Intel: Potential Risks in Working with Waymo
The ever-changing tech world
In technology, there are no permanent friends—or rivals. Before the ongoing bitter courtroom battle between Alphabet’s (GOOGL) Waymo and Uber occurred, Uber and Alphabet—then known simply as Google—were once allies.
Another example is Cisco Systems (CSCO) and Arista Networks (ANET), which are entangled in a long-running legal dispute over patent ownership. Arista was founded by former Cisco employees who originally exited on amicable terms.
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Alphabet designing its own chips
Waymo seems to be a well-matched partner for Intel (INTC) while pursuing ~$126 billion in revenues in the autonomous driving market by 2027. However, it’s worth noting potential pitfalls that this collaboration could carry.
Through its various units, Alphabet is reported to be working on its own chips. Google, for example, has designed its own server chips to handle AI (artificial intelligence) functions. Alphabet’s chip design efforts pose the risk that the company could someday phase out or limit the use of chips from outside suppliers such as Intel.
Although working with Waymo could unlock tremendous revenue opportunities for Intel, the risk of Intel someday being supplanted as a Waymo chip supplier cannot be totally discounted.
Intel, Waymo, and BMW
However, as far as prospects in the autonomous driving market go, Intel has not put all its eggs in one basket. Besides Waymo, it’s also an autonomous driving partner of German (EWG) automaker BMW.
Intel could also use the Waymo label to win more autonomous driving business. Until now, Intel has relied on sales to the personal computer market for the majority of its revenues, as illustrated in the chart above.