. In response, Intel stated to the outside world that the company is refocusing its strategic priorities, "As part of this plan, we have decided to gradually shrink the automotive business under the Client Computing Group while ensuring a smooth transition for our customers."

Intel's expression is quite subtle, but the undeniable fact is that this chip giant is about to leave the automotive industry, and all of this has long been foreshadowed.

Three months ago, Intel's new leader, Chen Liwu, made his debut as CEO. This Chinese "firefighter" is tasked with making Intel "great again" after being mired in difficulties, and his first move was to focus. In April, Chen Liwu stated internally that the company would undergo a large-scale layoff in the coming months to address declining sales and a bleak revenue outlook.

Financial reports show that last year, Intel's annual revenue fell by 2% year-on-year, gross margin dropped by 7.3 percentage points, and net profit attributable to shareholders turned from a profit of $20.899 billion in 2020 to a loss of $18.756 billion. Apart from core products, revenues from other departments of Intel have shown a significant downward trend.

During this year's Shanghai Auto Show, Jack Weast, Vice President and General Manager of Intel's Automotive Division, candidly stated, "Currently, Intel's automotive revenue has not yet been presented as a separate percentage of Intel's overall revenue."

Intel, which is in urgent need of solutions, clearly has no time to pay attention to the automotive business that has not yet brought returns.

Industry analysts believe that Intel's closure of its automotive business reflects the reality of its defeat in the competition in the fields of autonomous driving and in-vehicle chips. In recent years, Intel's autonomous driving subsidiary Mobileye has faced fierce competition from rivals such as NVIDIA and Qualcomm, resulting in a continuous decline in market share.

According to data from Zosi Automotive Research, the top three manufacturers of L2+ and above intelligent driving SoCs in January and February of this year are NVIDIA, Tesla, and Huawei HiSilicon, with market shares of 51.4%, 18.8%, and 16%, respectively, while Mobileye's market share is only a mere 2.9%.

Data from the Gaogong Intelligent Automotive Research Institute regarding the front-mounted cockpit chip sector shows that Intel only captured 2.96% of the market share last year, far below Qualcomm, NXP, and Renesas.

Clearly, Intel has not received any olive branches from automakers.

According to incomplete statistics, the only domestic brands currently cooperating with Intel (Mobileye) are Geely and FAW Group. In contrast, the demand for high-end intelligent driving chips from mainstream automakers has already shifted to brands like NVIDIA, Qualcomm, and Horizon In addition, with the strong rise of Aito, IM Motors, and other "model rooms," Huawei, as an automotive supplier, has begun to widely enter joint ventures and independent brand products, becoming one of their main selling points.

Currently, the competition landscape in the automotive market has entered a heated stage, and Intel, which does not hold a dominant market share, faces the danger of being marginalized.

Intel is not without a sense of crisis. At this year's Shanghai Auto Show, Intel brought three major product lines: an expandable high-performance software-defined vehicle (SDV) central computing platform, electric vehicle powertrain solutions, and domain controllers. Meanwhile, to keep up with the iteration of domestic automotive intelligence, Intel announced partnerships with companies such as Black Sesame and Mianbi Intelligent, preparing to counterattack.

However, shortly after taking office, Chen Liwu has determined to promote comprehensive reforms at Intel, with divesting non-core businesses becoming the top priority, inevitably affecting the automotive sector.

Looking back, a few years ago, due to the decline in global computer shipments and the increasing demand for chips in the automotive market, Intel, like major tech companies such as Qualcomm, Xiaomi, and Huawei, sought to break into the automotive sector.

In 2021, then-CEO of Intel, Kissinger, predicted that by 2030, chips would account for more than 20% of the BOM cost of high-end vehicles, a fivefold increase from 4% in 2019, while the demand for chips across various industries continued to grow. Kissinger believed that by 2030, the overall market size for automotive chips would more than double, reaching $115 billion, accounting for about 11% of the entire chip market.

At that time, Intel viewed the automotive sector as a future contributor to the company's revenue growth.

To this end, Intel made significant investments, acquiring Mobileye in 2017, and subsequently entering the first tier of automotive parts suppliers. Prior to this, Intel had also acquired computer vision startups Movidius, deep learning company Nervana Systems, and computer vision algorithm company Itseez.

Now it seems that the large-scale "buying spree" did not allow Intel's first-mover advantage to last until the end of the race. It is worth mentioning that ZEEKR, which once aimed to deeply bind with Mobileye, soon replaced it with NVIDIA's dual Orin chip solution on the ZEEKR 001 model.

The outcome of a decade-long layout in the automotive industry ending up like this is indeed lamentable.

However, Intel's departure from the automotive business does not mean that automakers no longer need its chips. Currently, several technology companies in the automotive field that Intel has invested in remain active in the automotive industry, while also retaining control over Mobileye.

As for Intel itself, under the command of the new captain, it will continue to focus on its foundry business, preparing to surpass Samsung and become the world's second-largest chip foundry by 2030