Intel Corp. (NASDAQ:INTC) is exploring options to sell part of its stake in Mobileye Global Inc. (NASDAQ:MBLY), the autonomous driving systems provider it controls. This move comes as Intel looks to overhaul its strategy amid challenging times, as the company faces pressure to improve financial performance. With the focus keyword “Intel stake in Mobileye” at the core of this decision, Intel is reevaluating its investments, including its 88% stake in Mobileye.
The decision to potentially sell off a portion of its holding is being driven by the need to raise capital and stabilize the company, which has been underperforming in recent years. This article delves into the challenges facing Mobileye, the broader implications for Intel, and the potential sale’s impact on the technology and automotive industries.
Intel Weighs Its Options for Mobileye Stake
According to sources familiar with the situation, Intel is considering a range of possibilities for its Mobileye stake, including selling shares in the public market or selling to a third party. These discussions are happening as Mobileye’s performance continues to decline, and the company’s stock hit a record low, falling 9.3% to $11.45 on Friday. Mobileye’s value has plummeted approximately 71% in 2023, significantly impacting Intel’s stake.
Intel’s deliberations come at a time when automakers are cutting production due to a post-pandemic supply glut, further hurting Mobileye’s business. Last month, Mobileye reduced its revenue forecasts and slashed its adjusted operating income projection, a move that shocked analysts. The company is on track for its third consecutive annual loss, putting Intel’s stake in Mobileye under scrutiny.
Challenges Facing Mobileye and the Autonomous Driving Sector
Mobileye, founded in 1999, develops hardware and software solutions for self-driving vehicles. Intel acquired the company in 2017 as part of its broader push into the autonomous driving space. Initially, the acquisition was seen as a bold step into a high-growth sector. However, Mobileye has struggled to meet expectations, particularly in the face of supply chain disruptions and slower-than-expected adoption of autonomous driving technologies.
The company’s recent struggles have left it with a market capitalization of roughly $10.2 billion, a stark contrast to its previous heights. This decline in valuation is reflective of broader challenges in the autonomous vehicle industry, as automakers grapple with supply shortages, regulatory hurdles, and the high cost of developing self-driving systems. These issues have been compounded by economic uncertainty, further pressuring companies like Mobileye.
Intel’s Strategy to Improve Performance
Intel’s consideration of selling its stake in Mobileye is part of a larger strategic overhaul led by CEO Pat Gelsinger. Intel has been navigating one of the most challenging periods in its history, with its stock price down more than 60% this year. The company reported a net loss of $1.61 billion in the last quarter, and analysts expect further losses in the near future.
In response, Gelsinger has launched an ambitious plan to regain Intel’s competitive edge in the semiconductor industry. This includes building new manufacturing plants and investing heavily in research and development to improve its chip technology. However, Intel’s current financial woes are creating pressure to explore more drastic measures, such as selling non-core assets like its stake in Mobileye.
In addition to considering a sale of its Mobileye stake, Intel is also evaluating options for its Network and Edge division, which manufactures chips for use in telecommunications and computing networks. This business has seen its revenue decline by nearly a third, adding to the company’s challenges. Intel has not yet made any final decisions, but a broader strategy shift appears to be in motion.
What the Future Holds for Intel and Mobileye
Intel’s potential sale of its stake in Mobileye marks a pivotal moment for both companies. For Intel, this move could provide much-needed capital and help streamline its focus on core areas like semiconductor manufacturing. At the same time, it could allow Mobileye to seek out new partnerships or investors as it works to stabilize its business.
The broader implications of Intel’s decision also extend to the autonomous vehicle sector, which is still in its early stages of development. Despite the recent challenges, self-driving technology remains a key area of interest for automakers and technology companies alike. How Intel and Mobileye navigate the current headwinds could have a significant impact on the future of autonomous driving.
Conclusion: A Critical Moment for Intel and Mobileye
Intel’s exploration of selling part of its stake in Mobileye underscores the challenges both companies face in today’s market. With Mobileye’s stock down 71% this year and Intel grappling with financial losses, the decision to offload some of its stake represents a strategic shift as Intel works to regain its footing. The focus on “Intel stake in Mobileye” highlights the key factor driving these discussions, with both companies facing a critical juncture in their growth trajectories.
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