As Intel's chip business continues to come under pressure due to falling PC sales, the company has been looking for growth elsewhere, from devices like wearables to connected homes and Internet of Things devices.
As part of the deal, Intel's automated driving group will be absorbed into Mobileye, which will be headquartered in Israel and led by Amnon Shashua, the vision chipmaker's co-founder and chief technology officer.
Intel estimates the vehicle systems, data and services market opportunity will reach $70 billion by 2030.
Mobileye brings the industry's best automotive-grade computer vision and strong momentum with automakers and suppliers.
Eric Schmidt, CEO of Google's parent company Alphabet, praised Mobileye's cutting edge technology a year ago, even though Mobileye is competing with Google to produce the world's first driverless vehicle. In announcing the deal, the company said that its processors will dovetail nicely with Mobileye's vision chips and 360-degree sensing technology in these "data centers on wheels".
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Intel is serious about becoming an important player in the self-driving vehicle market.
Mobileye N.V., whose vehicle-mounted technology is created to anticipate collisions, has agreed to be acquired by microprocessor manufacturer Intel Corp.
Intel just became a bigger player in the realm of autonomous driving, announcing its planned acquisition of Mobileye today. "Together, we can accelerate the future of autonomous driving with improved performance in a cloud-to-car solution at a lower cost for automakers", said Brian Krzanich, Intel CEO. The company's offerings are already inside several semi-autonomous vehicles, including Tesla cars. Mobileye also works on sensor fusion technologies, as well as cameras. Intel is funding the deal with offshore cash ($13.6 billion out of Intel's $17.1 billion in cash was located outside of the U.S.at the end of 2016).
In a statement announcing the deal, Intel claims that the market for various vehicle systems could be worth about $70 billion by the year 2030, and the deal with Mobileye puts the chip maker in competition with new-era auto companies such as Tesla, as well as old rival such as Qualcomm, which recently acquired chip maker NXP.
Mobileye NV (NYSE:MBLY) was downgraded by stock analysts at Evercore ISI to an "outperform" rating in a research report issued on Monday.