1What Intel’s $15.3 Billion Mobileye Buyout Means for Self-Driving Cars
Intel is making a major acquisition in the field of self-driving cars with its March 13 agreement to buy Mobileye, an Israeli company that develops computer vision and machine-learning systems. When the $15.3 billion, all-cash deal closes later this year, Mobileye will become an Intel subsidiary in a self-driving technology market that the chipmaker believes could grow to $70 billion by 2030. The deal was generally well-received among analysts, who said the merger should put Intel ahead of the pack in the race to develop the critical components for safe and reliable self-driving cars. Some, however, said that Mobileye has fundamental problems that Intel will have to resolve to make its investment pay off long term. However, both Intel and Mobileye hailed the deal, saying they can work collaboratively toward improving self-driving car technology well into the future.
2What Intel Is Buying
According to the companies, Intel will acquire Mobileye for $15.3 billion in cash it already has on its balance sheet. The deal has been approved by the boards at both companies. Upon completion, Mobileye will merge with Intel’s Automated Driving Group and be led by Prof. Amnon Shashua, Mobileye’s co-founder and chairman.
3Why Intel Made the Acquisition
4Why Mobileye Signed the Deal
5Intel Sees a Huge Market Opportunity
6Diversification to Give Intel New Look
Several analysts wrote in research notes to investors March 13 that Intel’s acquisition signals a change in the company’s makeup. While Intel is still heavily involved in building processors, it’s also trying to diversify its business. The Mobileye underscores the diversity in the company’s business model.
7Mobileye Focusing on Next-Generation Technology
Mobileye is focused on car technology and next-generation technologies that could complement that. For instance, it has a technology called Road Experience Management that features sharable, high-definition maps for car fleets. It also is working on cloud-based tools for car localization and navigation technology.
8A Sign of Things to Come?
In an interview with The New York Times March 13, Gartner analyst Martin Birkner said the Intel acquisition could kick off an arms race in the self-driving car market as other prominent companies look to make strategic acquisitions in this field. While Birkner didn’t point to any specific deals, he believes consolidation will happen rather quickly.
9Some Negative Implications
Not everyone is so sure that the deal makes sense. In fact, Global Equities Research analyst Trip Chowdhry told investors in a note March 13 that Mobileye is a potential problem for Intel because of massive research and development costs and so far no return on Mobileye’s investments. He believes “Intel has now inherited Mobileye’s problems,” but won’t be able to fix those problems. Analyst group Semiconductor Advisors noted the acquisition might prove to be “a small incremental net negative” for Intel’s revenue and profit figures.
10Intel Won’t Close the Deal for at Least Nine Months
11How the Deal Affects the Self-Driving Car Market
Looking ahead, the market may be affected in dramatic ways. Intel now may be slightly ahead in self-driving car technology, putting its chief rivals Nvidia and Qualcomm on notice. Several analysts believe Nvidia and Qualcomm will respond by boosting their investments in self-driving cars.