Intel Corporation (NASDAQ:INTC) has inked a deal to acquire Mobileye NV (NYSE:MBLY), a driverless car technology company based in Israeli. This now puts the chipmaker in direct competition with competitors such as QUALCOMM, Inc. (NASDAQ:QCOM) and NVIDIA Corporation (NASDAQ:NVDA) in the race to build self-driving car systems for car manufacturers.
“This is a tremendous opportunity for them to get into a market that has significant growth opportunities. Mobileye’s technology is very critical… The price seems fair,” a Loop Capital Markets’ analyst, Betsy Van Hees said.
Product diversification
The acquisition could assist Intel to diversify from the computer semiconductor segment whose growth has been slowing lately. It is also likely to significantly increase valuations for startups in the driverless car sector in a market that is already overheated.
The winner or winners in what is likely to be an arms race, however, stands to reap handsomely. In 2016, a report from Goldman Sachs Group Inc (NYSE:GS) estimated that the driverless cars and systems market would witness growth from a figure of $3 billion in the year 2015 to a figure of $96 billion in ten years. By 2035, the market will worth around $290 billion.
Though Intel has previously not been a big player in the autonomous vehicle industry, it has made investments in a couple of startups focused on developing various driverless car components such as sensors and robotics. Mobileye, on the other hand, has a much broader portfolio which includes data management, data fusion, cloud software, machine learning, roadway mapping, in-car networking, sensor chips and cameras.
Tesla partnership
Mobileye has previously supplied Tesla Inc (NASDAQ:TSLA) with vision systems. The two companies however ended their partnership after a Tesla Model S driver died in accident while the vehicle was in Autopilot mode. The Israeli-based firm is also partnering with Intel and BMW in a project that aims to testing around 40 driverless cars in the next half of the year. Founded in 1999, the firm has a 70% market share in anti-collision systems and driver-assistance systems. It has 660 employees on its payroll.
In Tuesday opening hours shares of Mobileye NV were trading in the range of between $60.01 and $60.72.
