Intel said it will acquire Mobileye in a deal valued at $15.3 billion in a move that will bolster the chip giant's footprint in computer vision and autonomous vehicle technology.
Meanwhile, Mobileye's technology will give Intel a way to couple its high-performance computing knowhow with computer vision. Competitively, Mobileye also gives Intel a key automotive footprint. Qualcomm's purchase of NXP gave it automotive as a market and broadened its Internet of things reach.
As for the financials, Intel will pay $63.54 a share in cash for Mobileye, which closed Friday at $47.27 and a market cap of $10.5 billion. Mobileye will boost Intel's non-GAAP results. Mobileye delivered $358.16 million in revenue in 2016 with net income of $108.37 million. Wall Street expected Mobileye to have sales of $499.2 million in 2017.
In a statement, Intel noted that it will be a key player in the vehicle systems, data and services market.
Intel has been positioning itself more as a business-to-business brand. The company sees its processors as the brains behind the cloud, analytics, smart home, smart city and other applications. Intel said that Mobileye's technology can extend beyond automobiles.
On a conference call, Intel CEO Brian Krzanich said the purchase of Mobileye will improve time to market and the integrated approach that customers want. Krzanich added that Mobileye fits into Intel's strategy because cars will be data centers on wheels. "The acquisition of Mobileye completes a virtuous circle of growth," he said.
Krzanich also argued that Intel will be able to provide the silicon, memory and communications, software assets and partnerships to provide an integrated stack for Internet of things applications. "You need to think about autonomous vehicles more like an integrated system," he said.
In an e-mail to employees Krzanich noted:
Many of you have asked why we think autonomous cars and vehicles are so important to Intel's future. The answer is DATA. Our strategy is to make Intel the driving force of the data revolution across every technology and every industry. We are a DATA company. The businesses we focus on, and deliver solutions to, create, use and analyze massive amounts of data.
According to the companies, the purchase will combine technologies that will boost connectivity, computer vision, sensor fusion, mapping, machine learning and artificial intelligence.
Intel will form an autonomous driving unit that will combine Mobileye and Intel's autonomous driving group. That group will be headquartered in Israel and led by Amnon Shashua, Mobileye's co-founder, chairman and CTO.
Shashua said in a letter to employees:
The transaction is unique in the sense that instead of Mobileye being integrated into Intel, Intel's Automated Driving Group (ADG) will be integrated into Mobileye. Intel's automotive activity, which is concentrated in the ADG today, has a sizable number of employees. The Group will form part of Mobileye and be headquartered in Israel. Within the ADG are resident skill sets that are largely complementary to ours. For example, the ADG team includes systems engineers, simulators, mapping ingestion infrastructure and cloud computing with data centers, vehicle build engineers, and access to a pool of software engineers that will become part of our team. Combining forces will help accelerate our plans and lower our execution risks. We aim to become the leading team in autonomous driving. We want to make an impact on the world and this acquisition will enable us to accomplish that.
The deal won't close until the end of 2017.
Mobileye's flagship technology is called EyeQ, which is a system-on-a-chip that processions vision with low power consumption. EyeQ has been adopted by 27 auto manufacturers so far. It is likely that Intel's manufacturing expertise can bolster Mobileye's chip roadmap. Here's a look at EyeQ's product cadence.