Intel is slated to launch self-driving test vehicles in Europe later this year as part of its new venture after acquiring Israeli tech company Mobileye. The cars the chipmaker will use are from BMW, another partner in this big project. On Monday, Intel revealed that it has agreed to purchase Mobileye -- a company known for its autonomous driving, anti-collision and other driving solutions -- for $15.3 billion. The announcement is seen as a desperate move by the renowned chipmaker to venture into the autonomous-driving sector after missing its chance to enter the mobile phones industry, as per Reuters. The combination of Intel and Mobileye is deemed fitting for both companies have what it takes to create top-of-the-line technologies for driverless vehicles.
Intel is acquiring Mobileye, a company that specializes in chips for vision-based autonomous vehicles. The Marker and Axios first reported the deal, valued at $15.3 billion, and it will see Intel take over some key technology for its ambitions to lead autonomous cars. BMW, Intel, and Mobileye have all partnered to deploy 40 autonomous vehicles for testing on public roads later this year. Intel and Mobileye's technology is to be tested on roads in the US and Europe. Intel's acquisition of Mobileye was officially confirmed this morning, and it will mark a huge investment in self-driving cars for the chip company.
Intel announced plans to acquire Israel-based Mobileye, a developer of vision technology used in autonomous driving applications, for $15.3 billion. Mobileye share prices jumped from $47 to $61 (the tender offering price is $63.54) on the news, a 30% premium. This transaction jumpstarts Intel's efforts to enter the emerging autonomous driving marketplace, an arena much different than Intel's present business model. As can be seen in the Frost & Sullivan chart on the right, we are presently producing cars with Level 2 and Level 3 automated systems. Intel wants to be a strategic partner going forward to fully automated and driverless Level 4 and Level 5 cars.
Intel's Mobileye unit has been awarded a contract to supply millions of autonomous vehicles. According to Reuters, eight million cars will be equipped with self-driving technologies and shipped off to an automaker stationed in Europe. Financial terms of the deal were not disclosed. Erez Dagan, senior vice president for advanced development and strategy at Mobileye told the publication that the contract will come into play in 2021 when Intel's Mobileye EyeQ5 chip is ready. The processor is an upgrade on the upcoming EyeQ4, which is due to be rolled out in the coming weeks.
The idea is to build a "scalable architecture" that can be used by any automaker, especially if they don't want to build their own tech from scratch. As such, it could become a huge business for MobilEye, which may help explain the huge acquisition price. The deal is one of the largest acquisitions of an Israeli-based tech company ever. Despite a recent PC renaissance thanks to Microsoft's Surface and other devices, desktops are still losing ground to mobile devices. That has affected Intel's bottom line while benefiting companies like Qualcomm, which makes the chips used in many smartphones and tablets.