Mobileye's best time to sprint for an IPO may be now.
In 2017, Intel acquired Mobileye for $15.3 billion, one of the largest acquisitions intel has ever made. In the days of the acquisition, Intel's "pro-son" to Moblileye can be described as "asking for people to give people, asking for money to give money." Not only did it allocate its own lidar and 4D radar development teams to Moblileye, but it also spent $900 million to acquire The Israeli urban traffic data startup Moovit in 2020, helping Mobileye quickly overcome its shortcomings and become a "full-stack self-developed" giant in the new era of autonomous driving.
Mobileye also lived up to expectations, not only becoming Intel's new growth pole with its eye-catching financial performance, but also holding the throne of the "King of ADAS" with a market share of nearly 80%.
In terms of financial data, Mobileye's revenue in Q4 2021 was $356 million, an increase of 7% year-on-year, a record, and the single-quarter revenue data was comparable to the $358 million revenue for the whole of 2016. At the same time, the company's full-year 2021 revenue reached $1.4 billion, an increase of 43% year-on-year, and the average annual compound growth rate from 2018 to 2021 was as high as 26.1%.
In terms of sales, Moblieye ushered in a historic moment on December 13 - the cumulative shipment of Mobileye EyeQ chips exceeded 100 million! Since the EyeQ1 chip was mass-produced in BMW, GM and Volvo in 2007, sales of the EyeQ series of chips have continued to increase. From 2018 to 2021, the sales data were 12.4 million, 17.5 million, 19.3 million and 28.1 million units, respectively, with a year-on-year growth rate of 43%, 41%, 10% and 46% respectively.
In addition, in 2021, Mobileye also received 41 new orders from more than 30 car companies, involving about 50 million new cars.
Coupled with strong financial performance, Intel decided to let Mobileye sprint for the IPO as soon as possible despite the recent sluggish performance of the US stock market due to geopolitics, interest rate hikes and other factors.
However, since mobileye is in a good situation and the market prospects for autonomous driving are so broad, why does Intel not "hold" Mobileye for a few years, and then impact a larger IPO when the market is "crazy" again?
Mobileye: ADAS forerunner, the "king of autonomous driving" with the largest market share
At the end of the 20th century, advanced driver assistance systems (ADAS) were still in their infancy, and the entire industry believed that necessary functions such as automatic emergency braking (AEB) could only be achieved with expensive radar sensors.
However, Amnon Shashua, a professor of computer sustainability at the Hebrew University, in his research, pioneered the demonstration that basically all the perceptual tasks necessary for assisted driving can be achieved based on a single camera. This makes the cost of assisted driving systems theoretically reduced to "civilian-level", thus making it possible to commercialize.
With two friends, Shashua and two friends did just that, and in 1999 co-founded Mobieye, a company focused on the ADAS circuit. "People as the Name Suggests," the company intends to use computer vision technology to detect vehicles, becoming the "eyes" of vehicles, and technologies to prevent collisions from occurring to reduce vehicle accidents and casualties.
In 2001, Mobieye, who was struggling with hardware, realized that "people who really write software seriously should make their own hardware." The company's leadership believes that only by designing its own Soc, which specifically addresses the large loads generated by computer vision, can it fully utilize the company's full strength. The hero saw the same thing, and Mobileye then embarked on the same path of software and hardware integration as Apple.
In 2004, under the leadership of Elchanan Rushinek, Mobileye's SoC design team successfully developed the EyeQ1 in 2004 using the 180nm process.
With the foundation of hardware and software "inside and outside", Mobileye successfully combined leading computer vision algorithms, powerful EyeQ Soc chips and cheap single cameras to create a cost-effective monocular vision ADAS, which was welcomed by Major Automakers such as Volvo, BMW, General Motors, and Audi.
After accepting a $130 million investment from Goldman Sachs in 2007, Mobileye grew into an "autonomous driving" unicorn that fanatically drove investors, especially after launching EyeQ3 in 2014. In the same year, Mobileye successfully landed on the New York Stock Exchange with a market capitalization of $8 billion, while setting a record for the largest IPO of an Israeli company in the United States with a fundraising of $890 million.
Seeing the broad prospects of Mobileye, in 2017, Intel, the "Big Blue" that intends to seize the high ground of self-driving technology, included Moblieye at a high price of about $15 billion, with a premium rate of 34%. Since then, Mobileye has become Intel's autonomous driving business unit. After completing the deal, then-Intel CEO Brian Kozizi excitedly said:
"If you see where self-driving cars are headed (the prospects), you know that this deal must be made to get a head start in 2021."
After joining forces with semiconductor giant Intel, Mobileye continues to be invincible in the field of self-driving chips, and before 2020, smart driving chips are almost monopolized by Mobileye. According to the latest data from guidehouse Insights, mobileye has about 80% of the global market for advanced autonomous driving assisted vision systems.
However, mobileye, who is proud of the current spring breeze, may not have a good life in the future.
