Until 2016, not too many people would have known about Israeli autonomous vehicle technology firm Mobileye. It surfaced into the automotive scene at two occasions. The first, was when the company announced that it had split up with what appears to be the current leader in the autonomous driving space, Tesla. The second instance was when the chipmaker earlier this year announced that it was teaming up with automaker BMW and chipmaker Intel to collect high-definition map data for its self-driving cars.
Today, we have learnt that Intel has agreed to buy Mobileye. $15.3 billion sounds like a pricey deal, and the move as Reuters rightfully pointed out will shake up the driverless car sector. While Mobileye is no small fry in the autonomous driving space, it is Intel who benefits the most out of this acquisition.
Mobileye NV is a technology company that develops not just chips but entire vision-based technologies and advanced driver assistance systems (ADAS). Its headquarters is located in Jerusalem, Israel and with a $15 billion dollar acquisition, it also makes Mobileye's sale one of the biggest for the country and the largest exit in Israel's tech industry till date.
Mobileye early years
The company was founded back in 1999 by Amnon Shashua. Shashua took his academic research a step further from what everyone else was up to at that time, by developing a vision system for vehicles, one that could detect vehicles on the road using just a camera and software running on a processor. It was and still is a big deal, as the price of a LiDAR (Light Detection and Ranging) system was a lot higher back then and today is a standard fitment on all self-driving vehicles that are currently under testing (except for a Tesla). The price tags for these modules have dropped by a fair margin today (earlier ones would cost as much as the whole car itself), but LiDAR prices continue to remain high, keeping today's demand in the automotive sector in mind.
In times where automakers and technology giants like Google (and earlier Apple) are still struggling to push out a fully autonomous self-driving car, Mobileye's chips are indeed worth a lot and will be a bigger deal when the self-driving race picks up in the near future.
Moreover, thanks to Tesla (and its crazy videos) it is proven tech even though a software problem led to the death of a Tesla owner when using its experimental Autopilot system.
So how and where does Intel come into the autonomous driving picture?
Well, Intel had to step up its game. Late last year, its competitor, Qualcomm acquired NXP for $47 billion, a move that came after the company, who had already done well in Q2 2016, had now locked its horns onto the connected car, a space that is quickly growing, has fewer regulations to deal with and will pave the way for the first generation of autonomous cars.
Looking at the way things are going, smartphones are the key products in the consumer electronics space (even Apple knows this) for the current day and for the next decade. It's a product that's closer to the customer, one that the consumer can carry about literally anywhere with them. It's also a space that Qualcomm dominates like no other. There's a chipset for every smartphone segment, wearable, IoT product and NXP adds to the number of platforms by adding cars to its bouquet. This also makes sense keeping Qualcomm's designs for 5G future in mind.
And by now, it gets crystal clear why Intel wants in. Intel in that same quarter saw a decline in profits, which was blamed on its restructuring. Moreover, Intel's chips so far only connect the back end, chips that power the cloud, and on the front end for consumers, laptops and desktops. Intel's push with processors or mobile phones was not so great and the company quickly withdrew after smartphone manufacturers like Asus themselves chose to switch over to Qualcomm.
Which is why the move to acquire Mobileye at $15 billion seems like a steal of deal. It adds another platform for Intel, self-driving cars that will work with its current Intel GO platform and give them the best hardware bits in the business to offer 360 degree packages to manufacturers for autonomous cars (read Waymo). In fact, Intel is already working with Delphi to develop the same.
Right now autonomous cars are the buzzword in the auto space since everyone out there is trying to push out the first wholly autonomous car, that is set for a world tied up with regulations that refuses to budge. Tesla has the perfect recipe, Uber is pursuing it, and Google along with auto manufacturers are still deciding. Heck even Nvidia is into autonomous cars and is even working with Baidu to build one from scratch.
Intel's now betting $15 billion on it so now let's all hope it happens... soon, at least for Intel.