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| Intel Buys Mobileye in $15.3 Billion Bid to Lead Self-Driving Car Market | Intel Buys Mobileye in $15.3 Billion Bid to Lead Self-Driving Car Market |
| (35 minutes later) | |
| In the world of driverless cars, household names like Google and Uber have raced ahead of rivals, building test vehicles and starting trials on city streets. | In the world of driverless cars, household names like Google and Uber have raced ahead of rivals, building test vehicles and starting trials on city streets. |
| But when it comes to what is under the hood, a wide array of lesser-known companies is looking to supply the technology required to bring such driverless cars to the masses. And in a $15.3 billion deal announced on Monday, Intel made a play to corner the market on how much of that technology is developed. | But when it comes to what is under the hood, a wide array of lesser-known companies is looking to supply the technology required to bring such driverless cars to the masses. And in a $15.3 billion deal announced on Monday, Intel made a play to corner the market on how much of that technology is developed. |
| The chip maker’s acquisition of Mobileye, an Israeli company that makes sensors and cameras for driverless vehicles, is one of the largest in the fast-growing sector and sets the stage for increasing competition between Silicon Valley giants as well as traditional automakers over who will dominate the world of autonomous cars. | |
| The likes of Google and Uber have already invested billions of dollars in their own technology, signing partnerships with automakers like Chrysler and Volvo and sending test vehicles onto the road in a bid to cement their place in the industry. The sector is estimated to be worth $25 billion annually by 2025, according to Bain & Company, a consulting firm. | |
| Faced with an existential threat to its legacy computer business, Intel — alongside competitors like Qualcomm — has focused on autonomous cars as a new and potentially lucrative market. Many of these driverless vehicles, experts say, will require immense computing power, including the latest microchips able to crunch reams of data in seconds to keep the cars on the road and safe. | Faced with an existential threat to its legacy computer business, Intel — alongside competitors like Qualcomm — has focused on autonomous cars as a new and potentially lucrative market. Many of these driverless vehicles, experts say, will require immense computing power, including the latest microchips able to crunch reams of data in seconds to keep the cars on the road and safe. |
| And by acquiring Mobileye, whose digital vision technology allows autonomous vehicles to safely navigate city streets, Intel aims to broaden its offerings beyond just chips to a wider suite of products that driverless vehicles will require. It hopes, as a result, to appeal to automakers that want to offer autonomous driving but lack the in-house expertise and do not want to rely on the likes of Google. | And by acquiring Mobileye, whose digital vision technology allows autonomous vehicles to safely navigate city streets, Intel aims to broaden its offerings beyond just chips to a wider suite of products that driverless vehicles will require. It hopes, as a result, to appeal to automakers that want to offer autonomous driving but lack the in-house expertise and do not want to rely on the likes of Google. |
| “Scale is going to win in this market,” Brian Krzanich, Intel’s chief executive, told investors on Monday. “I don’t believe that every carmaker can invest to do independent development into autonomous cars.” | “Scale is going to win in this market,” Brian Krzanich, Intel’s chief executive, told investors on Monday. “I don’t believe that every carmaker can invest to do independent development into autonomous cars.” |
| Intel has a history with such strategic moves. It cornered the personal computer market over more than three decades, supplying hundreds of millions of desktop computers with much of their internal architecture, after dominating which microchips were used in the industry. But in recent years, Intel has struggled to find its feet as people’s habits have increasingly turned to the mobile world, where the company’s chips have lost out to rivals. | Intel has a history with such strategic moves. It cornered the personal computer market over more than three decades, supplying hundreds of millions of desktop computers with much of their internal architecture, after dominating which microchips were used in the industry. But in recent years, Intel has struggled to find its feet as people’s habits have increasingly turned to the mobile world, where the company’s chips have lost out to rivals. |
| Last year, for instance, the company announced that it was laying off 12,000 people, or 11 percent of its global work force, as demand for personal computers continued to decline. | Last year, for instance, the company announced that it was laying off 12,000 people, or 11 percent of its global work force, as demand for personal computers continued to decline. |
| While Intel still makes more than half of its annual revenue from traditional computing chip-making operations, the company’s sales from its “internet of things” division, a unit that includes its burgeoning automaking team, grew 15 percent in 2016, to $2.6 billion, according to regulatory filings. | While Intel still makes more than half of its annual revenue from traditional computing chip-making operations, the company’s sales from its “internet of things” division, a unit that includes its burgeoning automaking team, grew 15 percent in 2016, to $2.6 billion, according to regulatory filings. |
| Over the last 18 months, Intel has signed partnership deals with BMW and Delphi Automotive, an auto parts supplier, to expand its presence in the field. It also acquired a 15 percent stake in Here, a digital mapping business owned by a consortium of German automakers, and announced last year that it would invest $250 million in start-ups working on driverless car technologies. | Over the last 18 months, Intel has signed partnership deals with BMW and Delphi Automotive, an auto parts supplier, to expand its presence in the field. It also acquired a 15 percent stake in Here, a digital mapping business owned by a consortium of German automakers, and announced last year that it would invest $250 million in start-ups working on driverless car technologies. |
| Mobileye, founded in Jerusalem in 1999, has signed deals with several automakers, including Audi, for the use of its vision and camera technology, which uses machine-learning and complex neuroscience to help drivers — and increasingly cars themselves — avoid obstacles on the road. | Mobileye, founded in Jerusalem in 1999, has signed deals with several automakers, including Audi, for the use of its vision and camera technology, which uses machine-learning and complex neuroscience to help drivers — and increasingly cars themselves — avoid obstacles on the road. |