Mobileye gradually fell behind, and Nvidia Qualcomm became a new favorite
Autonomous driving is usually divided into 6 levels, L0 to L5, from artificial driving, assisted driving to conditional automation, and finally fully automated, and the complexity gradually increases.
In the past 5 years, driven by Tesla's demonstration, global car companies have seen the potential of automatic driving, and major car manufacturers have intended to launch autonomous driving products, and automatic driving is moving towards L4/L5 at high speed.
According to the prediction of iResearch data, after 2020, models with L3 functions such as TJP and HWP will gradually land; L4/5 models are expected to land no earlier than 2025, and the scene will gradually open the road scene from the closed driving environment (park, port, mine, airport) to the city, when the vehicle will be completely taken over by the system, the vehicle travel tool attributes will be strengthened, and consumers will purchase cars and travel methods will undergo major changes.
The trend of autonomous driving towards L4/L5 at high speed has brought great challenges to the "former king" Mobileye.
(1) Chip computing power is left behind, EyeQ5 "born at the wrong time"
As mentioned earlier, Mobileye's main first-mover advantage is based on "reducing hash rate and reducing costs". Therefore, when the demand for computing power in the early days of automatic driving such as L1 and L2 is not large, Mobileye, which integrates software and hardware, can be described as an invincible hand in the world, and the market position is difficult to shake.
With the demand for new functions brought about by the improvement of autonomous driving level, in addition to traditional cameras, millimeter-wave radar, ultrasonic radar and emerging lidar have successively appeared in the next generation of models of various OEMs. The increase in sensors will also bring pressure on huge amounts of data processing, which will require chips with higher computing power for data processing, analysis, and decision-making. Therefore, the higher the computing power, the more complex situations can be handled, and the safer autonomous driving (assisted driving) will be.
In terms of chip computing power alone, Mobileye's EyeQ series SoCs are now somewhat outdated. Before 2021, Mobileye's most advanced chips will still be mass-produced in 2018 and will only support the EyeQ4 for L3 level autonomous driving. The EyeQ5, which supports L4, is late, delaying its launch in 2020 and starting deliveries in 2021. At the same time, EyeQ5 only has 24TOPS computing power and 10W power consumption, and the performance will be thrown away by the "rising stars" such as Nvidia, AMD, Huawei, Qualcomm, and Horizon.
In particular, with the resource endowment of GPUs, NVIDIA, which has a full-stack tool chain, is more optimistic in the field of high-end automatic driving. Guotai Junan Securities Wu Xiaofei team said:
NVIDIA's characteristics in the field of autonomous driving chips are the ability to integrate multiple sensors such as head input, laser positioning, radar and ultrasonic sensors, making it more advantageous in higher-level autonomous driving.
The market also confirms this, and now, the three major "new car-making forces" of Weilai, Xiaopeng and Ideal are among the customers of NVIDIA, and traditional OEMs such as Zhiji Automobile and SAIC R are also among them. In addition, traditional car companies such as Volvo, Mercedes-Benz and Buick, as well as Robotaxi and commercial vehicle manufacturers such as Didi and ZOOX, are also NVIDIA customers.
It is worth mentioning that domestic manufacturers in terms of computing power are not willing to show weakness and are catching up with the international leading level. For example, Huawei's MDC series platform hash rate of 400+ TOPS and has been mass-produced, while horizon and black sesame's new generation of computing power hundreds of TOPS chips have been streamed.
(2) The closure is too strong, and a large number of customers change the door
Mobileye chooses software and hardware packaging, and the "not open source" method has also made this self-driving "big brother" criticized.
Take the EyeQ5 chip using the "CPU + ASIC" architecture as an example, although the chip has extremely low power consumption, its algorithm system is relatively closed, which is almost a black box for OEMs and Tier 1, and it is almost impossible to make secondary modifications to differentiate its own algorithm. At a time when autonomous driving is still in the "initial stage", a relatively reliable and complete solution is undoubtedly the fastest and most secure choice, but in the context of the rise of "open" manufacturers such as Nvidia, Horizon, Huawei, Baidu, etc., the "closed" solution of "what to use" and difficult to tune software and hardware integration is not so pleasing.
Therefore, a number of terminal manufacturers, including Weilai, Tesla, and Ideal, have changed their doors. Tesla has long been at odds with Mobileye, using FSD chips to replace Mobileye; ideally in 2021 will also be EyeQ4 into Horizon Journey 3; and a number of car companies such as Weilai have selected powerful NVIDIA Orin chips for the new generation of models.
In particular, even BMW, the "iron buddy" that was written as a milestone by Mobileye, recently reached a cooperation with Qualcomm Ride. Wall Street Insights mentioned that a BMW spokesperson said in November last year that Qualcomm's chips will be used in BMW's "Neue Klasse" series of cars, which are expected to start production from 2025.
Mobileye's early timeline, image source: Mobileye official website
In addition, because Mobileye does not have a research and development team in China, this has led to the company's research and development system facing data supervision problems in China.
