Intel, the leading chip-maker, has today confirmed that it is acquiring Mobileye – an Israel-based company that also makes chip, but for vision-based vehicle automation. The acquisition deal is worth $15.3 billion, making it the biggest deal in the world for a company that only focuses on autonomous driving.
Intel has said that it is expecting the transaction to close within the next nine months and to immediately boost its non-GAAP earnings per share as well as its free cash flow. The company is paying $63.54 per share in an all-cash deal. It is said that the deal is made “in an effort to boost the chipmaker’s position in the autonomous car market.”
As part of the agreement, Ziv Aviram and Amnon Sashua will continue to run the company. According to Intel CEO Brian Krzanich, the deal is also all about having control of important troves of data.
You must be wondering why Intel is paying a whooping $15.3 billion for the acquisition. Well, Mobileye accounts for around 70 percent of the global market for advanced driver-assistance and anti-collision systems.
Currently, both companies are already collaborating with German automaker BMW on a project to make around 40 self-driving test vehicles on the road in the second half of this year. The technology is slated to be tested on roads in the US and Europe.
Commenting on this acquisition, Brian Krzanich, CEO of Intel, said,
The acquisition of Mobileye brings together the assets of Intel’s Xeon processors, FPGAs, 3D XPoint memory, and 5G modems with the world leader in automotive computer vision. This acquisition essentially merges the intelligent eyes of the autonomous car with the intelligent brain that actually drives the car.
Intel’s acquisition of Mobileye will mark a huge investment in self-driving cars for the chip company. Intel previously said it will spend $250 million over the next two years toward the development of autonomous vehicles, but a $15 billion deal is far more significant.
Mobileye, based in Jerusalem, was founded in 1999 by Prof. Amnon Shashua and Ziv Aviram, working as CTO and CEO of the company, respectively. The company makes driver assistance systems and is enhancing the technology for self-driving cars. Some traditional car makers are using its vision technology to compete with tech giants such as Google, Apple and Tesla.
The company received an investment of $130 million from Goldman Sachs in the year 2007. Later, in 2014, it got listed on the New York Stock Exchange, and currently has a market value of $10.6 billion. Employing around 600 people, the company had adjusted net income of $173.3 million in 2016.
In the recent years, Intel has lost the smartphone-chip market to the likes of Qualcomm and MediaTek, mainly because of its late entry into the same. Now, the company is looking to edge out others in innovative fields and as a part of that, it has begun co-operating with Mobileye.
Last October, Qualcomm announced a $47 billion deal to acquire NXP — the largest automotive chip supplier, putting pressure on other chipmakers seeking to make inroads into the market for autonomous driving components.
This acquisition will definitely help it against competitors like Nvidia and Qualcomm. Both the companies have been investing in vehicles, and Intel appears to be paying a premium to catch up and push forward with its autonomous vehicle plans and to be a step ahead of others in the “innovative” market.
