Originally appeared in The New York Times
Intel agreed on Monday to pay $15.3 billion for Mobileye, an Israeli technology company that specializes in making sensors and cameras for autonomous cars, as the global microchip giant tries to expand its reach in the fast-growing sector.
The deal follows a growing partnership between Intel and Mobileye. In January, the companies announced plans to have up to 40 autonomous cars on American and European roads by the end of this year as part of trials with BMW, the German automaker.
Companies from the technology sector, like Google and Uber, and automakers like General Motors and Tesla have invested heavily in driverless cars. Intel is trying to keep pace to ensure that its computer chips are used in such vehicles when they eventually become commercially available, which is expected by the end of the decade at the earliest.
As part of the deal, Intel said it would buy Mobileye’s outstanding shares at $63.54 a share, a 34 percent premium to Mobileye’s closing price on Friday.
“This acquisition is a great step forward for our shareholders, the automotive industry and consumers,” Brian Krzanich, Intel’s chief executive, said in a statement. “Together, we can accelerate the future of autonomous driving.”
Intel’s deal for Mobileye seems to be a recognition that chip-making rivals like Nvidia and Qualcomm have moved slightly ahead in the race to provide the computing power needed for autonomous cars.
Last year, Intel said it would invest $250 million in start-ups working on driverless car technologies, and it signed deals with BMW and Delphi Automotive, an auto parts supplier, to expand its presence in the field.
Announcing the Mobileye deal, which would be one of the largest ever acquisitions of an Israeli tech company, Intel said it would continue investing in the autonomous-driving industry, a sector that it said would be worth about $70 billion by 2030.
Intel added that it would combine its automated-driving division with Mobileye’s operations, with the aim of helping automakers and suppliers bring driverless vehicles to the market. Mobileye already provides the vision systems used in some of the autonomous-driving systems made by Tesla, though that relationship is expected to end in the near future.
“By pooling together our infrastructure and resources, we can enhance and accelerate our combined know-how,” Ziv Aviram, Mobileye’s chief executive, said in a statement.
Experts say that autonomous cars are unlikely to hit the roads in the short term because regulators are beginning to question which rules such vehicles should follow and because companies are struggling to make the technology work seamlessly.
Uber, the ride-booking service, halted its driverless car tests in California after local officials said the company did not have required permits. In Europe, regulators are divided on the issue of self-driving cars, causing the automotive industry to complain that the delays could hamper plans to take the technology to the Continent’s streets.
Intel’s acquisition of Mobileye is expected to close by the end of 2017. The deal has the approval of both companies’ boards but requires shareholder and regulatory approval.
Citigroup and Rothschild acted as financial advisers to Intel. Raymond James & Associates advised Mobileye.