Mobileye, “the leader for front-view camera processors with around 80 percent market share,” as noted by IHS Markit analysts, can literally open the door for Intel to any car OEM and most tier ones in the world. This will eventually enable Intel to “solidify its position in the autonomous driving supply chain,” according to IHS Markit.
This is a play similar to that of Qualcomm – why it needed to buy NXP. It’s all about gaining access to a promising, electronics-intensive “future” autonomous vehicle market dominated by traditionally closed automakers and tier ones.
IHS Markit analysts concluded: "For autonomous car architectures, Intel now has control over key automated driving building blocks including object recognition, sensor fusion, path planning, localization (Mobileye’s Road Experience Management) and last but not least – connectivity and telematics."
Further, the market research firm reiterated: "The advanced machine vision algorithms implemented by Mobileye ensured the growth in average selling price (ASP) and high margin of EyeQ processor family ever since its inception."
This sounds all good and rational for Intel and Mobileye. But there is a rub. Intel and Mobileye are both known to have a commanding share in respective market segments (Intel with PCs, Mobileye with automotive vision).
Fear and loathing for Wintel-like duoploy
While Intel and Mobileye are both admired, they both often induce fear and loathing in casual conversation among their competitors. “Intel-killer” or “Mobileye-killer” is a phrase rivals like to use when explaining how good their own products are compared to the market leader.
The picture of two dominant players in the electronics industry joining hands (even though they are not in the same market at the same time) is evocative of the Wintel model in the PC era.
Philippe Lambinet, CEO at Cogito Instruments and a former senior executive at STMicroelectronics, was the first to point out to us the potential of Intel pursuing a “Wintel-like duopoly” in the automotive market via Mobileye, just as the processor giant did with Microsoft in the PC industry.
After the Intel-Mobileye announcement, Lambinet asked us again: “Will automotive customers get scared and fear a ‘Wintel-izazion’ of their industry? In the PC industry, Wintel captured almost all the value. Is there such a risk with automotive?”
We don’t know the answer yet. But one thing we should all fear is a lack of competition that might be led by Intel’s becoming a “one-stop shop” for autonomous driving technology. One of the unintended consequence of the merger of two dominant players is the risk of “getting rid of potential competitors,” Luca De Ambroggi, principal analyst, Automotive Electronics at IHS Markit, told us.
Never return to prior growth
But analysts at Semiconductor Advisors shared even darker thoughts on the semiconductor industry as a whole:
Given that Intel continues to reduce its focus on the Semi side with its talk about non-semi coupled with investments outside of Semi we think this is a confirmation of the view that the Semi business will never return to prior growth or profitability. Intel has lowered capex spend levels, slowed technology transitions, reduced staff — all moves that squeeze more profitability out of a slowing business.
Now, what are we going to do about that?
— Junko Yoshida, Chief International Correspondent, EE Times