By: TPS & TJVNews.com
Intel Corporation and the Israel-based Tower Semiconductor, a leading foundry for analog semiconductor solutions, announced Tuesday a definitive agreement under which Intel will acquire Tower for $53 per share in cash, representing a total enterprise value of approximately $5.4 billion.
Tower Semiconductor owns two manufacturing facilities in Migdal Ha’Emek, Israel, (150mm and 200mm), two in the US (200mm), and three facilities in Japan (two 200mm and one 300mm).
“The acquisition significantly advances Intel’s IDM 2.0 strategy as the company further expands its manufacturing capacity, global footprint and technology portfolio to address unprecedented industry demand,” it stated.
“Tower’s specialty technology portfolio, geographic reach, deep customer relationships and services-first operations will help scale Intel’s foundry services and advance our goal of becoming a major provider of foundry capacity globally,” said Pat Gelsinger, Intel CEO. “This deal will enable Intel to offer a compelling breadth of leading-edge nodes and differentiated specialty technologies on mature nodes – unlocking new opportunities for existing and future customers in an era of unprecedented demand for semiconductors.”
Tower’s expertise in specialty technologies, such as radio frequency (RF), power, silicon-germanium (SiGe) and industrial sensors, extensive IP and electronic design automation (EDA) partnerships, and established foundry footprint will provide broad coverage to both Intel and Tower’s customers globally. Tower serves high-growth markets such as mobile, automotive and power.
Intel’s purchase of Tower Semiconductor will be its sixth acquisition of an Israeli company over the past five years.
Mobileye was purchased by former Intel CEO Brian Krzanich in 2017 for $15.3 billion. Kraznich’s predecessor Bob Swan bought mapping technology outfit Moovit in 2017 for $900 million, which was folded into Mobileye, according to Yahoo Finance.
In December of 2021, the Jewish Voice reported on Intel’s decision to launch Mobileye as an IPO in their attempt to take it public. A report on the Yahoo Finance web site indicated that experts in the industry have valued Mobileye at more than $50 billion. In terms of breaking ground on the manufacture of self driving vehicles, Mobileye is leading the pack in autonomous driving technology and the Yahoo Finance report indicated that Mobileye has conducted major deals with the likes of the Ford Motor Company and Geely.
Intel’s long-term commitment to the automotive market is underscored by recently announced programs, including the Intel Foundry Services Accelerator and dedicated capacity for the automotive industry. Intel will continue to support Mobileye with technical resources to deliver industry-leading sensor technologies, while Mobileye’s strength in the automotive sector will continue to enable Intel to address the automotive sector’s fast-growing silicon BOM opportunity. Intel’s global reach along with its ability to offer a geographically diverse supply chain, global manufacturing network and expertise in radar, lidar and software continues to position Mobileye for ongoing collaborative success.
The money that Intel will make in spinning off Mobileye will help them with freeing up resources for other projects they have in the corporate pipeline, according to the Yahoo Finance article. One of those commitments include the $20 billion cost of building new factories in Arizona so that Intel can make computer chips for other companies.
Intel will remain the majority owner of Mobileye, and the two companies will continue as strategic partners, collaborating on projects as they pursue the growth of computing in the automotive sector. The share of semiconductors is expected to be 20% of a premium vehicle’s total bill-of-materials (BOM) by 2030 1. The Mobileye executive team will remain, with Israeli born Prof. Amnon Shashua continuing as the company’s CEO. Recently acquired Moovit as well as Intel teams working on lidar and radar development and other Mobileye projects will be aligned as part of Mobileye.
“Intel’s acquisition of Mobileye has been a great success. Mobileye has achieved record revenue year-over-year with 2021 gains expected to be more than 40 percent higher than 2020, highlighting the powerful benefits to both companies of our ongoing partnership,” Intel CEO Pat Gelsinger said. “Amnon and I determined that an IPO provides the best opportunity to build on Mobileye’s track record for innovation and unlock value for shareholders.”
“Mobileye has realized accelerated growth and opportunity since joining the Intel family, nearly tripling annual chip shipments, revenue and the number of employees since the acquisition,” said Shashua, founder and CEO of Mobileye. “Our alignment with Intel continues to provide Mobileye with valuable technical resources and support that has yielded strong revenue along with free cash flow that allows us to fund our AV development work from current revenue. Intel and Mobileye’s ongoing technology co-development will continue to deliver great platform solutions for our customers.”
In a research note to clients, Wells Fargo analyst Aaron Rakers said, “We continue to believe that Mobileye is one of the more dynamic pieces of Intel’s portfolio and would highlight that the company is set for the deployment of fully driverless delivery starting in 2023 in a partnership with Udelv. In addition to unlocking Intel shareholder value, we believe IPO proceeds can assist with what looks likely to be a capital intensive 2023 rollout.”
A final decision on the IPO and its conditions and ultimate timing is pending and subject to market conditions.
Intel, as majority shareholder, will continue to fully consolidate Mobileye. The transaction is not expected to have an impact on Intel’s 2021 financial targets.
Mobileye was founded in Israel in 1999, by Prof. Amnon Shashua, when he evolved his academic research at the Hebrew University into a monocular vision system to detect vehicles using only a camera and software algorithms on a processor. The inception of the company followed Shashua’s connections with the auto manufacturers through his previous startup Cognitens. Following a critical meeting with an Asian OEM, which secured funding for a concept demo,
Shashua formed a team with two of his close friends, Ziv Aviram and Norio Ichihashi. Shashua and Aviram became a two-in-the-box in managing the new startup where Aviram was responsible for the operations, finance and investor relations and Shashua for the technology, R&D, and the strategic vision of the company. The two-in-the-box arrangement continued through taking the company public on the New York Stock Exchange in 2014, and until 2017, when Mobileye was acquired by Intel Corp. After the acquisition, Aviram retired and Shashua took over the CEO position. Ichihashi was responsible for the Asian market which was the first engagement market with OEMs and Tier-1s until 2001.
(TPS & TJVNews.com)
