Author(s): Raghu Gopal
This week, US chipmaker Intel agreed to buy Mobileye, an Israeli autonomous car technology company, for $15.3 billion. The deal underscores the expanding alliances between automakers and their suppliers as they race to develop self-driving cars, a concept that not long ago seemed like science fiction but is now rapidly approaching reality.
Intel believes the acquisition will help boost innovation in the market for self-driving cars, which the company believes will be a $70 billion opportunity by 2030. However, Intel is part of a crowded field of technology companies and car-makers seeking to get their self-driving systems into cars and their autonomous vehicles on the road. In October 2016, Qualcomm announced a $47 billion deal to buy NXP, the largest supplier of automotive chips. The acquisition heaped pressure on other chipmakers seeking to make strides into the market for autonomous driving components including Intel, Mobileye and Nvidia. Samsung has also made moves in this area, buying Harman, a manufacturer of automotive electronics, for $8 billion in November 2016.
Intel isn't new to the autonomous driving market and has already made significant investments in the technology. In January 2017, it announced a 15 percent stake in Here, a provider of mapping data and services that's co-owned by German automakers Audi, BMW and Daimler. In 2016, among other purchases, Intel acquired computer vision start-up Itseez, Italian semiconductor designer Yogitech, and Movidius, a start-up that also develops computer vision technology.
Mobileye's camera-based driving assistance system continuously scans a car's environment, identifying markers, road signs, other vehicles and pedestrians. The technology differs from that currently developed by Tesla and Waymo, which uses a combination of cameras, radar and lidar to map out a 3D picture of the car's surroundings.
Intel will place its automated driving group under the leadership of Mobileye. This is a strong indication of Intel's confidence in Mobileye's management and technology.
The acquisition could make Intel — which would provide the connectivity, data analysis and computing technology for self-driving car systems — an important part of the transportation industry.
It's certainly not just Intel in hot pursuit of technology and talent in this area. There have been significant investments in companies associated with autonomous driving across both component and auto industries. The stakes are high and there's no room for complacency. Proponents of self-driving cars will need to prove to regulators and the public that the developments in this space will lead to improved safety. The array of sensors and software must be highly capable of processing very detailed imagery to manoeuvre at high speeds through heavy traffic and poor weather conditions.
We don't doubt autonomous driving will happen, the question now is the speed. This is an expensive purchase for Intel and not without considerable risk. Fully autonomous driving is still some years away and will rely on a blend of technologies rather than any single approach. The size and importance of the opportunity for chipmakers mean this is just the start of acquisition activity in the automotive space. The challenge for Intel and its rivals will be integrating a rich variety of assets and technologies while keeping their foot on the gas.