Intel buys Mobileye to boost self-driving auto efforts

Intel buys Mobileye to boost self-driving auto efforts

Intel announced it has acquired Mobileye, a major supplier of computer vision and machine-learning systems for the automotive industry, for $15.3 billion.

Mobileye is a company that develops vision-based advanced driver assistance systems and driverless technology.

Intel's deal to purchase Mobileye came with a $15.3 billion price tag, a hefty sum that valued Mobileye at $63.54 per share.

The $63.54-per-share cash deal marks the largest purchase of a company exclusively focused on the self-driving sector and could significantly alter the competitive landscape among key technology and systems suppliers, including chipmakers Nvidia Corp (NVDA.O) and Qualcomm Inc (QCOM.O) and systems integrator Delphi Automotive PLC (DLPH.N). The acquisition will position Intel as a leading technology provider in the autonomous vehicle market.

Shares of Mobileye rocketed more than 30 percent in premarket trading following the announcement.

"Intel's purchase of Mobileye is a fascinating cascading effect: A middle-aged company (Intel is 50 years old) purchasing the talents and capabilities of a teenage company (Mobileye is 18 years old) to help modernized mature companies (100-plus-year-old GM, Daimler, etc.)".

Almost all the major global automakers are involved in testing autonomous or semi-autonomous vehicles, with some expecting full autonomy within a few years.

"Many of you have asked why we think autonomous cars and vehicles are so important to Intel's future".

Intel and Mobileye have been working since about a year ago, as they have worked together in programs related to autonomous driving.

That likely will be an attractive proposition in an overall market that Intel estimates will be worth as much as $70 billion by 2030.

Ziv Aviram told Prime Minister Benjamin Netanyahu, who had called to congratulate him, that Mobileye would establish a world development center in Israel and would take responsibility internationally, on behalf of Intel, for the creation of a driverless auto, a statement from the Prime Minister's Office said.

In a separate letter, Mobileye senior management told employees that once the acquisition is complete, Intel's Automated Driving Group (ADG) will be integrated into Mobileye.

How the partnership between Intel and Mobileye takes shape will be evidenced in the near future with the former already joining hands with BMW's iNext self-driving project, which is expected to launch in 2021.

Intel will spend just over $15bn to buy the Israeli company.

Intel has a history of buying up companies to plug holes in its business: From 1997 to 2002, Intel went on a rampage, buying up around 40 companies both during and after the dot-com bubble.

Morgan Stanley analyst Adam Jonas in NY told clients on Tuesday that the premium paid for Mobileye was justified given its strategic position, its dominant position in the critical data space, and its seat at the table which will accelerate Intel's mobility ambitions. "That said, I don't think Intel can start making a vehicle".



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