|Interesting piece on Intel's place in autonomous vehicles.|
How Intel Can Disrupt The Self-Driving Car Strategies Of Nvidia, Google, Baidu, And Tesla
Aug. 11, 2017 7:00 PM ET
About: Intel Corporation (INTC), Includes: AAPL, BIDU, GOOG, GOOGL, TS
Intel’s purchase of Mobileye for $15.3 billion will let it disrupt the nascent industry for self-driving cars.
The Mobileye acquisition is an expensive gamble that can make Intel a go-to provider of Big Data platforms, sensors, software, processors to self-driving car manufacturers.
The Intel cloud/hardware and Mobileye camera/software combo could be a serious alternative to Nvidia’s self-driving car GPU/platform ecosystem.
It will be car manufacturers, not search engine giants like Google and Baidu, who will usher in mainstream adoption of self-driving cars.
The self-driving car industry is a new expansion market for Intel's core x86 processor products.
The $15.3 billion purchase of Mobileye ( MBLY) is an expensive gamble on the part of Intel ( INTC). Based on the $358.16 million FY 2016 revenue of Mobileye, Intel made a 42.71 Price/Sales bet on it. Intel will probably take on new debt to finance this venture. Intel loaded up $7 billion of debt to finance its $16.7 billion (less than 9x P/S purchase based on 2014 revenue of Altera) bet on Altera. Altera is probably contributing more $2 billion to Intel’s annual top line right now. However, I think it will take many years before Mobileye itself can generate the same level of contribution.
Nevertheless, I think Mobileye can help Intel disrupt the self-driving car strategies of Google’s (NASDAQ: GOOG) (NASDAQ: GOOGL) Waymo, Nvidia ( NVDA), Tesla ( TSLA), and Baidu ( BIDU). Mobileye, founded in 1999, is a pioneer in Advanced Driving Assistance Systems [ADAS]. With the global influence of Intel, Mobileye could become a key leader in self-driving car technologies.
Intel plans to build a test fleet of 100 self-driving cars. They will likely use Mobileye’s EyeQ processor, 360-degree surround-view mono-vision sensing, and AI/deep learning technologies. Morgan Stanley already estimated that Waymo could already be worth $70 billion. I believe that by 2020, some analysts will also estimate that Mobileye could be worth $70 billion to Intel.
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