Intel (Euronext: INCO.NX - news) will buy Israeli car tech firm Mobileye (EUREX: MOEF.EX - news) for more than $15 billion (14 billion euros), the companies said Monday, in a deal signalling the US computer chip giant's commitment to technology for self-driving vehicles.
Israeli media reported that the deal worth approximately $15.3 billion was the largest ever cross-border acquisition for an Israeli tech firm.
Intel and Mobileye said they expected to combine to become a global leader in "autonomous driving" that could provide the technology at a lower cost.
"The combination is expected to accelerate innovation for the automotive industry and position Intel as a leading technology provider in the fast-growing market for highly and fully autonomous vehicles," it said.
"Intel estimates the vehicle systems, data and services market opportunity to be up to $70 billion by 2030."
Last year, BMW announced that it was joining forces with Mobileye and Intel on a self-drive project for "highly and fully automated driving" to be commercially available by 2021, called the BMW iNext.
BMW announced in January it would deploy 40 self-driving vehicles for tests in the United States and Europe this year.
In August, Mobileye and UK-based auto-equipment maker Delphi said they were teaming up to develop an autonomous driving system which would be ready for vehicle-makers in 2019.
Nearly all the major global automakers are involved in testing autonomous or semi-autonomous vehicles, with some expecting full autonomy within a few years.
The Israeli firm was founded in 1999 and employs some 660 people. It has developed real-time camera systems used to avoid accidents with the help of algorithms that interpret the data.
- 'Data centres on wheels' -
Its proprietary EyeQ5 computer vision processor gets input from the 360-degree surround view sensors as well as localisation.
Drivers may be familiar with its system that warns when they are approaching too closely to another vehicle or pedestrian.
Mobileye co-founder Ziv Aviram said of the acquisition that "together, we will provide an attractive value proposition for the automotive industry".
"We expect the growth towards autonomous driving to be transformative," he said in the statement.
"It will provide consumers with safer, more flexible, and less costly transportation options, and provide incremental business model opportunities for our automaker customers."
The companies said the transaction, approved by the boards of both Intel and Mobileye, is expected to close within the next nine months.
"As cars progress from assisted driving to fully autonomous, they are increasingly becoming data centres on wheels," the statement said.
"Intel expects that by 2020, autonomous vehicles will generate 4,000 GB of data per day, which plays to Intel's strengths in high-performance computing and network connectivity."
Israeli officials were also touting the deal as a sign of confidence in the country's high-tech sector -- an industry that has given it the nickname the "start-up nation".
Prime Minister Benjamin Netanyahu spoke by phone with Aviram to congratulate him, a statement from the premier's office said.
"The deal dramatically proves that the vision we are leading is being realised," Netanyahu said.
"Israel is becoming a global technology centre not only in the field of cyber but also the automotive field."
Economy Minister Eli Cohen told army radio that "what's important now is that the production remains in Israel, where some 300 international companies are located".
The centre for work on the combined autonomous vehicle will be Mobileye's headquarters in Jerusalem, the firms said.
Aviram told Netanyahu that a global development centre will be established in Israel and "will be responsible all the international activity of Intel's autonomous cars", the statement from the premier's office said.
Intel has long operated in Israel, opening its first development centre in 1974.
In 2014, the firm announced it was to invest close to $6 billion in upgrading its Israeli production facilities.