The Intel-Mobileye Deal and the Frenzy of Automotive Tech M&A

A few days ago, Intel shocked the market by announcing the $15 billion acquisition of Mobileye, a darling of the auto-tech industry . Born in Israel, Mobileye developed a camera based software that has been widely adopted by car manufacturers. The acquisition event was not as surprising as the price. $15 billion is not only a ridiculous multiple of Mobileye’s forward earnings but it also represents Intel’s second biggest M&A deal after the acquisition of Altera a couple of years ago. The acquisition is a confirmation of the favorable climate for auto-tech M&A investments.

Big Tech is Leading the Auto-Tech M&A Path

Intel’s acquisition of Mobileye is hardly the first high profile M&A deal in the auto-tech market. Qualcomm (Intel’s biggest rival) recently spent $39 billion on the acquisition of NXP Semiconductors, a chip manufacturer widely used in vehicle telematic systems. Speaking of telematics, Samsung recently bought Harman International for $8 billion, clearly signaling to the market that they intend to be a contender in the auto-tech market. Siemens is another software powerhouse that has been an active acquirer in the auto-tech market. The company recently bought Mentor Graphics Corp which produces design software for automotives. Uber also acquired Otto recently for its self-driving vehicle technologies which have sparked a law suit by rival Alphabet’s Waymo.

Car Manufacturers are Also Active Acquirers

Big tech companies are not the only acquirers in the auto-tech space. Car manufacturers have also been incredibly active. Just to list a few examples: Ford has acquired several auto-tech companies such as ArgoAI or SAIPS. Toyota also recently acquired the team behind Jaybridge Robotics which develops self-driving vehicle technologies Similarly, GM bought Cruise Automation to expand its advance auto-tech capabilities.

Auto-Tech Strategic Investments are Also Flying High

Acquisition has not been the only financial channel available to auto-tech companies. Corporate strategic investments dollars are also flying fast into the sector. Leading the way im obviously, GM and Toyota with their monster investment in Lyft and Uber respectively but there are plenty of more relevant examples. Companies such as BMW and VW recently invested in Chargepoint to help develop fast-charging networks. Ford has not only been an active acquirer bt also an aggressive investors with positions in companies such Velodyne.

Auto-Tech Partnerships are Also Hot

At the center of the auto-tech revolution we have Alphabet’s Waymo. The company has been aggressively expanding its strategic deals in the space. The most notable example is the partnership with Fiat Chrysler which opted to outsource its self-driving technology program to the Waymo. The Alphabet subsidiary is also uniquely positioned to become the most universal auto-tech provider in the market but it will definitely face strong competition on several fronts.

CEO of IntoTheBlock, Chief Scientist at Invector Labs, I write The Sequence Newsletter, Guest lecturer at Columbia University, Angel Investor, Author, Speaker.

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