Intel to buy autonomous auto tech company Mobileye

Last October Qualcomm agreed to acquire fellow chipmaker NXP Semiconductors, a leader in the automotive computer chip market.

The acquisition was initiated to couple Mobileye’s leading computer vision expertise with Intel’s high-performance computing and connectivity prowess to create automated driving solutions from the cloud through the network to the auto.

“I believe that today’s announcement puts us in the driver’s seat to achieve our vision of creating the technology foundation on which the future of autonomous driving will be built”.

The chipmaker confirmed the acquisition Monday, saying it will pay $63.54 per share in cash for the Israeli tech firm. Mobileye’s shares shot up about 28 percent to $60.62.

For autonomous auto architectures, Intel now has control over key automated driving building blocks including object recognition, sensor fusion, path planning, localization (Mobileye’s Road Experience Management) and, last but not least, connectivity and telematics.

Mobileye was founded in 1999. And with Mobileye now maintaining contracts with 27 global OEMs, there’s an opportunity to quickly deliver at a worldwide scale. Aquarius Engines, which has designed and developed an engine to generate electric power, is working with Peugeot SA and three other automobile companies. At the time, Mobileye insisted that it had more going for it than its relationship with Tesla. But Intel struggled to gain a foothold in the early market, and ended up taking a $600 million writeoff in its wireless business – and ended up selling much of its mobile business to Marvell for the same amount in 2006.

According to Mobileye co-founder, president and CEO Ziv Aviram, Intel will now be a more lucrative option for car-makers looking to develop autonomous technologies with Mobileye on board. The pair announced a partnership with BMW in July 2016 with the aim of putting an autonomous vehicle on the streets by 2021. Along with enabling autonomous and semi-autonomous driving, information collected by onboard computer systems sends data back to automakers to help improve the vehicle and self-driving technology. That investment was announced last month.

Another lesson from this deal is that Israel has once again shown its capacity to anticipate the big technology trends and not be daunted by the fact it does not manufacture the core products that will benefit from technological change. That’s a 34% premium to Mobileye’s price at Friday’s close, and is the driving force behind the company’s 30% surge in stock price Monday morning.

Another analyst suggested that Intel’s Mobileye purchase is playing catch-up.

While this move was unforeseen, it does make a lot of sense and is just one of many recent big moves in the automotive industry. In January, the company announced it bought a 15 percent stake in Here, a provider of mapping data and services that’s co-owned by German automakers Audi, BMW and Daimler.

Nvidia, which is increasingly competing with Intel in the data-center and server arena, is also becoming its main foe in autonomous cars. That added $3.5 billion to Mobileye’s now near $14 billion market cap. It also strengthens Intel’s position in the sector against rival chipmakers Nvidia and Qualcomm.