A person familiar with the matter told Reuters the IPO could value the Israel-based unit Mobileye at more than $50 billion.
Intel has struggled to keep up with rivals and has been under pressure by activist investors to shake things up.
Intel CEO Pat Gelsinger confirmed the plan first reported by the Wall Street Journal on Monday.
In a published statement, Gelsinger said he and Mobileye Chief Executive Amnon Shashua "determined that an IPO provides the best opportunity to build on Mobileye's track record for innovation and unlock value for shareholders."
Intel, however, plans to retain its majority ownership in Mobileye, the company said, and will continue to provide technical resources to the unit.
The chip-maker bought Mobileye for $15.3 billion in 2017, putting it into direct competition with rivals Nvidia and
Qualcomm to develop driverless systems for global automakers eager to add driverless functionality to their automobiles.
But even though it is owned by Intel, Mobileye has never used Intel's factories to make its chips, so far, relying on
Taiwan Semiconductor.
A global shortage of chips has hampered auto production this year.
Shares of Intel rose solidly in early Tuesday trading.
