Intel CEO aims to build chip factories with money raised from Mobileye IPO

Visitors are seen at the Intel booth during the China Digital Entertainment Expo and Conference, also known as ChinaJoy, in Shanghai, China on July 30, 2021. REUTERS / Aly Song

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Dec. 7 (Reuters) – Intel Corp (INTC.O) will keep most of the money it raises next year when it sells a stake in its autonomous vehicle components unit Mobileye as part of a Planned initial public offering, targeting some of those funds to build more Intel chip factories, CEO Pat Gelsinger said on Tuesday.

Intel shares rose 4.1% at noon on Tuesday after jumping 8% during the session, as Wall Street applauded the chip giant’s decision to list Mobileye on the stock exchange. Gelsinger said the IPO will make it easier for Mobileye to grow as global automakers spend billions of dollars to accelerate their transition to electric and autonomous vehicles.

“Now is the right time,” he said on a conference call. “This is a unique asset and we will be making the right decisions to fully realize this potential.”

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Gelsinger said Intel would retain a controlling stake in Mobileye and would also receive “the majority of the proceeds” from the IPO. He declined to specify the size of the stake that would be sold or a fundraising goal, but said “it will certainly help in our aggressive overall factory building.”

Intel has announced plans to build two chip factories in Arizona and add more factories in the United States and Europe at sites that have not been announced.

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Before Tuesday’s gains, Intel shares had barely moved this year, significantly underperforming a more than 40% increase in the Philadelphia SE Semiconductor Index (.SOX), as the chipmaker struggles to step up. its technology while its rivals manufacture more energy-efficient microprocessors. .

Mobileye, an Israeli company that Intel bought for around $ 15 billion five years ago, could be valued at over $ 50 billion when it goes public in the United States in mid-2022, said a source at Reuters. Gelsinger said the value will be pegged closer to the IPO and declined to say how many Mobileye will be sold, repeating that Intel will retain a controlling stake.

Mobileye has a rich list of customers, including BMW, Audi, Volkswagen, Nissan, Honda, and General Motors. Read more

Its technology has been deployed by car manufacturers who are equipping their cars with driver assistance systems or experimenting with autonomous driving technology in their turn towards electric vehicles. Intel expects Mobileye’s revenue to grow by more than 40% this year.

WestPark Capital analyst Ruben Roy appreciated the deal for the money and the greater strategic focus it could bring to Intel. Roy said Mobileye is expected to experience compound annual growth of around 25% to 30% over the next several years.

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Reporting by Nivedita Balu and Chavi Mehta in Bengaluru and Ben Klayman in Detroit; Editing by Anil D’Silva and David Gregorio

Our Standards: Thomson Reuters Trust Principles.

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