In an interesting announcement today, Intel and Mobileye have entered into an agreement whereby Intel will commence a tender offer for all issued and outstanding ordinary shared of Mobileye. At $63.54 per share, this will equate to a value of approximately $15 billion.

Mobileye is currently one of a number of competitors actively pursuing the visual computing space, and the high item on that agenda is automotive. We’ve seen Mobileye announcements over the last few years, with relationships with car manufacturers on the road to fully autonomous vehicles. Intel clearly wants a piece of that action, aside from its own movement into automotive as well as cloud computing required for various automotive tasks.

Intel estimates that vehicle systems, data, and the services market for automotive to have a value around $70 billion by 2030, including edge cases through backhaul into cloud. This includes predictions such that 4TB of data per day per vehicle will be generated, which is going to require planning in infrastructure. Intel’s expertise in elements such as the RealSense technology and high-performance general compute will be an interesting match to Mobileye’s portfolio.

“This acquisition is a great step forward for our shareholders, the automotive industry, and consumers,” said Brian Krzanich, Intel CEO. “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.”

The acquisition will combine into a single organization under Intel’s Automated Driving Group, to be HQ in Israel and led by Prof Shashua, Mobileye’s co-founder, Chairman and CEO. All current contracts under Mobileye for automotive OEMs and tier-one suppliers will be retained under the single group, which will also be under Doug Davis, Intel’s SVP of Intel’s Automotive.

Mobileye currently offers on its roadmap products such as the EyeQ4 and EyeQ 5 SoCs, for level 3/4 autonomy in 2018 and 2020 respectively, as well as high-performance FPGAs for vision analytical techniques. The acquisition of Altera by Intel over a year ago as a step into the FPGA market may come into play here, as well as Intel’s semiconductor manufacturing facilities. As with Altera, it will likely take some time before full integration between Intel’s resources and Mobileye’s technology occurs.

There will be an investor call webcast on 3/13 at 8:30 am (ET) about this announcement at this link here. The full transaction is expected to close within nine months, subject to regulatory approval, and is not subject to any financing conditions. Intel intends to fund the acquisition with cash from the balance sheet.

As we get more information we will let you know.

Additional 1: For scope, Intel's purchase of Altera was $16.7 billion, as we reported here.

Additional 2: Here is the Investor Call slide deck.

Additional 3: It will require purchasing 95% of the ordinary stock, and will use offshore cash that Intel has not repatriated into the US.

Source: Intel and Mobileye

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  • ikjadoon - Monday, March 13, 2017 - link

    I usually don't post grammatical or spelling comments. But, this is rough:

    >Intel will comments a tender offer for all issued and outstanding ordinary shared of Mobileye

    This sentence could've been posted on a Google-translated blogspam website and I wouldn't have batted an eye.
    Reply
  • Ian Cutress - Monday, March 13, 2017 - link

    Sorry, early morning and written in a rush. Will fix :) Reply
  • ikjadoon - Thursday, March 16, 2017 - link

    No worries, we appreciate it. I think this announcement by Intel wasn't as expected as we usually are, given the amount of leaks.

    And I appreciate the slide deck: it's always confidence-inspiring to see what's coming out of the horse's mouth, too.
    Reply
  • Meteor2 - Monday, March 13, 2017 - link

    Fascinating. MobilEye has partnered with Delphi (auto components, annual revenue $17bn) aiming to offer OEM self-drive systems by 2019, with retail after that.

    This basically puts Intel into a direct fight with Nvidia for self-drive tech. I don't count Waymo or Uber as their LIDAR-based approaches are dead-ends compared to MobilEye's and Nvidia visual cameras-fused-with-radar-and-sonar approach.
    Reply
  • shabby - Monday, March 13, 2017 - link

    Has intel stopped innovating? Seems they're buying up companies that are "sure wins" in the future, yet are late doing so. Reply
  • HomeworldFound - Monday, March 13, 2017 - link

    It's sensible. If cars are going to drive themselves, they'll need the technology to do so. There's a nice space for a CPU/SOC and connected services, and it's better that those come from a great company as opposed to some cheap Chinese company. Reply
  • name99 - Monday, March 13, 2017 - link

    That's not the issue. The issue is why does Intel imagine that they are better positioned to take advantage of this market than other investment alternatives for their cash?

    The auto market is essentially identical to the mobile and IoT markets. It has zero installed base, so no interest in x86 legacy code. Intel competes on a level platform with ARM, while dragging the excess costs (in design time and turn-araound time) of x86.
    Likewise the market is large companies (automakers) with specific needs, not individuals. ARM's approach of being able to tailor a SoC (12 high-end cores, 6 low-end cores, 4 DSPs, 2 GPUs, and a partridge in a pear tree) to exactly what Mercedes Benz wants makes sense. Intel's approach is to provide some pre-configured more-or-less random collection of elements on a SoC (driven by marketing on the one hand, and whatever binning yields on the other hand) and Mercedes is expected to just accept whatever in the line-up best meets their needs.

    I don't see anything in Intel today that shows that they have learned from their mobile and IoT failures, and I don't see anything that explains why auto will play out differently.
    Reply
  • Meteor2 - Monday, March 13, 2017 - link

    Intel has zillions of dollars outside the US which it doesn't want to lose a large portion of to tax, so, from the perspectives of a shareholder, why not buy up sure-fire bets?

    But Intel have stated that their future growth isn't going to come from CPUs, it's going to come from new areas like 5G and AI.
    Reply
  • prisonerX - Monday, March 13, 2017 - link

    Intel has been innovating? Reply
  • Stan11003 - Tuesday, March 14, 2017 - link

    This is a pretty old tactic for intel. The very core based chips we have today came from a start-up israel lab.
    http://www.seattletimes.com/business/how-israel-sa...

    It makes sense with a company the size and complexity of Intel acquiring star ups helps them stay nimble without risk.
    Reply

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