Intel might be known as one of the world’s largest chip manufacturers, but in the next few years it’s going to be strongly associated with driverless car technology too. The company has just bought Mobileye, a pioneer in the autonomous driving sector, for a huge $US15bn.
You may not have heard of Mobileye – like many other automotive companies, their products are sourced by car makers and left unbranded. But since its creation in 1999, the Israeli company has become a leader in the autonomous sector. According to the Financial Times, its chips and cameras are installed in 15m vehicles, the company is in partnership with 25 automakers, and it has a 80% market share. When you see those figures, Intel’s acquisition makes a lot more sense.
Mobileye might seem like a great company, but why is Intel buying it rather than, say, Mercedes-Benz? The answer is pretty simple. While car makers may label everything as their own, the truth is that much of the technology you see on the road today is developed by third party companies – including autonomous tech. And now, as growth in the smartphone and computer market slows, chip makers believe that driverless cars offer a new revenue stream.
When you look at the amount of cars fitted with it, and the technology it’s using, there’s clearly huge scope for growth, and therefore a huge market for a chip maker like Intel. However, by buying Mobileye – a company which makes everything but chips for driverless vehicles – Intel can now offer a complete solution for car makers looking to buy driverless tech.
Despite the high asking price, Intel is well aware of how much money it can make. In a speech last year, Intel’s chief executive Brian Krzanich said, “Together, we expect to be the global leader in autonomous driving, and we see this market as growing to an over $70bn TAM [total addressable market] by 2030.”
Betsy Van Hees, analyst at Loop Capital Markets, told the BBC. “This is a tremendous opportunity for them to get into a market that has significant growth opportunities”.
This isn’t a new trend either. For the last few years, nVidia has been hugely involved in the driverless tech market, while last year Qualcomm bought NXP for $47bn and Samsung bought Harman for $8bn.