Monday 23 October 2017

Intel accelerates self-drive car plans with $15bn swoop

Intel chief executive Brian Krzanich
Intel chief executive Brian Krzanich

Ian King

Intel aims to make its second-biggest acquisition - a $15bn deal for Israel's Mobileye - in a bold move to dominate technology for self-driving cars.

The US chipmaker will pay $63.54 a share in cash for Jerusalem-based Mobileye, the firms said in a joint statement. Mobileye shares surged 30pc in premarket trading in New York.

Intel is trying to accelerate a push into what many chip companies view as the next big opportunity: self-driving cars and the data they generate.

The €14bn deal gives Intel the ability to offer carmakers a larger package of all the components needed as vehicles become autonomous. Intel estimates the vehicle systems, data and services market will be worth $70bn (€65bn) by 2030.

"Together, we can accelerate the future of autonomous driving with improved performance in a cloud-to-car solution at a lower cost for automakers," Intel ceo Brian Krzanich said.

While Intel's chips are dominant in personal computers and datacentres, the world's largest semiconductor maker has struggled in other areas where semiconductors based on ARM designs have prevailed. Under Krzanich, Intel has sought to break into everything from drones to cash registers. That's generated a limited amount of new revenue that hasn't yet fired up overall sales growth, leaving it reliant on PCs and servers for its profit.

But self-driving vehicles have potential to disrupt the auto industry, and carmakers and technology companies are scrambling to stake out a leading market position.

Intel's chips are already in 30 vehicle models currently on the road and are being used in hundreds of autonomous test vehicles, it said in January.

Intel and Mobileye had already teamed up with BMW and plan to introduce fully autonomous cars by 2021. The companies are dispatching a fleet of 40 self-driving 7-Series sedans this year to hone systems for complex urban traffic.

Alphabet's Google has clocked two million self-driving miles, Tesla Motors has gathered data from 1.3 billion miles of data from autopilot-equipped cars, and Mercedes-Benz parent Daimler has partnered with Uber Technologies.

Google, which separated its self-driving car project into a new unit called Waymo, plans to start a service using semi-autonomous minivans made by Fiat Chrysler as soon as the end of 2017. Volkswagen is rolling out Moia, a new division that will focus on car-sharing and other mobility services. Mercedes already offers cars that can pilot themselves.

Digital services for automobiles could more than double by 2025 from $900m (€843m), according to Frost & Sullivan's Sarwant Singh, a senior partner at the global market research company. Earlier this year, Singh attributed much of Mobileye's success to the fact that it was first in its field.

Intel's offer represents an equity value of about $15.3bn (€14.3bn) and an enterprise value of $14.7bn (€13.7bn). (Bloomberg)

Irish Independent

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