Intel/Mobileye Duopoly: Dream or Nightmare?

PARIS — Intel’s Mobileye acquisition Monday has stirred mixed emotions and contrasting reviews among those who cover the industry. Excitement, puzzlement, surprise, fear, confidence and some disappointment.

One of the most scathing comments came from Semiconductor Advisors LLC, financial and strategic advisory services:

Even though Intel tried to suggest a strong link to Intel's data center business we find little to no synergy as there is no direct uplift of the data center business.  

This suggests that Intel is taking a leap of faith to go very far outside its core business franchise.  This can also be viewed as an admission that the core Semi business is not likely getting significantly better any time soon and that the company needs something new to jumpstart growth.

Intel CEO Brian Krzanich

Intel CEO Brian Krzanich

Clearly, those at Semiconductor Advisors aren’t buying Intel CEO Brian Krzanich’s argument. Krzanich reportedly told shareholders at last month’s investor day that the “traditional market view” of Intel as a Silicon Valley giant making chips for PCs and servers is “wrong.” Intel today, he said, sees itself as “a data company.”

There are, of course, numerous tech analysts applauding Intel’s acquisition of Mobileye. While acknowledging that autonomous vehicles are still in their infancy, this school of observers believes this was the right decision at the right time.

Smartphone lessons
Most seasoned electronics industry veterans remember how badly Intel missed the smartphone market. Intel didn’t listen to customer demand and believed they could forcefeed the x86 architecture onto a market already dominated by ARM.

The Mobileye buy, however, is different. Some die-hard Intel skeptics appear to be even optimistic, inferring that Intel might have learned its lesson as it prepares its plunge into the automotive market.

Richard Windsor, analyst at Edison Investment Research, shared his view in his research note: “Missing the boat in mobile has damaged Intel’s reputation…The acquisition of Mobileye by Intel highlights both Intel’s determination not to miss the next big trend as well as the concentration of Google’s competitors around HERE.”

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