By Joseph Horch
Technology & Innovation Writer
Last year Goldman Sachs projected the market for advanced driver assistance systems and autonomous vehicles to grow from about $3 billion in 2015 to $290 billion by 2035.
It is perhaps easy to see why then Intel Corp (INTC.O) agreed to buy Israeli autonomous vehicle technology firm Moblieye (MBLY.N) for $15.3 billion on Monday, March 13th.
Mobileye provides driver-assisted technologies for 27 automakers, including Ford, BMW, and Nissan, who are all developing their own driverless cars.
Intel is the world’s largest computer chipmaker and many analysts see this acquisition has a strategic move to propel the chipmaker into the front ranks of automotive suppliers.
While Intel is the world’s largest chipmaker many of these chips are not found in modern smart technologies such as phones or tablets. Skeptics have raised questions over whether auto firms will be able to deploy fully self-driving car safely by 2021, as several, including Ford have promised. Investment analysts are concerned about potential synergies between Intel and Mobileye, as well as the acquisition price.
Intel recently has not been a major player in the sector, however, the company had invested in half a dozen start-ups developing different components for self-driving cars. Mobileye brings a portfolio that includes cameras, sensors, in-car networking, roadway mapping, machine learning, cloud software, and data fusion and management. Intel is paying a premium of 60 times Mobile’s earnings. That’s nearly four times the premium that Qualcomm is paying to acquire the Netherlands NXP, the largest automotive chip supplier.
Betsy Van Hees, an analyst at Loop Capital Markets believes that, ”This is a tremendous opportunity for them to get into a market that has significant growth opportunities.
Mobileye technology is very critical… The price seems fair”. The self-driving technology market is becoming crowded, ranging from Uber to internet companies such as Alphabet Inc’s Waymo.
It is noteworthy that Mobileye no longer does business with Tesla after CEO Amnon Shashua, in an interview with Reuters, accused Tesla of “pushing the envelope in terms of safety” with its Autopilot system, saying it was not “designed to cover all possible crash situations in a safe manner.”
Mobileye, founded in 1999, accounts for 70 percent of the global market for driver-assistance and anti-collision systems. The company had a net income of $173.3 million last year. Intel and Mobileye have already begun collaborating with German automaker BMW on a project that aims to develop a fleet of 40 self-driving vehicles on the road in the second half of this year. Mobileye has also partnered with Delphi on a self-driving platform that is being shipped to smaller car companies that lack the resources to develop their own systems.
This partnership is in-line with Shashua’s philosophy that, “If you want to build a truly autonomous car, this is a task for more than one player… The idea is to have a number of partners to share resources and data.”
A version of this article appeared in the Tuesday, March 21st, 2017 print edition.
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