At Intel's (INTC +2.61%) recent investor day, the company revealed it would soon be spinning off its Mobileye subsidiary, which develops self-driving cars and driver-assist systems.
In this video clip from "Semiconductor Revolution" on Motley Fool Live, recorded on March 3, Motley Fool contributors Billy Duberstein, Jose Najarro, and Nicholas Rossolillo discuss Mobileye's future potential; how Intel's moves are helping it keep up with competitors Taiwan Semiconductor Manufacturing, Nvidia, and Advanced Micro Devices; and what it all means for investors.
Billy Duberstein: Intel recently had its investor day. It gave a lot of long-term targets and plans. So we'll get into that. One interesting thing is that Mobileye, they're going to try to do an IPO of Mobileye this summer to raise money for their investment into their foundry business. So it's going to be pretty interesting what kind of valuation that gets. I think they bought it for about $15 billion back in 2017. Some think it could be worth as high as $50 billion now and I hope they will get that. But there was a recent DigiTimes article that said Mobileye hopes to build a $5,000 Level 4 autonomous system by 2025. That would make it basically appropriate to put into low-cost cars and really democratize highly autonomous vehicles, which I thought was really interesting. They give a roadmap that it's, I guess it's going to be $4,000 for the cameras, lidar, and radar. So their system is going to be composed of three different technologies. So radar, which I think it's sound waves, that detect objects, lidar, which is just lasers to paint a picture of what's around the car, and then also cameras. I think Tesla's going with like the pure camera approach, I think. Then they are trying to get their IQ Ultra system on-chip. Their IQ is their autonomous driving chip. They're trying to make something called the IQ Ultra system on chip for Level 4, get in production by the end of 2023 and then volume production by 2025. That's actually going to be based on 5-nanometer technology produced by TSMC. So not even Intel there. You can see Intel still having to rely on TSMC for the most advanced nodes, better node for all the products that are not CPUs. That's kind of exciting for Mobileye. If they can translate that into optimism by the summer, they could raise a lot of money so we'll have to see. It's something to track over the next couple of years in the summer.
Jose Najarro: To me this is very crazy. I mean, these semiconductor companies are really starting to focus in these kind of one-stop solutions for autonomous driving. You mentioned, Intel their main chip is going to be called the IQ. I know Nvidia has, was it the IQ, yeah, the IQ. When Nvidia has their chip that's called Orin at the moment and then they are looking to build a full system. Well, Nvidia also has a full system and now what's coming into mind is AMD just recently finished the acquisition of Xilinx, who also has a few chips that work in the automotive market. So who knows, maybe AMD is next to provide some form of chips and home solutions like we're seeing here in the autonomous market. Nick, any thoughts there before we take a quick look at Slido?
Nicholas Rossolillo: I think it's an interesting move. Just all deferred ability on Intel because I follow Intel a lot less closely. But I do think it's an interesting move and it jives with Pat Gelsinger's stated objective for the company. Correct me if I'm wrong, but Intel still going to keep a sizable stake in Mobileye, correct?
Duberstein: They're still going to be the majority shareholder. I'm not sure how much of it they're going to sell it all depends. Yeah.
Rossolillo: They're going to raise a decent amount of cash in this partial spinoff and I think they really need that cash to plow back into manufacturing because TSMC just is a beast. I mean, it's tens of billions of dollars without even batting an eye getting dumped into their existing fabrication capabilities and new ones as well. I think this is a really smart move for Intel and then for us as investors, it's obviously exciting to see such a high-growth technology play get separated out from Intel and we'll get to discover what the true valuation is according to the market.
