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The Road Ahead Looks Promising for Intel's Mobileye

The leader in advanced driver-assistance systems contributes only a small part of the chipmaker's overall revenue for now, but sales are growing.

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Because of Mobileye's relatively small contribution to Intel's (INTC) total sales (only 1% of 2018 revenue), we understand why many investors might overlook the subsidiary and even question why Intel owns this business at all when it faces stiff competition in its core PC and data center segments. But since Intel acquired Mobileye in 2017 for $15.3 billion, the leader in advanced driver-assistance systems, or ADAS, has been steadily increasing its annual design wins while growing revenue at a healthy double-digit rate. The firm is on track to surpass $1 billion in sales in 2020, and we believe it will approach $3 billion by 2023, which supports our assumptions of mid-single-digit revenue growth for Intel as a whole.

Founded in 1999, Israeli-based Mobileye supports automotive vision systems that use cameras, processors, and pertinent software algorithms. While the camera can come from a variety of suppliers, Mobileye's contributions revolve around the processor that makes the camera "smart" (EyeQ vision processor) and overarching software algorithms that identify objects such as pedestrians and other vehicles. In contrast to competing solutions that use visual detection, radar, and lidar sensors, Mobileye primarily focuses on the visual aspect of sensing for its ADAS features (a single camera mounted in the rear-view mirror). Mobileye does not eschew radar or lidar sensors—rather, it plans to use a camera-centric approach to build full autonomous vehicle capability, then add radar and lidar as a secondary layer for true redundancy. Given its existing portfolio of computer vision products found in vehicles today, we expect Mobileye (and thus Intel) to be a meaningful player in future AVs.

Abhinav Davuluri does not own shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.

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