| It also has longstanding ties with Intel. The chip maker was a partner with Mobileye and BMW last year over efforts to bring autonomous cars to city streets by 2021. In January, the companies announced plans to have up to 40 autonomous cars on American and European roads by the end of this year as part of initial trials. | It also has longstanding ties with Intel. The chip maker was a partner with Mobileye and BMW last year over efforts to bring autonomous cars to city streets by 2021. In January, the companies announced plans to have up to 40 autonomous cars on American and European roads by the end of this year as part of initial trials. |
| As that collaboration grew, Intel and Mobileye executives began talking about a potential takeover at the end of December, holding meetings, mostly in New York, to complete a deal that will see Mobileye’s executives take the lead in Intel’s new expanded efforts. | As that collaboration grew, Intel and Mobileye executives began talking about a potential takeover at the end of December, holding meetings, mostly in New York, to complete a deal that will see Mobileye’s executives take the lead in Intel’s new expanded efforts. |
| “This deal makes Intel a tier-one partner for the automotive industry,” said Martin Birkner, an automotive analyst at Gartner, a technology research company in Munich. “As the industry moves towards autonomous driving, new types of digital suppliers like Intel are developing quickly.” | “This deal makes Intel a tier-one partner for the automotive industry,” said Martin Birkner, an automotive analyst at Gartner, a technology research company in Munich. “As the industry moves towards autonomous driving, new types of digital suppliers like Intel are developing quickly.” |
| Intel’s efforts to stamp a claim on driverless cars represents a recognition that chip-making rivals like Nvidia and Qualcomm had moved slightly ahead in the race to provide the computing power needed for autonomous vehicles. | Intel’s efforts to stamp a claim on driverless cars represents a recognition that chip-making rivals like Nvidia and Qualcomm had moved slightly ahead in the race to provide the computing power needed for autonomous vehicles. |
| As part of the deal, Intel said it would buy Mobileye’s outstanding shares at $63.54 a share, a 34 percent premium to Mobileye’s closing price on Friday. The acquisition requires shareholder and regulatory approval, and is expected to close by the end of 2017. | As part of the deal, Intel said it would buy Mobileye’s outstanding shares at $63.54 a share, a 34 percent premium to Mobileye’s closing price on Friday. The acquisition requires shareholder and regulatory approval, and is expected to close by the end of 2017. |
| Much of Intel’s success will depend on Amnon Shashua, Mobileye’s co-founder and chief technology officer, who has a doctorate in brain and cognitive sciences from the Massachusetts Institute of Technology. | Much of Intel’s success will depend on Amnon Shashua, Mobileye’s co-founder and chief technology officer, who has a doctorate in brain and cognitive sciences from the Massachusetts Institute of Technology. |
| Part of Mr. Shashua’s plan is to have cars with Mobileye’s advanced driver assist systems collect imaging and location data that can be used to create what the company calls RoadBook — a vast digital map of roadways in the United States and Europe. | Part of Mr. Shashua’s plan is to have cars with Mobileye’s advanced driver assist systems collect imaging and location data that can be used to create what the company calls RoadBook — a vast digital map of roadways in the United States and Europe. |
| The goal, Mr. Shashua said, is to provide carmakers with a complete product line of digital services that go beyond what they can do for themselves. | The goal, Mr. Shashua said, is to provide carmakers with a complete product line of digital services that go beyond what they can do for themselves. |
| “The collaboration that we want to do can’t happen if we are two different organizations,” he said on Monday. “The collaboration already runs deep.” | “The collaboration that we want to do can’t happen if we are two different organizations,” he said on Monday. “The collaboration already runs deep.” |
| Despite Intel’s high hopes for autonomous cars, experts say such vehicles are unlikely to hit the roads by the end of the decade, at the earliest, because regulators are beginning to question which rules such cars should follow and because companies are struggling to make the technology work seamlessly. | Despite Intel’s high hopes for autonomous cars, experts say such vehicles are unlikely to hit the roads by the end of the decade, at the earliest, because regulators are beginning to question which rules such cars should follow and because companies are struggling to make the technology work seamlessly. |
| Uber, the ride-booking service, halted its driverless car tests in California after local officials said the company did not have the required permits, though its tests in Pittsburgh are continuing. Google’s own efforts ran into difficulties after the company’s driverless cars were involved in a spate of collisions. | Uber, the ride-booking service, halted its driverless car tests in California after local officials said the company did not have the required permits, though its tests in Pittsburgh are continuing. Google’s own efforts ran into difficulties after the company’s driverless cars were involved in a spate of collisions. |
| And in Europe, regulators are divided on the issue of self-driving cars, causing the automotive industry to complain that the delays could hamper plans to take the technology to the Continent’s streets. | And in Europe, regulators are divided on the issue of self-driving cars, causing the automotive industry to complain that the delays could hamper plans to take the technology to the Continent’s streets. |
| Still, with technology companies and global automakers making hefty — and costly — bets on autonomous cars, experts that say more deals like Intel’s acquisition of Mobileye are likely to follow as firms jostle for position. | Still, with technology companies and global automakers making hefty — and costly — bets on autonomous cars, experts that say more deals like Intel’s acquisition of Mobileye are likely to follow as firms jostle for position. |
| More acquisitions, said Mr. Birkner of Gartner, “are an absolute necessity.” | More acquisitions, said Mr. Birkner of Gartner, “are an absolute necessity.” |
| “Carmakers and Silicon Valley companies,” he said, “are realizing that they both bring different skills to the table.” | “Carmakers and Silicon Valley companies,” he said, “are realizing that they both bring different skills to the table.” |