The two companies, along with BMW Group, have been partners since previous year in a joint project to begin producing self-driving cars by 2021. 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.
Such a massive investment could only be justified if Intel sees a way to dominate a large chunk of the autonomous vehicle market. The Israeli company now utilizes STM chips for the products it provides auto manufacturers with.
'This transaction extends Intel's strategy to invest in data-intensive market opportunities that build on the company's strengths in computing and connectivity from the cloud, through the network, to the device, ' the company added. It used to supply Tesla with the bits and pieces that powered its Autopilot semi-autonomous driving features but the two companies later had a falling out.
This would be the biggest exit in the history of Israeli hi-tech, which until now were NDS, acquired by Cisco for $5 billion, and Chromatis, purchased by Lucent for $4.5 billion. The technology is slated to be tested on roads in the U.S. and Europe.
The deal also could have an impact on the role of other self-driving component suppliers, including mapping company Here, as well as technology companies from Google to Chinese Internet giant Baidu.
"This acquisition is a great step forward for our shareholders, the automotive industry and consumers", Intel CEO Brian Krzanich said in a statement (PDF).
Israeli media originally reported that the acquisition would cost Intel between $14bn-$15bn, however Intel later today confirmed that they would pay a total of $15.3bn for the company at a price of $63.54 per share.
Mobileye is a popular name when it comes to computer vision technology.
Mobileye co-founder Ziv Aviram said of the acquisition that "together, we will provide an attractive value proposition for the automotive industry".
But Intel's bid for Mobileye is also the latest move from the chipmaker to catch up to rivals like Qualcomm and Nvidia, who have spent the last two years building a substantial lead in the automotive industry as suppliers of driverless auto system processors and software.