Intel to acquire Mobileye for $15.3 billion; targeting autonomous driving
13 March 2017
Intel Corporation announced a definitive agreement under which Intel would acquire Mobileye, a global leader in the development of computer vision and machine learning, data analysis, localization and mapping for advanced driver assistance systems and autonomous driving. A subsidiary of Intel will commence a tender offer to acquire all of the issued and outstanding ordinary shares of Mobileye for $63.54 per share in cash, representing an equity value of approximately $15.3 billion and an enterprise value of $14.7 billion.
The combination is expected to accelerate innovation for the automotive industry and position Intel as a leading technology provider in the fast-growing market for highly and fully autonomous vehicles.
Intel estimates the vehicle systems, data and services market opportunity to be up to $70 billion by 2030. This transaction extends Intel’s strategy to invest in data-intensive market opportunities that build on the company’s strengths in computing and connectivity from the cloud, through the network, to the device.
This acquisition will combine the technologies from both companies, spanning connectivity, computer vision, data center, sensor fusion, high-performance computing, localization and mapping, machine learning and artificial intelligence. Together with partners and customers, Intel and Mobileye expect to deliver driving solutions that will transform the automotive industry.
The combined global autonomous driving organization, which will consist of Mobileye and Intel’s Automated Driving Group, will be headquartered in Israel and led by Prof. Amnon Shashua, Mobileye’s Co- Founder, Chairman and CTO.
The organization will support both companies’ existing production programs and build upon relationships with automotive OEMs, Tier-1 suppliers and semiconductor partners to develop advanced driving assist, highly autonomous and fully autonomous driving programs. Intel Senior Vice President Doug Davis will oversee the combined organization’s engagement across Intel’s business groups and will report to Prof. Amnon Shashua after the transaction’s closing.
This acquisition is a great step forward for our shareholders, the automotive industry and consumers. Intel provides critical foundational technologies for autonomous driving including plotting the car’s path and making real-time driving decisions. Mobileye brings the industry’s best automotive-grade computer vision and strong momentum with automakers and suppliers. Together, we can accelerate the future of autonomous driving with improved performance in a cloud-to-car solution at a lower cost for automakers.—Brian Krzanich, Intel CEO
We expect the growth towards autonomous driving to be transformative. It will provide consumers with safer, more flexible, and less costly transportation options, and provide incremental business model opportunities for our automaker customers. By pooling together our infrastructure and resources, we can enhance and accelerate our combined know-how in the areas of mapping, virtual driving, simulators, development tool chains, hardware, data centers and high-performance computing platforms. Together, we will provide an attractive value proposition for the automotive industry.—Ziv Aviram, Mobileye Co-Founder, President and CEO
As cars progress from assisted driving to fully autonomous, they are increasingly becoming data centers on wheels. Intel expects that by 2020, autonomous vehicles will generate 4,000 GB of data per day, which plays to Intel’s strengths in high-performance computing and network connectivity. The complexity and computing power of highly and fully autonomous cars creates large-scale opportunities for high-end Intel Xeon processors and high-performance EyeQ4 and EyeQ5 SoCs, high-performance FPGAs, memory, high-bandwidth connectivity, and computer vision technology.
The transaction is expected to be accretive to Intel’s non-GAAP EPS and free cash flow immediately. Intel intends to fund the acquisition with cash from the balance sheet. The transaction is expected to close within the next nine months. It has been approved by the Intel and Mobileye Boards of Directors and is subject to the receipt of certain regulatory approvals and other closing conditions. The offer is not subject to any financing conditions.
We still don't know if these future autonomous cars will need a monthly fee and what will happen if there is a strike or lock out in the company.
Posted by: gorr | 13 March 2017 at 07:42 AM
Why so afraid of the future, gorr?
Posted by: Brent Jatko | 13 March 2017 at 08:31 AM
That would make a BIG player in the game. The amount and type of processing required demands a completely unique architecture. I know, I worked in image processing hardware design for more than a decade in Silicon Valley.
Posted by: SJC | 13 March 2017 at 10:12 AM
One more heavy weight in the ADV game will help to develop a secure and safe complexe project.
Lawyers will have a field day, to sue such heavy weight for every crash, but a $15+ B investment will put up a very strong defence.
Interesting times ahead?
