Intel’s big $15 billion move into self-driving cars – Christian Science Monitor
March 14, 2017
—Intel Corporation, a major US manufacturer of semiconductor chips, looks to seize a share of the self-driving car industry with their recent purchase of Mobileye, an Israeli maker of collision avoidance systems for cars.
Entering the stage as one of the largest acquisitions in one of the most rapidly developing sectors of the tech industry, Intel joins other Silicon Valley behemoths such as Google, Uber, and Tesla, which have led the charge in developing autonomous vehicles.
Previously, both Google and Uber had partnered with Fiat Chrysler and Volvo respectively under the expressed intention of utilizing such a collaboration to more rapidly produce safe and effective self-driving cars.
So far Google’s self-driving prototypes have covered more than 1.5 million miles nationwide while Uber has been testing a fleet of autonomous Volvos on the streets of several cities, including Pittsburgh, since October.
Meanwhile, General Motors announced early in 2016 they were making a $500-million investment in self-driving vehicles via a partnership with rideshare company Lyft. And Ford announced last September that they would have an affordable, driverless vehicle road-ready by 2025.
Intel now aims to step into the forefront of the increasingly competitive field through their high-valued purchase of Mobileye – already a major manufacturer of the sensors and collision avoidance systems used by Tesla, BMW, General Motors, and Volvo.
The deal which comes in at just over $15 billion, or $63.54 per share, stands as one of the largest investments yet made by the chipmaker, however Intel sees this as a move that will leapfrog them into a top spot in the burgeoning industry.
Intel expects the acquisition to “accelerate innovation for the automotive industry and position Intel as a leading technology provider in the fast-growing market for highly and fully autonomous vehicles,” according to a press release.
The release continued on to say that, “this acquisition will combine the best-in-class technologies from both companies, spanning connectivity, computer vision, data center, sensor fusion, high-performance computing, localization and mapping, machine learning, and artificial intelligence. Together with partners and customers, Intel and Mobileye expect to deliver driving solutions that will transform the automotive industry.”
In January, BMW, Intel, and Mobileye announced a combined effort to put 40 autonomous BMW vehicles on the road in the United States and Europe as a test trial. BMW says it plans to sell fully autonomous cars by 2021.
Intel isn’t alone in seeing the potential of this purchase. According to a research note written by Akhilesh Kona, an analyst with IHS Markit, Intel will “be a one-stop-shop, offering hardware and software solutions for infotainment and automated driving applications,” according to CBS News. Acquiring Mobileye “represents a major change for the automotive supply chain and will put Intel in a prevailing position for the autonomous car market.”
But other analysts are more circumspect in their expectations, noting that Intel has lately established a history of spending a considerable amount of money without seeing much of a return on investment.
“We can recall few cases where so much has been spent (habitually) to buy so little,” said Bernstein analyst Stacy Rasgon, according to Reuters, noting that over the past few years Intel has spent more than $30 billion while only adding $2 billion to $3 billion in revenue.
But CFRA Research analyst Angelo Zino tells Reuters that “investors should be pleased with the perspective that they (Intel) are getting in on this trend fairly early,” referring to the autonomous vehicle market, after mentioning that Intel missed the explosive growth of the mobile industry in the past decade.
With the Mobileye acquisition, Intel is “paying a huge premium in order to catch up, to get into the front of the line, rather than attempt to build from scratch,” Mike Ramsey, an analyst with technology researcher Gartner told Bloomberg News.
Intel chief executive officer Brian Krzanich explained the decision to Bloomberg by saying, “we are looking beyond just the revenue it’s going to grow into. If you look at where autonomous vehicles are going, you have to make a deal in order to be there in 2021 when models hit the road.”