What makes Mobileye worth more than $50b?

Mobileye CEO Amnon Shashua Photo: Heinz Troll European Patent Office
Mobileye CEO Amnon Shashua Photo: Heinz Troll European Patent Office

The Intel unit's advanced driver assistance systems are just the start. The Israeli company is also quietly developing a platform for a smart electric car.

Last September Mobileye CEO Prof. Amnon Shashua briefed journalists to mark the launch of the company's autonomous taxi service in Germany. After the briefing I asked Shashua politely, "In a period in which every startup in the auto-tech sector with zero revenue is holding an offering and trading at a valuation of billions, isn't Intel tempted to float Mobileye, which reports substantial and consistent profits?

Shashua replied, "When I spoke on the matter with Intel's new chairman he asked me to write down what I think the company would be worth in an IPO. I can only tell you that the amount was significantly bigger than the sum for which Intel acquired Mobileye."

In hindsight, Shashua's response foretold today's announcement that Intel is planning an IPO for Mobileye next year and also hinted at the biggest secret around any such flotation - the company's valuation. The final valuation will also depend on market sentiment but it would be a pretty good bet to back it being about $50 billion. Perhaps even much higher because the company's revenue is stable and provides a springboard to a huge new market in the future.

At present Mobileye has a monopoly on the global market for advanced driver assistance systems (ADAS) - safety systems for smart cars. Eight out of ten cars that roll of the production lines of carmakers worldwide are equipped with the ADAS of the Jerusalem-based company and according to the company's order backlog, its dominant position in the market is unlikely to change any time soon. Here and there rivals pop up trying to take a bit out of Mobileye's market share but the Israeli company's cost/performance credibility is keeping it ahead of the field.

The future market that Mobileye is targeting with major resources is the development of fully autonomous cars. On this front, Mobileye's current and future declared technology contains the entire wish list for global venture capital investors in auto-tech: kits for fully autonomous cars, which have already been adopted by the world's car manufacturer who already have a timetable for serial production of autonomous cars; an advanced mapping division based on high resolution global data that can be commercialized for vertical markets such as smart cities; advanced independent development assisted by Intel on laser sensors (lidar) and multi-dimensional radar for autonomous vehicles; and robot taxi services with wireless haling algorithms.

Young companies, which each operate in only one these sectors, have held IPOs over the past two years at valuations of billions of dollars. Put all these sectors together into one package and you get a flotation that will stir up huge interest on Wall Street.

Mobileye's quiet activities

Those who look even further ahead may draw the conclusion that this is only the tip of the iceberg. Mobileye recently quietly began to develop a modular platform for a smart electric car called 'skateboards' on which automotive driving technology can be integrated in the future.

The significance of this is that Mobileye will in the future have a base on which to become an electric car manufacturer with its own brand, from bumper to bumper, possibly even with a strategic manufacturing partnership with a large serial production vehicle company. This is by no means a fanciful idea and in fact such a process is strongly underway in the vehicle industry, where cars are today a platform for installing technology, which can be purchased from outsourcing.

Huge IT companies like Apple, Foxconn, Baidu and Alibaba and many others are already building for themselves independent car brands. Add to that the enormous competitive power providing 'support' from global chipmakers because chips are today the most important currency of trade in the car industry - and the scenario of Mobileye becoming a car manufacturer is certainly viable.

So if in several years Intel does make Mobileye into a fully-fledged full-stack car manufacturer, it is clear that the pricing of the company's second public offering will be of a completely different caliber. Think of the pricing of Tesla, NIO and other smart electric car manufacturers. This could certainly be what Intel is planning.

When Mobileye's IPO gets going at an unprecedented valuation, this will be very important and positive news, even in the short term, for very many Israeli auto-tech companies. The previous large IPO by Mobileye, which led to the $15 billion acquisition by Intel, threw a spotlight on the Israeli auto-tech market and attracted many global investors to Israel. Mobileye's upcoming public offering, at a far higher valuation, could be the next springboard for the Israeli auto-tech industry.

Published by Globes, Israel business news - en.globes.co.il - on December 7, 2021.

© Copyright of Globes Publisher Itonut (1983) Ltd., 2021.

Mobileye CEO Amnon Shashua Photo: Heinz Troll European Patent Office
Mobileye CEO Amnon Shashua Photo: Heinz Troll European Patent Office
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