Intel announced on Monday that it will buy Israeli technology firm Mobileye for $15.3 billion as part of Intel’s bid to become a player in the up and coming race to create and market the first successful driverless vehicle.
In 2016 Goldman Sachs projected that the market for advanced driver assistance systems and driverless vehicles would grow from about $3 million in 2015 to as much as $290 billion in 2035, so it’s no surprise Intel wants to get in on it.
What is a bit surprising is that Intel would pay such a high price to enter the race when, according to industry newsletter Semiconductor Advisors, it’s so “very far outside [Intel’s] core business franchise.” The price for acquiring Mobileye is about 60 times Mobileye’s earnings.
In fact, Intel’s decision doesn’t come so far out of left field as it may seem. The company, which is the world’s largest chipmaker, has spent the last year or so investing in and acquiring related companies, including Altera, Yogitech, Arynga, and Itseez. All of these companies are involved with creating the chips, semiconductors, and machine vision technology that will be vital to making a viable self-driving car.
In January of this year, Intel launched Intel GO, a new brand for the software and hardware tools it’s developing specifically for the creation of driverless vehicles. Intel has such faith in this new division, in fact, that they announced the same month that they will be putting a fleet of about 40 autonomous cars on the road by the end of 2017.
“Scale is going to win in this market,” said Brian Krzanich, Intel’s Chief Executive. “I don’t believe that every carmaker can invest to do independent development into autonomous cars.”
While Intel may have struggled in recent years to remain relevant in a world quickly shifting toward mobile computing rather than traditional computers, it’s still worth noting that the company has a long history of successful, strategic moves that put it at the forefront of the personal computer market for more than 30 years. If they’ve chosen to move into a new market, it’s worth paying attention.