Back in 2017, chip giant Intel (INTC 2.55%) bought Mobileye, a specialist in vision recognition chips for autos, for what at the time was a huge price: $15 billion. Now it's planning an IPO for Mobileye at a much higher valuation. In this Motley Fool Live video, recorded on Dec. 9, Industry Focus host Nick Sciple and Motley Fool senior auto specialist John Rosevear look at what makes Mobileye so valuable, and why Intel might be eager to unlock some of that value right now.
A transcript follows the video.
Nick Sciple: Intel announced plans earlier this week to spin out its Mobileye unit. That's the unit that develops chip systems for self-driving cars. Mobileye was publicly traded until Intel acquired the business for about $15 billion in 2015. Today reports are saying they're seeking a $50 billion valuation for Mobileye. John, what do you make of this news?
John Rosevear: Well, I don't follow Intel itself closely, but I know that Intel has not had a great few years. But on the other hand, Mobileye has gone gangbusters. That $15 billion that Intel paid for them was a hefty premium in 2015. But Mobileye has roughly tripled its revenues since then.
We should back up a bit. Mobileye is an Israeli company led by its co-founder Amnon Shashua, who is one of the smartest people in the world working on what we call machine vision, processing images that cameras pick up, hence Mobileye, the name of the company. They do business with just about every automaker in the world with the exception of Tesla and the possible exception of Toyota. But many, many things. They have made advances in self-driving software. They are working with Nio, the Chinese electric vehicle maker, on self-driving taxis that are coming very soon. A very impressive company. Has moved very quickly.
At the time Intel bought it, it was pretty much the only pure-play self-driving stock. Now, of course, the field is a little more complicated, but I think a $50 billion valuation in the current market given current valuations will be easily reached. Let's put it that way.
Nick Sciple: Where do you put Mobileye in this constellation of, now there's Luminar out there, there's Velodyne? Nvidia, to a certain extent, plays in the self-driving universe. Where does Mobileye fit in there? Would you say they're a leader or a disruptor?
John Rosevear: Well, first of all, they're different from companies like Luminar and Velodyne because they're not making lidar. They're making, essentially, computer chips --processing chips that process the images harvested by cameras, lidar, and so forth, to help the self-driving car or driver-assist brain, computer brain make sense of it all. At this point, they've been around 15 years, I want to say something like that, a while. They weren't a new company when Intel bought them in 2015. At that time, they were already selling vision processing chips to most of the world's automakers. If your car can sense when it's wandering out of lane or anything like that, chances are good that there is a Mobileye chip in that system software. They're vision processing systems on chips. They've gotten a lot more sophisticated since 2015. I think Mobileye remains out in front of this. I don't know if you'd call them an incumbent now. [laughs] They're certainly important to a lot of automakers plans, whether that automaker is Ford or Nio, let's put it that way.
