Intel buys Mobileye for reported $15 billion in massive self-driving car coup

Intel is buying Jerusalem tech giant Mobileye for $15.3 billion, the two companies announced Monday. Israeli daily Haaretz initially broke the story via its finance paper The Marker, but it was confirmed later in the day. Mobileye’s current market value is $10.5 billion. Intel has been working with Mobileye and BMW to get their own self-driving car models on the road, joining a host of manufacturers in a global autonomous vehicle race.”

Mobileye is an attractive target because of what it does now and what it will soon be capable of. Its EyeQ software is already used by most of the world’s carmakers to help their vehicles stay in their lanes and brake in emergencies, precisely what will also be required in autonomous vehicles. This system, which is currently fitted in over 15m vehicles but is set to be used by many millions more, can also collect information from installed cameras to continuously update the incredibly detailed maps that self-driving cars will require.

Mobileye is not the first Israeli car-technology firm to attract a foreign buyer. Waze, a driving-navigation app, was snapped up by Google in 2013 for $1.1bn. Last year Volkswagen paid $300m for a share of Gett, a ride-hailing startup. But this is by far the biggest deal.

Though not a vast sum by technology-industry standards, some analysts reckon that Intel has overpaid. The firm is under pressure. Its main business, of providing chips for PCs, is past its peak. Its record with deals to make up for that is unenviable. Intel has proved willing to write enormous cheques to chase growth. Last year it sold McAfee, a cyber-security business, for some $4.2bn, around half what it had paid for it six years earlier.

Last year Qualcomm, another big chipmaker, announced a deal worth $47bn for NXP Semiconductors, a firm that makes chips for cars. Nvidia, better known for chips used by the gaming industry, is developing them for cars, too.

"This acquisition is a great step forward for our shareholders, the automotive industry and consumers,” said Brian Krzanich, Intel CEO, in a press release. “Intel provides critical foundational technologies for autonomous driving including plotting the car’s path and making real-time driving decisions. Mobileye brings the industry’s best automotive-grade computer vision and strong momentum with automakers and suppliers. Together, we can accelerate the future of autonomous driving with improved performance in a cloud-to-car solution at a lower cost for automakers.”

Mobileye and Intel’s Automated Driving Group will now merge and headquarter their operations in Israel under the auspices of Mobileye Co-Founder, Chairman and CTO Professor Amnon Shashua. The two companies did not specify where the joint operation will be located, but given that both companies maintain national headquarters in Jerusalem it will likely be in the holy city.

The Mobileye and Delphi relationship started in 2002 with the implementation of what was one of the most advanced active safety systems of the time.

BMW had announced a tripartite deal with Mobileye and Intel to develop a fully autonomous car by 2021, but expedited that timeline in an announcement last December that foresaw BMW self-driving cars being tested in Munich this year. Intel clarified at CES that test would include 40 vehicles.

Such a massive investment could only be justified if Intel sees a way to dominate a large chunk of the autonomous vehicle market.Setting price aside, installing Mobileye’s camera and mapping expertise with Intel’s chip and computing skills makes sense as the battle to establish predominance in the field of autonomous vehicles heats up. 

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Source:Geektime|The Economist