What to know as Intel's Mobileye self-driving unit is poised to go public this week
This week, Intel plans to launch an initial public offering that may value the business at $16 billion by spinning off a portion of its self-driving Mobileye division.
Investors praised the spinoff's possibilities when they were first revealed in late 2021, but by 2022, both the financial markets and the global economy had drastically deteriorated.
Amid concerns about a potential global recession and the sharp slump in tech markets, Intel (INTC) reportedly had to reduce Mobileye's valuation several times in order to close the transaction. Mobileye is based in Israel.
Mobileye was estimated to be worth $50 billion by some analysts in December, but it now appears to be closer to $16 billion. For sake of comparison, Intel purchased the business in 2017 for approximately $15.3B.
The IPO is being co-led by Goldman Sachs and Morgan Stanley, and Mobileye intends to trade on the Nasdaq under the symbol "MBLY."
While it will continue to have a controlling stake in Mobileye, Intel might generate up to $820 million by selling between 10% and 20% of the company in the offering at a price of $18 to $20 per share.
In doing so, Intel will continue to strengthen its financial position as it seeks to compete with Taiwan Semiconductor as a worldwide foundry, a move that necessitates significant spending.
In an effort to increase the size of its manufacturing facilities on the continent, Intel announced earlier this year that it will invest up to $88 billion in Europe over the next ten years.
The business is also investing extensively in the United States, shelling out almost $20 billion for its new plant in Ohio. Early this year, work on the new Ohio factory began.
One of the biggest winners of the U.S. CHIPS Act, a piece of legislation created to make the domestic semiconductor industry more competitive with Taiwan's and China's respective semiconductor industries, has reportedly been Intel, according to certain investment banks.
Intel is sharpening its emphasis on its key business segments under Chief Executive Pat Gelsinger, making Mobileye somewhat of a distraction for the Santa Clara, California-based chip giant.
Mobileye has been rapidly expanding even though Intel no longer places a high priority on it as it seeks to serve its clientele across more than 800 distinct vehicle types, including those made by BMW, Volkswagen, and other manufacturers.
Mobileye reported $854 million in revenues and a $405 million gross profit for the six months that ended on July 2. In the same time period, it produced a net loss of $67M and an operating loss of $36M.
Mobileye named a number of rivals in its S-1 filing, including semiconductor firms Ambarella, Advanced Micro Devices, and Nvidia, as well as automakers Tesla, Google's Waymo, General Motors' Cruise, and even Apple.