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The Intel-Mobileye Merger Is Official: Should We Be Concerned?

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Part 4
The Intel-Mobileye Merger Is Official: Should We Be Concerned? PART 4 OF 11

What Mobileye Can Offer Intel in the Merger

About Mobileye

In the previous part of this series, we saw that Intel (INTC) is acquiring Mobileye (MBLY) to create a single autonomous driving unit. Brian Krzanich, Intel’s chief executive officer, describes the deal as a merger of the “eyes” (Mobileye) and the “brains” (Intel) of autonomous cars.

Founded in 1999, Mobileye is a leader in driver assistance systems, accounting for 70.0% of the global driver-assistance and anti-collision systems market. The company’s technology is currently powering more than 15.0 million vehicles. Its customer base spans 27 automakers, and 57.0% of its revenue comes from four automakers—General Motors, Nissan, Hyundai, and BMW.

Mobileye competes with automotive suppliers such as Delphi Automotive (DLPH), Autoliv, Robert Bosch, ZF Friedrichshafen, Continental, and Denso.

What Mobileye Can Offer Intel in the Merger

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Mobileye’s financial health

Mobileye went public in 2014 with the largest Israeli initial public offering of $7.6 billion. Since then, the company has grown exponentially from revenue of $143.6 million in fiscal 2014 to $358.0 million in fiscal 2016. Its fiscal 2016 revenue was driven by 113.0% YoY (year-over-year) growth in its aftermarket business and 34.0% YoY growth in its semiconductor business, according to Pacific Crest Securities analyst Brad Erickson.

The truck segment reported the fastest growth in fiscal 2016. However, Mobileye’s long-term growth would most likely be in the much larger passenger vehicle market. Morningstar Research Services analyst Richard Hilgert said that 35.0 million passenger vehicles are produced every year in the United States and Europe compared to 500,000 medium and heavy-duty commercial vehicles.

Mobileye expects its revenue to rise 40.0% YoY to $500.0 million in fiscal 2017. But $500.0 million in revenue is just a drop in the bucket compared to Intel’s annual revenue of $60.0 billion.

Mobileye’s product portfolio

Mobileye’s driver assistance systems are based on a single-lens camera approach. A forward-facing smart camera mounted on the front windshield reads traffic signs and lane markings. The system alerts drivers of potential obstacles such as vehicles and pedestrians and automatically applies the brakes if it believes a crash is imminent.

Its driving assistance systems feature adaptive cruise control, lane departure warnings, and distance keeping. In 2017, Mobileye plans to introduce road experience management that updates the map of the real world using data from sensors of nearby vehicles.

Intel and Mobileye have a history

Intel and Mobileye have worked in partnership with several companies in the automotive sector. They partnered with Delphi Automotive and BMW for their autonomous research and development projects. They plan to start production of fully autonomous platforms for BMW by 2021.

Next, we’ll see how Intel plans to leverage Mobileye’s technology in its autonomous car project.

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