In September last year, the Ministry of Industry and Information Technology issued the Opinions on Strengthening the Management of Access to Intelligent and Connected Vehicle Manufacturers and Products, which mentioned that personal information and important data collected and generated during operations in the territory of the People's Republic of China should be stored in China in accordance with relevant laws and regulations. Where it is necessary to provide data abroad, it shall pass a data export security assessment. Obviously, road data related to autonomous driving is clearly closely related to national security.
In general, in the field of future autonomous driving that is "determined by computing power", Mobileye's first-mover advantage is getting smaller and smaller. At the same time, with the improvement of the level of automatic driving and the hardware and software embedded in major domestic and international manufacturers, competition in this field will become more and more intense.
The best time for an IPO?
In the face of the siege and interception of major "autonomous driving cutting-edges", Mobileye has not "served the old". In 2022, the company is fully engaged in the layout of high-end autonomous driving.
On the one hand, at the CES 2022 conference, the former "king of ADAS" issued three high-computing power advanced process chips in one go. Among them, EyeQ Ultra is an autonomous driving chip, built based on a 5nm process, with a computing power of 176TOPS; EyeQ6 Light and EyeQ6 High are both ADAS chips, manufactured by 7nm, with computing power of 5TOPS and 34TOPS respectively. The commercial layout of Mobileye's assisted driving and autonomous driving "walking on two legs" is still being methodically and continuously advanced.
On the other hand, Mobileye is also trying to deepen cooperation with local manufacturers and become "more open". Wall Street news mentioned that at the CES conference in early January this year, at the world's most influential Consumer Electronics Show in Las Vegas, Mobileye revealed that it is cooperating with Zeekr, a pure electric vehicle brand owned by Geely Automobile, to launch the world's first car with L4 level autonomous driving capabilities in 2024. At the same time, the two sides will effectively integrate in terms of software technology.
Although Mobileye's future is still promising, considering the increasingly "white-hot" competitive landscape of the autonomous driving industry, the best time to go public may be now.
For Intel, Wall Street has mentioned that from 2020, under the attack of AMD, Apple and other giants, Intel is becoming more and more difficult, the total market share of CPU has fallen from nearly 80% a year ago to less than 65%, the stock price has also fallen to the level of two years ago, and the company has fallen into the "darkest hour". Today, the company is pinning its hopes on the IDM 2.0 strategy to expand the scale of chip foundry to "reinvigorate the moment", at a time when large sums of money are needed.
For Mobileye, Intel's poor performance in recent years can be described as "a fire at the city gate, affecting the pond fish" Mobileye, who expected to "lean back on a tree for shade", also performed mediocrely in the two years when the parent company fell into a trough, and the technological progress was far less than that of its opponents. Under the attack of NVIDIA, Qualcomm, Huawei and other "rising stars", Mobileye's lead is getting smaller and smaller.
So, a few years from now, will Mobileye's performance still be as bright as it is now?
So, for Intel, with the growing investor interest in self-driving cars and the glare of Mobileye's data and financial metrics, it will once again hit the IPO to seek a high valuation of more than $50 billion, or a well-thought-out choice. Boosted by Mobileye's "high prosperity", while reaping large investment gains, Intel's sluggish stock performance may also be improved.
(Wall Street insiders mentioned that out of concerns about Intel's financial situation, for nearly a year, Intel's stock price has fallen sharply every time it announces its earnings report.) Over the past year, Intel's stock price has fallen by nearly 19 percent. ）
It is worth mentioning that although Intel CEO Kirsinger previously stressed that Intel does not need the funds of the IPO to revitalize the "Big Blue", Harlan Sur, an analyst at Damo, still said bluntly in the research report: This move can alleviate the financial pressure caused by Intel's capital research and development in the future. At the same time, Sur believes that Intel chose to let Mobileye go public at this time, and the timing is very correct. Sur said in the research report:
"This is a very right time for Intel. Now, the market has very high expectations for the growth of mobile eyeQ5, autonomous driving platforms and other businesses. As a result, Intel can get the most out of the market's high expectations. ”
For Mobileye, choosing an IPO listing may help it get rid of the low valuation brought by affiliated with Intel and greatly enhance its corporate image, which is also a beautiful thing. Perhaps as Intel CEO Kilsinger said, more potential for Mobileye is expected to be further unlocked after the market goes public:
"Because of its affiliate with Intel, Mobileye is undervalued by investors. Greater independence will also help boost its image and attract more customers; we don't see the full value of this business yet, and a public listing could help unlock Mobileye's potential. ”
After mobileye is successfully launched, the "king of ADAS" who has obtained sufficient bullets will undoubtedly further aggravate the "inner volume" in the field of automatic driving. Historically, the "white-hot" competition of giants can often greatly promote the speed of industry progress and technological change, thereby benefiting consumers more, which is undoubtedly popular with consumers.
Perhaps, the future has come, and the curtain has begun on a new era of autonomous driving.