Intel Is Making Waves in the Autonomous Driving Race With Mobileye

Last year Intel Corporation (INTC) gobbled up Mobileye, an Israel-based company working on self-driving car hardware, for $15.3 billion.

At the time, some observers and investors balked at the price of the deal. Admittedly, $15 billion isn't exactly chump change and the deal came at a huge premium to Mobileye's business at the time. But Intel CEO Brian Krzanich didn't make a big splash for the sake of making a big splash. He made the deal because he knew what Intel needed to do stay relevant when the race for autonomous driving began.

Well, tech companies have started their engines and they're getting ready to run.

Reports from Reuters say that Intel/Mobileye has landed a big deal with a European automaker, although what automaker is involved wasn't disclosed. Financial terms also weren't disclosed.

However, we do know that the deal includes 8 million vehicles and will begin in 2021 involving Intel's EyeQ5 chips. The company says the EyeQ5 chips will be capable of level 4 autonomous driving. Given that level 4 is oh-so-close to level 5 fully autonomous driving, consumers have reason to be excited.

Because we don't know the terms of the deal, we don't know many cars Mobileye plans to supply annually. If it were 8 million, it would seemingly eliminate automakers like Fiat Chrysler Automobiles (FCAU) and Daimler (DDAIF) (maker of Mercedes and Smart), given that these two don't even ship 8 million units per year between the two of them.

In fact, the only company that would fit that profile in this case would be Volkswagen, but again, it's not clear what the terms are so we can't say with certainty. We do know Mobileye/Intel has partnered with BMW, another European automaker, for an autonomous car to be produced in 2021.

That's one indication it could be BMW.

In any regard, the competition is heading for up the technology inside of our cars. Nvidia Corporation (NVDA) has been hard at work as well, setting up an interesting battle between the two chip giants over the next few years.

Because of both companies' ability to land big deals, maybe it won't be such a one-sided fight as we once thought. Earlier this year, we looked at how Nvidia was leading the autonomous driving revolution.

This article is commentary by an independent contributor. At the time of publication, the author had no positions in the stocks mentioned.

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