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Intel invests $15 billion on Mobileye to manufacture driverless car sector


Intel Corp (INTC.O) decided to buy Israeli autonomous vehicle technology firm Mobileye (MBLY.N) at a cost of $15.3 billion on Monday in a deal. It might push the U.S chipmaker into the direct competition against Nvidia Corp (NVDA.O) and Qualcomm Inc (QCOM.O) for developing driverless systems for automakers worldwide.

Mobileye can thrust the world's largest computer chipmaker into the top spot of automotive suppliers when Intel has been moving for the market beyond from its core computer to semiconductor business.

It guarantees to heighten the arms race among the world's carmakers and suppliers to obtain self-sufficient vehicle technology, and it could fuel already-overheated valuations of self-driving start-ups.

The stakes are higher. In the previous year, Goldman Sachs assumed that autonomous vehicles market would expand from about $3 million to $96 million in 2025 and $290 million in 2035.

However, people have doubted whether auto companies and suppliers would be able to make self-driving cars in the next four years, as they promised. Investment analysts shared their concerns about the potential synergies between Intel and Mobileye along with the cost of acquisition.

Intel has not been a potent candidate in this market up until now, but they have invested in minimum half a dozen start-up companies for developing separate parts of self-driving cars systems, from robotics and sensors.

Mobileye comes with an immense portfolio which contains cameras, sensor chips, in-car networking, roadway mapping, machine learning, cloud software and data fusion and management.

Intel is paying 60 times, and it's about the four times to the premium that Qualcomm is paying to acquire the Netherlands' NXP. Mobileye's shares grow 28.2 percent to go nearby $60.62, while Intel's shares dropped to 2.1 percent.

The self-driving market is getting more and more crowded, alongside mapping company. On the other hand, technology companies are shifting from Alphabet Inc's Waymo (GOOGL.O) to Chinese Internet giant Baidu Inc (BIDU.O). Delphi Automotive PLC, which acquired partnerships with Intel and Mobileye, increased 4 percent.

Blending EYES AND BRAIN

Intel had a mixed performance on technology outside of computer chips on the market. The company took a decsion about its cyber security division, known as McAfee at a cost of $4.2 billion along with debt after five years while it purchased for $7.7 billion.

Intel will provide Mobileye unusual autonomy with its own automated driving group and Mobileye's operations under Mobileye Chairman Amnon Shashua, who will manage the unit from Israel.

Intel Chief Executive Brian Krzanich said the acquisition was akin to merging the "eyes of the autonomous car with the intelligent brain that actually drives the car."

Mobileye delivers inbuilt cameras, chips and software for driver-assist systems. These are building blocks for self-driving cars for more than two dozen vehicle manufacturers.

It was an initial supplier of Vision System to Tesla, but the two companies had a situation, which resulted to dispute in the last summer after a driver of Tesla Model S died while managing the vehicle via Tesla's Autopilot system.

Mobileye discovered in 1999 that It hires 660 people and total adjusted net income $173.3 million last year.

Shashua and two other senior Mobileye executives acquire close to seven percent of the company. Shmuel Harlap, Israel's biggest car importer and one of Mobileye's earliest investors, also acquires a seven percent.

SELF-CONTROL MODE

Mobileye and Intel are doing a collaboration with German automaker BMW on a project to put a line of 40 self-driving test vehicles on the road till the second half of this year.

Mobileye has joined with Intel for its fifth-generation chips to use in fully autonomous vehicles which are going to hit the market in 2021 most likely.

Also, they made a partnership with Delphi on a self-driving platform which shipped smaller car companies to provide resources for developing their own systems.

In the last October, Qualcomm declared a $47 billion deal to obtain NXP, which is the largest automotive chip supplier to put pressure on other chipmakers in the market that includes Intel, Mobileye and Nvidia. The deal will result to make the industry’s largest sensors portfolio, networking and other crucial components for autonomous driving.

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