Intel Corp agreed to buy Israeli autonomous vehicle technology firm Mobileye for $15.3 billion on Monday in a deal that could thrust the U.S. chipmaker into direct competition with rivals Nvidia Corp and Qualcomm Inc to develop driverless systems for global automakers.<\/p>\n
<\/p>\n
The pricey acquisition of Mobileye could propel the world\u2019s largest computer chipmaker into the front ranks of automotive suppliers at a time when Intel has been reaching for market beyond its core computer semiconductor business.<\/p>\n
It also promises to escalate the arms race among the world\u2019s carmakers and suppliers to acquire autonomous vehicle technology, and could fuel already-overheated valuations of self-driving start-ups.<\/p>\n
The stakes are enormous. Last year, Goldman Sachs projected the market for advanced driver assistance systems and autonomous vehicles would grow from about $3 billion in 2015 to $96 billion in 2025 and $290 billion in 2035.<\/p>\n
Skeptics have questioned whether auto companies and suppliers will be able to deploy fully self-driving cars safely in the next four years, as several have promised. Investment analysts on Monday raised concerns about the potential synergies between Intel and Mobileye, as well as the acquisition\u2019s price.<\/p>\n
Intel has not been a significant player in the sector, although it has invested in at least half a dozen start-up companies developing different components for self-driving systems, from robotics to sensors.<\/p>\n
Mobileye brings a broad portfolio that includes cameras, sensor chips, in-car networking, roadway mapping, machine learning, cloud software and data fusion and management.<\/p>\n
\u201cThis is a tremendous opportunity for them to get into a market that has significant growth opportunities,\u201d said Betsy Van Hees, an analyst at Loop Capital Markets. \u201cMobileye\u2019s technology is very critical… The price seems fair,\u201d she added.<\/p>\n
Still, the industry newsletter Semiconductor Advisors on Monday wrote that Intel\u2019s acquisition of Mobileye indicates a strategic move \u201cvery far outside its core business franchise.\u201d<\/p>\n
The price is about 21 times expected 2017 revenue, making it more than six times more expensive than the semiconductor industry\u2019s three-year deal average, said B. Riley analyst Craig Ellis. He said the \u201cvery expensive transaction\u201d improved Intel\u2019s position in the automated driver assistance market, but left Nvidia the leader on the highest end.<\/p>\n
Intel is paying a premium of 60 times Mobileye\u2019s earnings, about four times the premium that Qualcomm is paying to acquire the Netherlands\u2019 NXP.<\/p>\n
The $63.54-per-share cash deal represents a premium of about 33 percent to Mobileye\u2019s closing price of $47 on Friday, but below its all-time high closing price of $64.14 in August 2015.<\/p>\n
Mobileye\u2019s shares rose 28.2 percent to close at $60.62, while Intel\u2019s shares were down 2.1 percent.<\/p>\n
The market for self-driving technology is becoming crowded, including mapping company Here, as well as technology companies ranging from Alphabet Inc\u2019s Waymo to Chinese Internet giant Baidu Inc.<\/p>\n
Shares of systems integrator Delphi Automotive PLC, which has partnerships with Intel and Mobileye, rose 4.0 percent. Delphi said in a statement that it expected the deal would let it accelerate adoption of new technologies.<\/p>\n
MERGING \u2018EYES\u2019 AND \u2018BRAIN\u2019<\/p>\n
Intel has a mixed record of capitalizing on technology outside computer chips. Last year it spun out its cyber security division, formerly known as McAfee, in a deal valuing it at $4.2 billion including debt, five years after having bought McAfee for $7.7 billion.<\/p>\n
Intel will give Mobileye unusual autonomy, integrating its own automated driving group with Mobileye\u2019s operations under Mobileye Chairman Amnon Shashua, who will lead the unit from Israel.<\/p>\n
Intel Chief Executive Brian Krzanich said the acquisition was akin to merging the \u201ceyes of the autonomous car with the intelligent brain that actually drives the car.\u201d<\/p>\n
Mobileye supplies integrated cameras, chips and software for driver-assist systems – the building blocks for self-driving cars – to more than two dozen vehicle manufacturers.<\/p>\n
In an interview in January, Shashua told Reuters: \u201cIf you want to build a truly autonomous car, this is a task for more than one player… The idea is to have a number of partners to share resources and data.\u201d<\/p>\n
Mobileye was an early supplier of vision systems to Tesla, but the two companies had an acrimonious and public break-up last summer after the driver of a Tesla Model S was killed while operating the vehicle using Tesla\u2019s Autopilot system.<\/p>\n
Mobileye, founded in 1999, accounts for 70 percent of the global market for driver-assistance and anti-collision systems. It employs 660 people and had adjusted net income of $173.3 million last year.<\/p>\n
Shashua and two other senior Mobileye executives stand to do well by the deal: together they own nearly 7 percent of the company. Shmuel Harlap, Israel\u2019s biggest car importer and one of Mobileye\u2019s earliest investors, also holds a 7 percent stake.<\/p>\n
BATTLE FOR SELF-CONTROL<\/p>\n
Mobileye and Intel are already collaborating with German automaker BMW on a project to put a fleet of around 40 self-driving test vehicles on the road in the second half of this year.<\/p>\n
At the same time, Mobileye has teamed up with Intel for its fifth-generation of chips that will be used in fully autonomous vehicles that are scheduled for delivery around 2021. Mobileye also has partnered with Delphi on a self-driving platform that is being shopped to smaller car companies that may not have the resources to develop their own systems.<\/p>\n
Last October, Qualcomm announced a $47 billion deal to acquire NXP, the largest automotive chip supplier, putting pressure on other chipmakers seeking to make inroads in the market, including Intel, Mobileye and Nvidia.<\/p>\n
The Qualcomm-NXP deal, which will create the industry\u2019s largest portfolio of sensors, networking and other elements vital to autonomous driving, is expected to close later in 2017.\u2014Reuters<\/p>\n
Image: Reuters<\/p>\n","protected":false},"excerpt":{"rendered":"
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