Intel's Historic Acquisition: Largest Tech Deal in Israel's History

Table of Contents

1. Introduction
2. The Deal between Intel and Mobileye
3. Reactions in Israel
4. Intel's Decision to Invest in Israel
5. Mobileye's Focus on Safe Driving Technology
6. Economic Significance of the Deal to Israel
7. Intel's Motivation for the Large Investment
8. Mobileye's Perceived Value and the Israeli Propaganda
9. The Future of Mobileye under Intel
10. Conclusion

The Largest Deal in Israeli History: Intel's Acquisition of Mobileye

In a historic deal, the international corporation Intel has acquired the Israeli company Mobileye for an astounding $15.3 billion. Mobileye, known for its advanced sensor technology in the automotive industry, is the world's largest producer of CPUs and the biggest private employer in Israel. With revenues reaching $60 billion and a profit of $36 billion in 2016, it's no wonder that Mobileye's market value was estimated at over $160 billion. This acquisition marks a significant milestone for the Israeli tech industry and has evoked mixed reactions in Israel.

The Deal between Intel and Mobileye

The acquisition of Mobileye by Intel represents a major vote of confidence in the Israeli tech industry. With a purchase price of nearly $15 billion, this deal is by far the largest in the history of the Israeli tech industry. Just a few years ago, the acquisition of Waze by Google for slightly over $1 billion made headlines in Israel. Now, with Mobileye being acquired for $15 billion, it is a groundbreaking achievement and a massive success for Israel's tech sector.

Reactions in Israel

The Israeli high-tech industry is known for its ambition to be acquired by international corporations, such as Intel. The response within Israel to this deal has been overwhelmingly positive, with even Prime Minister Netanyahu expressing his support and celebrating the acquisition. The Israeli government sees this as a vote of confidence in the country's technological prowess and aims to capitalize on the international prestige associated with having a foothold in Israel.

Intel's Decision to Invest in Israel

While Intel has factories around the world, it chose to establish a factory in Israel in 1996 and eventually became the largest private employer in the country. This decision was influenced by the Israeli government's investments in Intel, totaling hundreds of millions of dollars in grants aimed at reducing unemployment and creating jobs in impoverished areas. The government's support for Intel's presence in Israel was not just an economic policy but also a political one, as it was important for Israel to maintain its image as a technological leader.

Mobileye's Focus on Safe Driving Technology

Mobileye's technology aims to reduce the risk of car accidents, which have historically plagued Israel with high death tolls compared to other countries. The company specializes in sensors that alert drivers to potential dangers such as swerving, speeding, or objects in their path. This technology is also crucial for the development of self-driving cars. Instead of addressing the underlying causes of reckless driving through education and awareness, Mobileye's technology provides a circumventive solution, aligning with the Israeli approach of utilizing sophisticated technologies to mitigate problems.

Economic Significance of the Deal to Israel

The economic significance of the Intel-Mobileye deal is substantial for Israel. Intel plans to keep Mobileye intact and bring its entire department for vehicles to Israel, including establishing it in Jerusalem. This move is interesting as Jerusalem is not widely known for its high-tech industry. Furthermore, the deal will result in significant tax revenue for Israel, as Intel purchased Mobileye for a price much higher than its market value, requiring them to pay taxes on the additional amount. However, the government's plans to distribute the tax revenue to the wealthy rather than investing in the general population has sparked criticism.

Intel's Motivation for the Large Investment

Intel's decision to invest such a significant amount, roughly 10% of its net worth, in Mobileye raises questions about their reasoning. In recent years, Intel has made questionable investment decisions, only to later regret them. So, why did Intel choose to acquire Mobileye, which produces technology not unique to the market? One possible explanation is the perceived value of Israeli high-tech companies and their association with security expertise. By acquiring Mobileye, Intel strengthens its position in the market and leverages the Israeli company's prestige.

Mobileye's Perceived Value and the Israeli Propaganda

Mobileye's valuation is crucial in understanding Intel's investment decision. The company was estimated to be worth only $10 billion at most, with its worth being just $5 million four years ago. The chosen price of $15 billion might have been influenced by the desire to make the three biggest shareholders, who each own 7% of the stock, billionaires overnight. This decision aligns with the Israeli government's aim to showcase Israeli technological achievements and bolster their image internationally.

The Future of Mobileye under Intel

Intel has announced its plans to maintain Mobileye as a separate entity and expand its presence in Israel. They aim to incorporate Mobileye's technology into their operations while capitalizing on the company's association with Israeli high-tech expertise. The success of this acquisition for Intel relies on leveraging this prestige and selling Mobileye's technology worldwide. However, whether customers across the globe will perceive the added premium as worthwhile remains uncertain.

Conclusion

The acquisition of Mobileye by Intel marks a significant milestone in the Israeli tech industry. With the largest deal in the country's history, Israel has affirmed its position as a technological leader. The economic implications of this deal are substantial, but the distribution of the resulting tax revenue has raised concerns. Whether Intel's investment in Mobileye will prove to be a lucrative decision and a demonstration of Israeli technology's superiority remains to be seen. As this deal unfolds, it will undoubtedly Shape the future of both companies and the Israeli economy.

Highlights:

• Intel acquires Israeli company Mobileye for $15.3 billion, the largest deal in Israeli tech industry history.
• Mobileye specializes in sensor technology for safe driving and is the world's largest producer of CPUs.
• Israel sees this deal as a vote of confidence in the country's tech industry and a sign of its technological leadership.
• Intel's decision to invest in Israel is influenced by the government's support and grants to reduce unemployment.
• Mobileye's focus on technology solutions instead of addressing underlying causes aligns with Israeli technological culture.
• The economic significance of the deal includes job creation and substantial tax revenue for Israel.
• Intel's motivation for the large investment is to leverage the prestige of Israeli high-tech companies and bolster their position in the market.
• The future of Mobileye under Intel involves incorporating its technology and expanding the company's presence in Israel.
• The success of the acquisition relies on leveraging the Israeli tech industry's reputation and the perceived value of Mobileye's technology.
• The impact of the deal will shape both companies' futures and the overall direction of the Israeli economy.

FAQs:

Q: Will Intel maintain Mobileye as a separate company after the acquisition? A: Yes, Intel plans to keep Mobileye intact and expand its operations in Israel.

Q: How much tax revenue will the Israeli government receive from the acquisition? A: Intel's purchase of Mobileye for a higher value than the company's market price will result in significant tax revenue for Israel.

Q: Why did Intel choose to invest such a large amount in Mobileye? A: Intel perceives Israeli high-tech companies, including Mobileye, as prestigious and valuable, which influenced their investment decision.

Q: What does Mobileye's technology focus on? A: Mobileye specializes in sensor technology for safe driving, with the aim of reducing the risk of car accidents.

Q: How will the acquisition impact the Israeli tech industry? A: The acquisition of Mobileye by Intel marks a significant milestone for the Israeli tech industry and positions Israel as a technological leader.

Resources:

• The Marker Magazine
• The Real News Network