US microchip maker Intel is about to be the new company behind the wheel at the driverless technology firm Mobileye.
Intel has agreed to buy the Israeli company for $15.3 (14.3 billion euros) which could give it a dominant role in the autonomous-driving sector.
It is the biggest technology takeover in Israel’s history and the largest purchase of a company solely focused on self-driving. The price represents a premium of around 33 percent to the Friday closing price of Mobileye’s shares.
Intel is known for hardware chips and Mobileye for collision detection software.
Speaking about the deal to unite Intel’s processors with Mobileye’s computer vision, Intel Chief Executive Brian Krzanich likened it to merging the “eyes of the autonomous car with the intelligent brain that actually drives the car”.
He called it “a great step forward for our shareholders, the automotive industry and consumers,” adding: “Together, we can accelerate the future of autonomous driving.”
KMH (@Korey_Michael) March 13, 2017
Ziv Aviram, Mobileye’s chief executive, said: “When you look at the combined assets of both companies, you see that they are really complimentary to each other.”
“It’s an area where the company (Intel) has had very little presence – the automotive market, and so 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 who has a “buy” rating on Intel shares.
“Mobileye’s technology is very critical … The price seems fair,” she added.
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.
Mobileye, founded in 1999, accounts for 70 percent of the global market for driver-assistance and anti-collision systems.
Not a science-fiction dream
Carmakers and their suppliers have been expanding alliances in the race to develop self-driving cars, a sector that once seemed a science-fiction dream but is drawing closer to reality month after month.
Mobileye and Intel are already working together with German carmaker BMW on putting a fleet of around 40 self-driving test vehicles on the road later this year.
The merger promises to create the most complete portfolio of technologies needed for driverless vehicles, including cameras, sensor chips, in-car networking, roadway mapping, machine learning and cloud software, as well as the data-centres needed to manage all the data involved.
Last October, Qualcomm announced a $47 billion deal to acquire the Netherlands’ NXP, the largest automotive chip supplier, putting pressure on other chipmakers seeking to make inroads into the market for autonomous driving components, including Intel, Mobileye and rival Nvidia.
The Qualcomm-NXP deal, which will create the industry’s largest portfolio of sensors, networking and other elements vital to autonomous driving, is expected to close later in 2017, subject to regulatory and shareholder approvals.
Mobileye's Acquisition And What It Means To Nvidia https://t.co/S8q1Pm9S8p— BestUSTraders (@bestUStraders) March 13, 2017