Intel Buys Mobileye To Steer Into The Self Driving Car Market
To catch up on companies such as Google, Uber or Tesla — which already have built and tested vehicles on city street — Intel decided to acquire its Israeli partner Mobileye. The two companies have started their collaboration within the frame of the consortium formed by BMW AG, Intel Corp., Mobileye, Magna International Inc, Continental AG and Delphi Automotives, in order to develop fully automated driving systems by 2021. The consortium have tried to convince car manufacturers to participate to accelerate the development of self-driving technologies and share costs. Fiat Chrysler announced in August that it will join the coalition.
Taking their established relations and Mobileye’s advanced technology expertise, Intel gains instant credibility in the driverless car race.
The world’s second largest and the second highest valued chip maker based on revenue after being overtaken by Samsung, Intel, has been founded in 1968. Equipping hundreds of millions of desktop computers with their internal architecture and leading which microchips were employed in the industry, the company has dominated the personal computer market over more than thirty years. Although, the company struggles to find its path as consumers habits have increasingly shifted on the mobile world. Last year, for example, the company announced it is dismissing 12,000 people, 11% of their global workforce, while demand for computers continues to decline.
Facing with an existential risk to its former computer activities, Intel – by the side of competitors like Qualcomm – has concentrated on stand-alone cars as a potentially fruitful new market. Almost all of these unmanned vehicles will require extensive computing power, including the latest chips able of digging massive amounts of data in seconds to keep cars safe and on the road. Even in the microchips, Intel moved to catch up with its rival Nvidia, whose ultra-fast processors attracted car makers because of their ability to merge camera images and radar sensors to identify obstructions.
Mobileye, an Israeli company founded in Jerusalem in 1999 has already closed deals with many constructors, such as Audi, for its detection and camera technology using machine learning and complex neuroscience to help drivers avoid dangers on the road.
The two companies are willing to demonstrate the strength of their combined talents in the next several months by building a fleet of 100 self driving test vehicles.
With the $15.3 billion deal closed, Intel benefits instant credibility since Mobileye already equips major automakers with its technology, and is a leader is digital mapping and sensors area. Through the acquisition of Mobileye, whose technologies permit autonomous cars to navigate safely in city streets, Intel’s goal is pretty limpid. The chip giant is betting that it is possible to reshape the competitive landscape. Intel wants to widen its product-range from just chips to a significantly wider collection of products that driverless cars will need. As a consequence, Intel hopes to appeal to car constructors willing to offer autonomous driving but do not have the required in-house expertise and do not want to depend on the likes of Google.
Intel will Mobileye’s shares at $63.54 a share, a 34% premium to Mobileye’s then closing price. The acquisition has been realised 4 months earlier than announced. Already installed in Jaffa, near Tel Aviv, the American firm will move its autonomous vehicle unit in the holy city according to a statement distributed to its employees.
The stability of the sale of processors ($ 8.9 billion in the third quarter of 2017) and the 7% growth of the Data Center subsidiary ($ 4.9 billion) account for a large part of the revenue generated by the group. Intel posted a $ 16.1 billion gain over the period, an increase of 2% compared to Q3 2016. Net profit was $ 4.5 billion. Encouraged by these good results, Intel is revising its expectations for the whole year. The company estimates that it will generate a turnover of nearly 62 billion dollars in 2017.
Large investments and acquisitions are expected in the autonomous vehicle sector. Ford Motor announced in February a $ 1 billion investment in Argo, a start-up in the field of artificial intelligence specializing in driverless cars. Google’s autonomous driving division, now called Waymo, has built a sizable test fleet using minivans made by Fiat Chrysler Automobiles, and it is operating them in several cities. Uber is running tests in Pittsburgh, while General Motors, Ford Motor and other traditional automakers are creating their own test fleets.
Last year General Motors acquired a software company, Cruise Automation. Cruise recently announced that it was developing a ride hailing application for driverless cars and that its employees were testing it on the streets of San Francisco.