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Self-Driving Car Race: Intel Buys Mobileye for $15 Billion

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Intel Corporation (INTC - Free Report) on Monday announced it struck a deal to acquire driver assistance technology company Mobileye N.V. (MBLY - Free Report) for roughly $15.3 billion. The deal marks the next step in the driverless car race.

Mobileye’s stock is up 29.43% in early afternoon trading on Monday to $61.19 per share, near its all-time high. Intel’s stock dropped 2.31% to $35.08 per share.

Mobileye specializes in chip-based camera systems called “artificial vision sensors.” The technology alerts drivers in real-time to potential road hazards, like pedestrians. The company claims that the sensor technology is 99% accurate and helps prevent accidents. It is working towards putting this technology into self-driving car technology in the future. Mobileye currently helps support over 15 million vehicles.

Israel-based Mobileye was founded in 1999 and it went public in July 2014. The IPO came after Mobileye began to invest in driverless car technology. The company’s current market cap is nearly $10.5 billion. In a memo to employees, Mobileye executives said Intel’s existing automated-driving efforts will be integrated into the company, and existing Israel leaders will head up the efforts.

Intel’s $15.3 billion acquisition is the biggest ever for an Israeli technology company. The move positions Intel as a “leading technology provider in the fast-growing market for highly and fully autonomous vehicles,” according to a company statement Monday. “Intel estimates the vehicle systems, data and services market opportunity to be up to $70 billion by 2030.”

Mobileye previously worked with Tesla, Inc. (TSLA - Free Report) to help power the electric carmaker’s Autopilot technology. The two companies parted ways after a Tesla driver died in a car crash on May 7, 2016, while using its Autopilot feature.

The deal comes after Mobileye partnered with self-driving technology company Delphi Automotive in Aug. 2016. The two companies plannedto create an affordable self-driving car platform to sell to carmakers by 2019. In Nov. 2016, Intel announced that Mobileye and Delphi would use its processors.Intel, Mobileye and German automaker BMW AG partnered to test 40 self-driving cars, which could possibly lead to production by 2021.

Intel’s purchase helps the technology giant begin to compete in the race towards autonomous car technology.

Last year, in the self-driving race, General Motors (GM - Free Report) spent $1 billion to purchase Cruise Automation. Uber recently bought self-driving truck maker Otto for $680 million. QUALCOMM Incorporated (QCOM - Free Report) , an Intel competitor, recently bought NXP Semiconductors N.V. (NXPI - Free Report) , a leading semiconductor supplier to the automotive industry.

In Nov. 2016, Samsung Electronics Co. bought Harman International Industries Inc. for $8 billion to move into the automotive vehicle space.

Waymo, the self-driving car company that split off from Google’s parent company Alphabet Inc. (GOOG - Free Report) , asked a federal court recently to stop Uber Technologies Inc.’s from developing autonomous vehicles. Waymo claims that Uber stole proprietary design secrets. The lawsuit states that a former manager of Google’s self-driving car project took documents before quitting to start the self-driving truck company Otto, which Uber acquired quickly.

Intel bought security-software company McAfee Inc. for $7.7 billion in 2011. The company sold McAfee for a major loss in 2016.

After missing out on the rise of the smartphone, Intel has fought to try and stay ahead of the next big technology. Intel is betting big on driverless car technology. The company purchased Israel-based 3D video technology company Replay Technologies in March 2016.

Intel announced in April 2016 it would lay off 11% of its workforce to in order to cut costs and to free up capital to invest in new businesses. In January, Intel announced it would purchase a 15% stake in digital mapmaker Here International B.V., joining BMW AG and Volkswagen AG’s Audi, to further the development in the real-time technology needed to improve self-driving car technology.

Auto part suppliers are doing well today in the wake of the Intel and Mobileye deal. Lear Corporation’s (LEA - Free Report) stock is 1.30% to $46.36+ per share Monday, an all-time high. Delphi’s stock is up 3.37% to $79.69 per share. Visteon Corporation’s (VC - Free Report) stock is up 5.58% to $98.77 per share.

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