Sensor maker gets a massive payday as Chipzilla gobbles up more non-x86 tech
The company sells an in-car camera system that is rapidly becoming an industry standard for self-driving technology – a market that Intel claims will expand to $70bn by 2030.
If that’s true Intel’s purchase may pay off, but the stock market is less sure, with Intel’s shares down more than two per cent on the news.
Mobileye has won favor in the car industry for taking a solid no-nonsense approach to the very complex task of automating driving. Most recently it ended up in a spat with electric car poster child Tesla when it killed its contract with the company because Tesla was “pushing the envelope in terms of safety” following several high-profile crashes of Tesla cars.
Mobileye’s chairman and CTO Amnon Shashua warned that an autopilot system “is not designed to cover all possible crash situations in a safe manner … It is a driver assistance system and not a driverless system.”
Tesla claims different, saying that it ended the arrangement after Mobileye demanded it stop researching its own camera-and-sensor technology.
Intel’s decision to purchase the company follows a lengthy partnership and a big deal cooked up between the two in January to effectively integrate their technology into one system: Mobileye running the sensor processing software, learning algorithms and localization mapping, and Intel doing driving policy and driving behavior software.
Intel has been making a big push into the autonomous car market recently and clearly it decided that owning the entire system for self-driving cars was in its long-term interests.
In a note to employees, Intel CEO Brian Krzanich said that the deal “merges the intelligent eyes of the autonomous car with the intelligent brain that actually drives the car.”
And he predicted, in his typically nerdy way, that in future when people talk about “what’s under the hood,” they’ll be talking about computing rather than size of engine. Nice try, Brian.
Although Intel is no stranger to multi-billion-dollar acquisitions, the $15bn it will pay for Mobileye stands out. It values Mobileye shares as worth $63.54 – 34 per cent above Friday’s closing price. After the deal was announced, those shares jumped 29 per cent to $61.17.
It is a huge deal – and potential gamble – for Intel. And it is by far the largest deal so far in the autonomous car market. ®