Intel Corporation has agreed to buy Mobileye, a global leader in the development of vision technology for Advanced Driver Assistance Systems (ADAS) and autonomous driving, in a deal worth $15.3 billion. The $63.54-per-share cash deal represents a premium of about 33 percent to Mobileye's closing price of $47 on Friday.
Self-driving cars are seen as the future of transportation, with the vast majority of carmakers showing a keen interest in developing, manufacturing and commercializing driverless cars in the coming years.
Analysts says the driverless car will reduce fuel consumption by 10% and insurance costs by up to 30%. However, skeptics have questioned whether automakers will be able to deploy fully autonomous vehicles in the next five years, as many have promised.
The market for self-driving technology has become increasingly crowded in the last few years. Intel has invested in several start-up companies developing different components for self-driving systems, but they would not be considered a key player in the market. Now, with this acquisition, they have paid a huge price to skip to the front of the line. But in Mobileye, what have they actually paid for?
Launched in 1999, Mobileye is an Israeli technology company that develops vision-based ADAS that provides warnings for collision prevention and mitigation. Its range of products includes cameras, sensor chips, in-car networking, roadway mapping, machine learning, cloud software and more.
Mobileye had adjusted net income of $173.3 million last year. The company currently accounts for 70 percent of the global market for driver-assistance and anti-collision systems. Its front-facing camera technology, computer vision chips and sensors are already used by nearly two dozen automakers, including Audi, BMW and Ford.
The implementation of ADAS has been considered a revolution as it provides dynamic features such as adaptive cruise control, parking assistance, blind spot detection, lane departure warning. The growth of the market is primarily driven by a growing focus on customer safety, the impending demand for comfort in driving along with the need to adhere to the government regulations to ensure safety.
But Mobileye is offering more than just ADAS technology. The Israeli company has developed mapping technology called Road Experience Management (REM) that automatically generates high-definition maps that can be collected and shared in real-time. German automaker Volkswagen has already announced a deal to integrate Mobileye’s mapping technology into cars beginning in 2018.
Mobileye and Intel already had a partnership in place prior to this acquisition. They are collaborating with BMW to develop production-ready Fully Autonomous Vehicles, with production launch planned for 2021.
Intel plans to integrate its own automated driving group with Mobileye's operations under Mobileye Chairman Amnon Shashua, who will lead the unit from Israel. Intel Chief Executive Brian Krzanich said the acquisition was akin to merging the "eyes of the autonomous car with the intelligent brain that actually drives the car."
Although it’s notable for the price tag, this is just one example in a list of acquisitions made by tech companies in the self-driving car market. In October, Intel’s rival Qualcomm announced a $47 billion deal to putchase NXP, the world’s largest automotive chip supplier. You could speculate that this played a part in Intel’s decision to acquire Mobileye.
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