Intel’s decision to acquire Mobilai in 2017 turned out to be a rather shrewd deal: Electric vehicle manufacturers (EVs) are increasingly adding self-driving capabilities to their latest models, which has created a very high demand for Mobilai chips and special software. Demand is so high in fact, that the business has outperformed Intel, its parent company and in addition, Mobilai’s revenue is expected to grow by 40% this year, while Intel’s revenue is expected to fall by around 6%.
Intel CEO Pat Glasinger Has been working hard since he holds the helm in an attempt to revive the fortunes of the world’s largest chipmaker. Intel, which has long been the dominant maker of computer processors, has given up market share to competitors like Advanced Micro Devices Inc and others and has completely lost its technological advantage in key markets.
Against this background, the acquisition of Mobilai led by Amnon Shashua was a special bright spot. The business, which was acquired by Intel in 2017 for about $ 15 billion, has grown consistently and much faster than Intel, and it serves an industry that is still emerging. Intel predicts that the silicon car market will reach $ 115 billion by the end of the decade.
The company has tested its technology in most taxi fleets in Tokyo, Paris, Shanghai and Detroit. It posted revenue of $ 326 million in the last quarter, up 39% from a year earlier. Operating profit climbed to $ 105 million, double the previous year.
Intel Weekly Graph Source TradingView
So Intel is completely proud of Mobilai. On Monday the company stressed that this segment has won big contracts with more than 30 leading car manufacturers in the field. In fact, research firm Guidehouse Insights estimates that Mobilai has already captured about 80 percent of the global market for “advanced driver assistance vision systems” … sensors. So like any good “parent”, Intel, the parent company is finally ready to put its Mobilai on its four wheels and indeed the chipmaker has announced that Mobilai will be listed on the stock exchange towards the middle of next year.
To date Mobilai has been undervalued by investors because it is part of a much larger company and the expectation is that a greater degree of independence will help both the business profile in the automotive industry and customer acquisition.
Why would you care?
Intel’s decision to list on the stock exchange should work both in its favor and in favor of Mobilai: Morgan Stanley estimates that listing on the stock exchange will allow the chipmaker to free up cash for better uses elsewhere, while this listing will still allow it to profit from Mobilai’s growth as a controlling shareholder. This should benefit its small stock, which has been less successful in an index that tracks some of the major chipmakers by 25% this year. Indeed, it can be seen that yesterday, Tuesday, was already a good start: investors raised the price of Intel shares close to 9%.
Intel compared the index to some of the major chip makers from Bloonberg
The bigger picture: Intel has a few more things up its sleeve
Intel also announced this week that it will acquire Screenovate, which has developed user-friendly technology that enables fast transfer of content to PCs to smartphones. It is a technology that has been adopted by major computer manufacturers such as HP and Dell and generates an estimated revenue of several million dollars a year. The company has 14 registered patents in the field of integration between smartphones, PCs and tablets.
Following the acquisition, Screenovate will join Intel’s Client Computing Group (CCG), which is the company’s PC-focused division. Intel estimates that the new technology will integrate well with its existing computer products and plans to continue to develop and market Screenovate’s existing products and work with the company’s team to improve the user experience in computers.
It must be said that the company is building on that it will help generate a flow of new customers. No financial details have been revealed about the deal but Intel will likely pay $ 100 million for Screenovate which was set up more than 10 years ago by CEO Joshua Glazer and currently employs 40 people.
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