Intel Scoops Up Autonomous Tech Company Mobileye for a Whopping $15.3 Billion
After collaborating with Mobileye to help BMW put a fleet of roughly 40 self-driving test units on the road before the end of this year, Intel has decided that it would rather just buy the cow. The acquisition of autonomous driving technology leader Mobileye is going to cost the computing giant a colossal $15.3 billion.
More specifically, an Intel subsidiary will offer $63.54 per share for all issued and outstanding shares, which carries an equity value of $15.3 billion and an enterprise value of $14.7 billion. No matter how you slice it, it’s the world’s largest purchase of a company solely focused on the autonomous driving sector. The motivation is clear. Mobileye accounts for around 70 percent of the global market for modern driving aides, anti-collision systems, and advanced autonomous safety.
“This acquisition is a great step forward for our shareholders, the automotive industry and consumers,” said Brian Krzanich, Intel CEO, in a statement. “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.”
For the last decade, Mobileye has outsourced chips from STMicroelectronics, which the Israeli company then sells to many of the world’s largest automakers for use in driver-assistance and safety systems. It’s a fair assumption that it will exclusively use Intel-sourced silicon in the near future. The company has already developed some for the BMW project, using fifth-generation Intel chips. The aim is to use those in fully autonomous vehicles in 2021, after the test fleet has a few years of testing under its belt.
Intel said it expects to close on the deal within the next nine months.
A staunch consumer advocate tracking industry trends and regulation. Before joining TTAC, Matt spent a decade working for marketing and research firms based in NYC. Clients included several of the world’s largest automakers, global tire brands, and aftermarket part suppliers. Dissatisfied with the corporate world and resentful of having to wear suits everyday, he pivoted to writing about cars. Since then, that man has become an ardent supporter of the right-to-repair movement, been interviewed on the auto industry by national radio broadcasts, driven more rental cars than anyone ever should, participated in amateur rallying events, and received the requisite minimum training as sanctioned by the SCCA. Handy with a wrench, Matt grew up surrounded by Detroit auto workers and managed to get a pizza delivery job before he was legally eligible. He later found himself driving box trucks through Manhattan, guaranteeing future sympathy for actual truckers. He continues to conduct research pertaining to the automotive sector as an independent contractor and has since moved back to his native Michigan, closer to where the cars are born. A contrarian, Matt claims to prefer understeer — stating that front and all-wheel drive vehicles cater best to his driving style.
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In other news, the price of Intel's stock is off today . . . From Intel's perspective, there's a great need to find or develop a market for its core expertise (chip design and fabrication) to replace the fairly static personal computer market. So, this might be one of them. As I understand it, the acquired company is at the heart of a lot of less-than-self-driving technologies that already are commercially available, such as adaptive cruise control, lane departure warning and so on. So, it's not in the vaporware business. Some people like that stuff. My truck has everything but adaptive cruise, and that's the one "advanced technology" I wished the truck had (although I have no experience with it). The "you're going to crash into the vehicle in front of you" alarm (which is not connected to the brakes) falses a sufficient number of times that I would hate to imagine it being connected to the vehicle's braking system. And by "falses," I mean that it goes off without any visible obstacle in front, not that it goes off when I have plenty of time to stop. That part you can adjust.
I can remember when Mobileye came to the SAE World Congress to show off their camera and software based driver assist systems maybe 10 years ago. They were having a hard time getting past the auto industry's then reliance on IR, radar and other sensor based systems. As a matter of fact, besides going after OEM sales, part of their business plan was selling aftermarket units to parents of teenagers. However, they proved that their software worked and are pretty well established as an OEM supplier these days. When they went public in 2014, their IPO was the largest by any Israeli company to date. Before the Intel announcement, Mobileye stock was trading at ~$42/share, giving the company a market cap of about $9 billion. Since the Intel announcement, the stock is up about 30%, so investors seem to think that Intel isn't making a foolish decision. Mobileye is profitable, has an existing revenue stream, and is well situated to take advantage of the growth in autonomous vehicles.