Intel (NYSE: INTC) announced that its self-driving unit, Mobileye, had filed for an initial public offering in the U.S. at an estimated value of $50 billion. Intel is the majority owner and is expected to use the proceeds to fund its new manufacturing facilities.
Mobileye was founded in 1999 by Amnon Shashua, a researcher from Hebrew University, whose research was on creating a visual system using algorithms, cameras, and sensors to aid in vehicle detection. From this, its technology was gradually integrated into cars initially as an upgrade but now increasingly a standard feature. Already, such vehicle detection systems have yielded improvements in terms of fewer accidents and fatalities.
In 2015, Mobileye was bought by Intel in a deal that valued it over $15 billion. The investment was certainly a success in terms of Mobileye continuing to grow during a period when Intel's stock was basically flat. However, in 2015, Intel was the top chipmaker in the world by a healthy margin and was focused on maintaining market leadership in new and existing categories. So, the Mobileye acquisition was its entry into the booming autonomous market.
Intel in 2022 is a much different company. It's been bypassed by upstarts like AMD (Nasdaq: AMD) and Nvidia (Nasdaq: NVDA) who have faster and better chips with Intel at least a generation behind. As a result, Intel is pivoting to being more of a semiconductor manufacturing company due to the global shortage of chips and the world's reliance on Taiwan Semiconductor (NYSE: TSM) which is increasingly problematic due to the potential of a Chinese takeover.
The IPO market has certainly gotten more rough as the number of new issues has dried up. Yet, it shouldn't pose a problem for a company like Mobileye which is currently working on developing its own LIDAR-based sensors.
Initially, Intel will retain a majority stake in Mobileye. Some expect that the company could spin-off some of its other units as well as it attempts a successful turnaround of its business.
Intel's stock continues to be a 'value trap' of sorts as it can look appealing based on its P/E of 12 and 3% dividend yield. However, its core business has peaked and is dying slowly. Anyone buying the stock is implicitly betting that the company's tech can catch up to its competitors or that it can execute its turnaround plan with more chip manufacturing.