By Jim Lundy and Adam Pease
Intel is making big moves in the autonomous driving market.
Intel announced last week that it plans to do an initial public offering of its Mobileye computer vision-based autonomous driving division. This blog analyzes the reasons for this move.
Why did Intel Acquire Mobileye?
Intel acquired Mobileye in 2017 for roughly $15 billion. The reasons were kind of obvious—Intel generates surplus cash flow and autonomous driving is an emerging market that is increasingly being linked to the burgeoning electric vehicle market. So, we give credit to Intel for having the vision to make this move.
CEO Pat Gelsinger Uses an EMC Playbook on IPO
With significant pressure on its core chip-making business, this is good news for Intel, which can now monetize a new market that will have significant demand over the next 10 years. On CNBC, Pat Gelsinger indicated that sales of Mobileye were roughly $1 billion last year and up 40% this year.
How will Intel Monetize this IPO?
With Intel keeping the majority of the shares in Mobileye, this bodes well for Intel for future cash generation and profits. As a market leader for autonomous driving, Intel stands to benefit from its new IPO.
Mobileye Leverages LiDAR and Video Cameras
There hasn’t been a significant event in the automotive world that demonstrates the need for cameras and LiDAR versus cameras alone. The good news is that Mobileye has several different platforms that could leverage both LiDAR and cameras making it more reliable over time.
Intel Needs Cash to Fund its Chip Factories
There is pressure on Intel to innovate and its chip-making business is significant. This move to spin out Mobileye will also help it on the cash generation front. So for now, there’s nothing but positive news relative to Intel.
Bottom Line
Intel’s move demonstrates the growing value of the autonomous vehicle market, which Mobileye has shown itself to be a leader in. This IPO will position Intel to monetize this market more effectively and provide it with additional revenue that can be reinvested in its expanding chip-making business.