Why Intel Bought Mobileye
"As you’ve heard me say, others predict the future. At Intel, we build it," Intel CEO Brian Krzanich wrote in a letter to employees.
On Monday, Intel bought it.
Intel, the world's largest chipmaker, announced it will acquire Mobileye, a leading automotive supplier of sensor systems that help prevent collisions, for $63.54 per share, which has a fully-diluted equity value of $15.3 billion and an enterprise value of $14.7 billion.
The deal has left some scratching their heads such as Citron Research, a short-selling firm that once called the company "the short of 2016" in a tweet.
Others have questioned the acquisition price, asking if Intel is paying too much?
But the deal isn't so surprising after a review of Intel's acquisition and partnership history in the past two years. And it represents the next wave of deals in the automotive tech space, said Stefan Heck CEO of NAUTO, self-driving car tech startup that uses a combination of its own artificial intelligence algorithms, cameras, motion sensors, and GPS to detect what’s happening on the road and inside the car.
In that first wave, large companies were acquiring teams of talented computer vision and artificial intelligence engineers out of research universities like Carnegie Mellon, Stanford University and MIT, Heck noted. Then came a wave of automaker-buys-tiny startup deals, including GM's acquisition of Cruise Automation, Ford's recent deal with Argo AI, and Uber buying Otto.
While there will likely be more of those types of deals to come, Intel's acquisition is different, Heck said.
Here's why Intel is so attracted to Mobileye.
Mobileye has an existing business and has majority market share
Mobileye's technology—vision chips and software that interprets data from a camera to anticipate possible collisions with cars, people, animals, and other objects—is used by nearly two dozen automakers, including Audi, BMW, General Motors, and Ford.