This Monday, March 7, Intel began the process of listing its autonomous driving unit, Mobileye, on the stock market. Proof that this sector is currently experiencing a significant gain in popularity with the public, professionals and investors.
Mobileye is on the rise
Founded in 1999, Israeli company Mobileye was acquired by Intel in 2017 for around $15 billion. It is developing a camera-based system with adaptive cruise control and lane change assistance in self-driving cars. Eventually, it plans to build its own LIDAR sensor but in the meantime, it uses units created by Luminar Technologies. In 2021, Mobileye recorded revenue of $1.4 billion, an increase of 40% over the previous year.
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The firm is on the rise: around 50 million vehicles are equipped with its technology, compared to 37 million in 2020. Wishing to take advantage of this success, Intel has therefore declared that it has confidentially submitted a draft registration statement to the Securities and Exchange Commission (SEC) for a proposed IPO. With this maneuver, the firm does not really create a surprise because it had already considered this possibility last December.
As reported Reuters, Intel did not disclose further details about the IPO, but the company has previously said it will receive the majority of the proceeds from the stock sale. Part of these funds will be used in particular to build more factories for manufacturing Intel chips, in which the company is investing heavily. Separately, the company will also retain a majority stake in Mobileye after the IPO, which is expected to take place in mid-2022.
Stock markets uncertain at the start of the year
With this IPO, Intel continues its momentum. Its leader, Pat Gelsinger, assured that the company wanted to become the number 1 in semiconductors again, while it must face very solid competitors like Nvidia or Qualcomm. With that in mind, Intel recently acquired Tower Semiconductor for $6 billion, but the buyout has failed to lift the firm’s stock price as investors fear spending will weigh on the company’s short-term results.
The stock markets are going through a great period of uncertainty, particularly due to the war in Ukraine. Photography: Maxim Hopman / Unsplash
By making Mobileye public, Intel hopes to generate enthusiasm for its own actions, as well as capitalize on the growing demand in the self-driving sector. The company estimates that the IPO could see Mobileye valued at around $50 billion. However, this value could be revised lower as investor interest in IPOs has waned significantly due to recent equity market volatility amid fears of impending rate hikes and geopolitical tensions.
As an example, traditional IPOs in the United States have raised approximately $2.33 billion year-to-date, compared to $26.67 billion during the same period in 2021. As a result , many companies have made the decision to postpone or abandon their IPO.
Semiconductors and automobiles… Linked fates?
Despite an uncertain stock market, this move by Intel demonstrates how the automotive and semiconductor industries are increasingly intertwined. In addition to Intel and Mobileye, you should know that the historic manufacturers General Motors and Ford also have their own division specializing in autonomous driving. It is for this reason that these two firms want to explore the possibilities of manufacturing semiconductors, precisely to support the automotive industry.