Over the past almost two years, Intel has signed partnership deals with BMW and automotive parts supplier Delphi Automotive to expand its presence in the automotive industry. The computer chipmaker also announced last year that it would invest $250 million in start-ups working on driverless car technologies. The biggest news, however, came earlier this week when Intel announced plans to buy Israeli autonomous vehicle technology firm Mobileye for $15.3 billion. The deal potentially puts Intel in competition with Nvidia Corp. and Qualcomm to develop driverless systems for global automakers.

 

Mobileye, founded in Jerusalem in 1999, has signed deals with several automakers, including Audi, for the use of its technology that includes cameras, sensor chips, in-car networking, roadway mapping, machine learning, cloud software and data fusion and management. Intel will support Mobileye’s production programs and build up its relationships with car suppliers and OEMs, according to an Intel statement. The combined organization will be headquartered in Israel and led by Amnon Shashua, Mobileye’s co-founder, chairman and chief technology officer.

 

Intel Chief Executive Brian Krzanich said the acquisition was akin to merging the “eyes of the autonomous car with the intelligent brain that actually drives the car.”

 

The stakes are significant. As has been widely reported, Goldman Sachs projected last year that the market for advanced driver assistance systems and autonomous vehicles would grow from about $3 billion in 2015 to $96 billion in 2025, and to $290 billion in 2035.

 

Interestingly, Intel’s purchase of Mobileye casts a spotlight on the growth of the technology industry in Israel. This will be the largest takeover of an Israeli tech firm, and it follows a series of deals and partnerships in recent years by major tech and auto companies.

 

Indeed, several major car manufacturers have made recent investments in Israel, including Ford Motor Co., which bought computer vision and machine learning company SAIPS AC last summer. Daimler AG and General Motors have also opened research and development centers in the country. Director General of the Prime Minister’s office Eli Groner says the autonomous tech sector could potentially boost Israel’s economic growth by 50 percent, The Times of Israel reports.

 

In Israel, the automotive technology sector currently counts about 350 startups, according to industry monitor IVC Research Center, with the potential, according to Groner, to grow bigger than the cybersecurity industry, which drew 15 percent of global capital raised by the sector in 2016, according to Start-Up Nation Central, a group that promotes Israel startups.

 

Consider, for instance, that Argus Cyber Security, based in Tel Aviv, announced a partnership with Qualcomm Technologies this year to protect cars from hackers. Otonomo Technologies, a data platform that tells users when to stop driving due to a malfunction and can call emergency services when there is an accident, is now working with nine car manufacturers, including Daimler. And then there’s Waze, formerly FreeMap Israel, a GPS-based geographical navigation application program that was first developed and popularized by the Israeli company Waze Mobile, and eventually acquired by Google in 2013 for a reported U.S. $1.3 billion.

 

It remains to be seen, of course, how quickly Israel’s technology sector will continue to grow. In the meantime, Intel’s investments show the growth of autonomous vehicle technology as well as the increasing importance of those companies’ role in the supply chain. Those investments may, ultimately, weaken car maker influence over the supply chain as automobiles incorporate increasingly sophisticated technology, and, as an article in the Wall Street Journal points out, simultaneously raise the profile of companies including Samsung Electronic, Siemens AG and Qualcomm which have bought into the sector.

 

What are your thoughts on the automotive supply chain? As companies continue to develop advanced driver assistance systems and autonomous vehicles, what impact is there on the supply chain. Also, are any companies from Israel’s technology sector in your company’s supply chain?