Over the past month, Intel unit Mobileye has filed for an IPO on Wall Street while Intel itself has announced the acquisition of Israeli chip foundry Tower Semiconductor for an enterprise value of $5.4 billion. The two developments are linked by Mobileye's plans to enter the lidar sensor market for autonomous cars, which it sees as an engine of growth in the coming years.
Lidars are considered a vital support component for autonomous car sensors. Lidar, which is an acronym for light detection and ranging, undertakes 3D scanning and can read the changing landscape and identify moving objects hundreds of meters away from the car, even during darkness and difficult weather conditions. Distance and conditions can be the weak point of the camera based sensors on which Mobileye relies.
Lidar technology has advanced in leaps and bounds in recent years and are currently based on solid state components that are much smaller and cheaper than first generation products and only cost hundreds of dollars per unit. They are suitable for mass production, even for cars that still need a driver behind the steering wheel. Thus the lidar market is ripe for rapid growth.
The main problem today is that these lidar systems are based on unique technology and are not easy to mass produce and need the reliability and precision required by the car industry and reasonably low costs.
Mobileye's ambition to become a major player in the lidar sector depends on investors, who must be persuaded that it can mass produce them to meet tight deadlines.
This is not a market in its infancy as was Mobileye's main advanced driver assistance systems (ADAS) market when it undertook its IPO in 2014. The lidar market is very competitive with dozens of rivals, many of them with supply contracts and collaboration agreements with major car manufacturers.
One such lidar developer and manufacturer is Israeli company Innoviz (Nasdaq: INVZ), which has a market cap of $500 million and already has cooperation agreements with car manufacturers including BMW, which should generating revenue next quarter.
Tower Semiconductor's chip manufacturing technology for laser sensors (photonics), which it has developed in recent years and marked out as a business target, should enable Mobileye to produce lidar sensors at the required speed. In recent months Tower has accelerated its activities in the field through serial production collaborations with Juniper and Quintessent.
Tower's connection with Mobileye will grant it an important competitive card that no other players in the field have - comprehensive and close control of the processes and costs from the R&D stage through to mass production of an end product for the car industry. Taking into account the forecasts for annual growth of about 30% in demand for lidars to about $4-5 billion in another five years, this could be an important factor in persuading investors that Mobileye is a good bet. It would also make Israel a one-stop-shop in the world of smart and autonomous cars.
Published by Globes, Israel business news - en.globes.co.il - on March 14, 2022.
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