Intel's $15 billion purchase of Mobileye shakes up driverless car sector

Mon Mar 13, 2017 5:39pm EDT
 
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By Tova Cohen, Ari Rabinovitch and Paul Lienert

JERUSALEM/DETROIT (Reuters) - Intel Corp (INTC.O: Quote) agreed to buy Israeli autonomous vehicle technology firm Mobileye (MBLY.N: Quote) for $15.3 billion on Monday in a deal that could thrust the U.S. chipmaker into direct competition with rivals Nvidia Corp (NVDA.O: Quote) and Qualcomm Inc (QCOM.O: Quote) to develop driverless systems for global automakers.

The pricey acquisition of Mobileye could propel the world's largest computer chipmaker into the front ranks of automotive suppliers at a time when Intel has been reaching for market beyond its core computer semiconductor business.

It also promises to escalate the arms race among the world's carmakers and suppliers to acquire autonomous vehicle technology, and could fuel already-overheated valuations of self-driving start-ups.

The stakes are enormous. Last year, Goldman Sachs projected the market for advanced driver assistance systems and autonomous vehicles would grow from about $3 billion in 2015 to $96 billion in 2025 and $290 billion in 2035.

Skeptics have questioned whether auto companies and suppliers will be able to deploy fully self-driving cars safely in the next four years, as several have promised. Investment analysts on Monday raised concerns about the potential synergies between Intel and Mobileye, as well as the acquisition's price.

Intel has not been a significant player in the sector, although it has invested in at least half a dozen start-up companies developing different components for self-driving systems, from robotics to sensors.

Mobileye brings a broad portfolio that includes cameras, sensor chips, in-car networking, roadway mapping, machine learning, cloud software and data fusion and management.

"This is a tremendous opportunity for them to get into a market that has significant growth opportunities," said Betsy Van Hees, an analyst at Loop Capital Markets. "Mobileye's technology is very critical... The price seems fair," she added.   Continued...

 
FILE PHOTO - Gameplayers demonstrate vitual reality headsets during the Intel press conference at CES in Las Vegas, Nevada, U.S. on January 4, 2017.  REUTERS/Rick Wilking/File Photo