Why Mobileye is Intel’s ticket to auto ‘table’

Article By : Junko Yoshida

Die-hard Intel sceptics believe Intel might have learned its lesson as it prepares its plunge into the automotive market.

Intel's announcement that it will acquire Mobileye has stirred mixed emotions—like excitement, puzzlement, surprise, fear, confidence and even disappointment—as well as contrasting reviews from those in the industry.

One of the most scathing comments came from Semiconductor Advisors LLC, financial and strategic advisory services:

Even though Intel tried to suggest a strong link to Intel's data centre business, we find little to no synergy as there is no direct uplift of the data centre business.

This suggests that Intel is taking a leap of faith to go very far outside its core business franchise. This can also be viewed as an admission that the core Semi business is not likely getting significantly better any time soon and that the company needs something new to jumpstart growth.

Clearly, those at Semiconductor Advisors aren’t buying Intel CEO Brian Krzanich’s argument. Krzanich reportedly told shareholders at last month’s investor day that the “traditional market view” of Intel as a Silicon Valley giant making chips for PCs and servers is “wrong.” Intel today, he said, sees itself as “a data company.”

There are, of course, numerous tech analysts applauding Intel’s acquisition of Mobileye. While acknowledging that autonomous vehicles are still in their infancy, this school of observers believes this was the right decision at the right time.

Smartphone lessons

Most seasoned electronics industry veterans remember how badly Intel missed the smartphone market. Intel didn’t listen to customer demand and believed they could forcefeed the x86 architecture onto a market already dominated by ARM.

The Mobileye buy, however, is different. Some die-hard Intel sceptics appear to be even optimistic, inferring that Intel might have learned its lesson as it prepares its plunge into the automotive market.

Richard Windsor, analyst at Edison Investment Research, shared his view in his research note: "Missing the boat in mobile has damaged Intel’s reputation…The acquisition of Mobileye by Intel highlights both Intel’s determination not to miss the next big trend as well as the concentration of Google’s competitors around HERE."

He further noted, "In addition, other ecosystems such as Tencent, Baidu, Facebook and Amazon are also working with HERE for their location data, all of which will benefit Intel as it tries to break the mould that the market has set for it."

Windsor said that Mobileye represents the second largest acquisition in Intel’s history. "It underlines the need for semiconductor companies to move into markets beyond consumer electronics and PCs. This is why Qualcomm is buying NXP and why Samsung is buying Harmon."

Mobileye's dominance

Technology/industry analysts who cover the automotive market see the Mobileye acquisition as Intel’s getting “a seat at the table,” as Phil Magney, founder and principal advisor of technology advisory Vision Systems Intelligence, said. Further, the deal will allow Intel “to be a one-stop-shop offering hardware and software solutions for infotainment and automated driving applications,” according to IHS Markit.

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