Posted by: HarveyD | 13 March 2017 at 06:25 PM
It should be very clear who is at fault in every AEV crash. There will be telemetry logs and image streams from the AEV, so it should be clear who was at fault.
As long as it does not cost more to be killed by a machine than by a human, there should be no problem.
Nice cash for Mobileye shareholders, I hope Intel make it work, their shares dropped 2.3% on the news, so the markets may not agree.
I suppose they need to get off the desktop in a hurry, and missed the mobile phone boat.
Posted by: mahonj | 14 March 2017 at 02:02 AM
This is insane. A lot of money for a very small company. The number of people making it all happen at mobileye is less than 200 and they could be hired away.
15 billion USD is 30 times more than mobileye’s sales of 0.5 billion USD. Tesla valued at 40 billion USD has sales of 10 billion USD so 4 times higher. Some say Tesla is overvalued but Mobileye is out of scale by comparison.
Microsoft bought the world’s largest phone maker Nokia to get into smartphones but it totally flopped. The same can happen for Intel. They need to work really focused and hard to make themselves matter in the self driving car area. To me the difficulty of making a self-driving vehicle is not in the hardware that is already good enough and many can make it. The problem is software. That is not ready yet and those who excel in software will take the market for self-driving on-demand transportation that will be a 1000+ billion USD industry per year by 2030. However, the money is made in selling transportation services not in selling sensors and cpus for these cars. Car makers will want to make their own sensors, cpus and software like Tesla does. This is what will give them the competitive edge for on-demand self-driving taxi services.
Posted by: Account Deleted | 14 March 2017 at 02:47 AM
Mobileye do the software as well as the hardware.
Intel desperately want to get into Automotive electronics and already know a fair bit about machine vision, so I would see it as a good fit. They get right in and can start to bring more features from software into hardware.
The fact that they have sales of $0.5B in a hot field like this means they are a good bet.
Intel might have overpaid, but that is the nature of these deals, especially if the target is a real player.
Posted by: mahonj | 14 March 2017 at 10:35 AM
@Mahonj I think Intel is right about going into the self-driving vehicle business. They should because in 20 years there will be over a billion vehicles on the road with full self-drive and a monster computer as their AI brain and Intel could supply these cpus. But the price they pay for mobileye is insane. Intel could have poached talent from all over the world by paying higher wages and got what Mobileye has for a fraction of the 15 billion USD. It would take more time though.
Also I really believe that self-driving tech and software in particular is so strategically important for any auto maker that they will all want to do it all by themselves as soon as possible. Tesla dropped Mobileye when they could do the camera vision themselves and Tesla is preparing to make their own cpus so they will eventually not need Nvidia or anyone else for that either. Other car makers will do the same. They start by buying from the best external suppliers like mobileye and Nvidia and when they are ready to do it themselves they do that because this is how to differentiate their products and gain a competitive edge. There is a lot of stuff that can be done differently or better with self-driving software. For instance, better software could give better user experience and also better accident statistics but also better fuel economy and less maintenance cost simply by improving algorithms. This is how you will be able to gain market share and make more profits.
Posted by: Account Deleted | 14 March 2017 at 11:28 AM
Sometimes big companies just mess things up if they try to do it themselves and have to buy the small company who has done it successfully. Look at google buying youtube. Google had google video, but couldn't get it right and just bought youtube in the end.
Big companies have too many committees and policies and people sticking their noses into things which can really mess things up. Small companies do not have that and can move very fast and clearly. Hence they get ahead ane get bought by the bigger ones.
I do not think that every car company will make their own AV system. I would expect them to buy them from 3rd parties, such as google (or Tesla) in the way that phone people use Android. Google will set a sensor spec and everyone (except Tesla) will follow. All the medium sized companies anyhow.
If you are interested in this stuff, consider reading "The Innovator's dilemma" by Clayton Christensen (it is well written, anyhow)
Posted by: mahonj | 16 March 2017 at 10:49 AM
Not every car maker has the resources required to fully develop and install workable safe automatic drive systems in their vehicles.
There will be enough room in the ADV industry for at least a dozen specialized groups to develop and put together the sensors, hardware and software required.
Competition will be fierce and may the best unit/system win. Intel can contribute and so could Microsoft, Apple, Google, Facebook, Samsung, LG, Sony, Toyota, Nissan/Renault, Honda/GM/Ford etc.
Posted by: HarveyD | 16 March 2017 at 07:30 PM