Why Intel Bought Mobileye for 15.3B; And why We’ll Be Seeing More Large Tech Investments
March 2017: Intel will acquire Jerusalem-based automotive sensor tech supplier Mobileye* for a cool 15.3 billion. At $63.54 a share, this is the largest acquisition in Israeli technology to date.
Jerusalem-based Mobileye sets the standard for vehicle safety around the world. It sells software algorithms and computer chips to vehicle manufacturers, including BMW, Ford, GM, Nissan, Volvo, Audi, and Hyundai. Nearly 15 million vehicles around the world implement Mobileye’s camera-based technology to perform detailed interpretations of the road ahead and anticipate collisions, even offering the potential to enable autonomous driving.
Intel is keeping up with the trends in the tech world. Uber’s 2016 purchase of Otto for 680M and Ford’s recent 1B acquisition of Argo AI indicate enthusiastic investment in the automaking industry. But Stefan Heck, CEO of tech startup NAUTO, distinguishes* Intel’s buy from other seemingly similar automotive tech deals. According to Heck, Intel’s deal represents a new wave of investments that we’ll be seeing in the future’s automotive tech market:
Short-term Sales Mobileye markets an existing product that is already used by countless carmakers. Its net profit margin this past year: over 30%.
Long-term Planning The automotive sensor company has its eye trained on the near future, working hand-in-hand with automakers like BMW to create self-driving cars and forward-thinking mapping technology to be implemented as soon as 2021.
Monopolizing the Market Mobileye is the lead supplier of chips used in advanced driver assistance systems (ADAS), whose market is steadily expanding as more automakers implement the cutting-edge safety technology. This puts the company in a key market spot.
The most important thing to take away? The future lies in self-driving cars**. Intel CEO Brian Krzanich explains his—and other multinationals’—focus in current investment strategy. DATA, he proclaims in a letter to Intel employees. He predicts that the Internet of Things will include 50 billion devices by 2020, and autonomous cars will contribute to a sizable chunk of data produced by IoT devices per day—4 terabytes, to be precise. “Our strategy is to make Intel the driving force of the data revolution across every technology and every industry,” he writes.
In the future, Heck predicts, we’ll be seeing a lot more similar large acquisitions by big players in tech investments. As the race to lead the data industry continues, multinational corporations will want to acquire existing companies to get to the front rather than building their own technology, which will take more time. Heck thinks we’ll see bold moves as MNCs invest wherever they can to secure a market portion in autonomous cars.
Intel’s purchase is particularly relevant to B.seed’s Israel-focused tech investments. As Bseed expands it's portfolio to offer more lucrative opportunities, you, as Bseed's potential partner, can join such exciting ventures in the tech industry. Bseed will look forward to keeping you updated and informed about the future of investing.
Disclaimer: The views and opinions expressed in this publication are those of the author, they do not necessarily state or reflect those of the Bseed Investments and it's management.
* Fortune.com - March 13, 2017
** Quartz media – March 13, 2017