Intel is to buy Israel’s Mobileye in a deal valued at about US$15 billion, instantly propelling the computer chip and technology giant to the forefront of autonomous vehicle technology.
The deal, announced on Monday, combines Mobileye’s market-leading software — which processes information from cameras and other sensors — with Intel’s hardware, data centers and its own software, giving automakers a one-stop place to shop for fully autonomous systems.
“This acquisition essentially merges the intelligent eyes of the autonomous car with the intelligent brain that actually drives the car,” Intel CEO Brian Krzanich wrote in a note to employees about the acquisition.
The combination, expected to close by year’s end, would allow the companies to bring components to market faster at a lower cost, solidifying Mobileye’s leadership position, officials from the companies said.
Automakers and some technology companies are testing autonomous vehicles in California, Michigan and a few other states.
Nearly all of them use Mobileye’s software, which reads inputs from cameras, radar and laser sensors and makes decisions on what an autonomous car should do.
Jerusalem-based Mobileye says it has contracts with 27 automakers.
It also controls about 70 percent of the market for software that runs automatic emergency braking and semi-autonomous cruise control systems that are in cars and trucks on the road today.
Intel’s involvement and the big price tag show that autonomous cars are coming in large numbers, signifying a sea change in the way people travel, said Timothy Carone, a Notre Dame University professor who has written about the future of automation.
“Major players are finding ways finding ways to position themselves for a change as seminal as the personal computer revolution,” Carone said.
Autonomous cars will need higher levels of connectivity to the Internet and access to bigger data centers, which Intel can provide, Krzanich said.
The two companies also will combine highly detailed mapping efforts.
Automakers want lower costs, faster times to market and the ability to get an autonomous driving system in one place, Krzanich said.
“If you put all of that together, you really get an end-do-end solution for autonomous driving,” said Mobileye chairman and cofounder Amnon Shashua, who will continue to lead the combined autonomous car unit.
In the deal, Intel Corp is to pay US$63.54 for each share of Mobileye NV, a 34 percent premium on its closing price on Friday.
The boards of both companies still have to approve the transaction.
The companies put the equity value of the deal at US$15.3 billion.
The deal is the latest combination as automakers and technology firms race to build autonomous cars and for leadership in auto electronics.
It moves Intel-Mobileye to at least parity with Google’s Waymo, Uber Technologies and car companies for autonomous car leadership, Carone said.
The deal also is likely to pressure competitors into signing more deals, he said.
Mobileye, with 660 employees, has been forming partnerships worldwide as its growth continued as a separate company. BMW, Intel and Mobileye partnered last year, and Mobileye teamed up with Delphi Automotive to develop building blocks for a fully autonomous car.
Competitors also formed partnerships last year.
Ride-hailing company Uber Technologies and Volvo signed a US$300 million deal for Volvo to provide SUVs to Uber for autonomous vehicle research. General Motors Co invested US$500 million in Uber rival Lyft Inc to develop a fleet of autonomous electric taxis.