MOBILEYE

Amnon Shashua was a computer science professor at Hebrew University of Jerusalem. In the late 1990s, he was working on computer vision, teaching machines to understand images.

He realized that the same technology could help cars understand the road.

He co-founded Mobileye in 1999 with Ziv Aviram, a serial entrepreneur. The idea was to develop a camera-based system that could detect lane markings, vehicles, pedestrians, and traffic signs.

In 1999, this sounded insane. Car companies were barely putting airbags in standard models.

The idea of a camera that could see the road was science fiction.

The early years were brutal. Mobileye spent over a decade developing its technology with almost no revenue.

The company burned through investor capital while trying to convince automakers that a camera-based safety system was worth integrating. It was not until 2007 that Mobileye landed its first major OEM deal.

Patience is an understatement. This was endurance.

Mobileye sells semiconductor chips (called EyeQ) and software to automakers. The chips process visual data from cameras mounted on vehicles to provide advanced driver assistance features: lane departure warnings, automatic emergency braking, adaptive cruise control, and more.

The business model is classic semiconductor: design the chip, have it manufactured by a foundry, sell it to automakers for $50-$100+ per unit. When you are in 170 million vehicles and every new car is adding more ADAS features, the revenue adds up fast.

Mobileye earned $2.08 billion in revenue in 2023. The margins are high because the chip design is done once and sold millions of times.

The EyeQ chip is Mobileye's flagship product. Now in its sixth generation, EyeQ6 can process input from multiple cameras simultaneously and run dozens of neural networks in parallel.

It powers features like automatic emergency braking, lane keeping, blind spot detection, and traffic sign recognition.

Mobileye SuperVision is the advanced product that enables hands-free highway driving. It uses 11 cameras and the EyeQ6 chip to handle steering, acceleration, braking, and lane changes on highways.

Zeekr, a Chinese EV brand, was the first to deploy SuperVision. Mobileye Drive is the full Level 4 self-driving system being developed for robotaxis and autonomous delivery.

Mobileye grew by being the first and being patient. For years, they were the only company with a viable camera-based ADAS chip.

This first-mover advantage created deep relationships with automakers. Once a Mobileye chip is designed into a vehicle platform, switching costs are enormous.

An automaker would need to redesign the entire ADAS system to switch suppliers.

The Intel acquisition in 2017 for $15.3 billion gave Mobileye access to Intel's manufacturing capabilities and automotive-grade chip fabrication. The 2022 IPO raised $861 million and valued the company at $17 billion.

Mobileye is now investing heavily in full self-driving technology (Level 4) while continuing to dominate the ADAS market.

Tesla is the biggest competitive threat. Tesla famously dumped Mobileye in 2016 after a fatal Autopilot crash and built its own vision system in-house.

Tesla's decision to go camera-only (no LiDAR, no radar) and train on data from millions of Tesla vehicles created a fundamentally different approach that competes with Mobileye's technology.

Mobileye also faces competition from Qualcomm and NVIDIA, both of which are pushing automotive chips. These companies have massive R&D budgets and existing relationships with automakers.

Mobileye's advantage is two decades of driving data and OEM relationships, but the semiconductor giants are closing the gap quickly.

Intel acquired Mobileye for $15.3 billion in 2017, making it the largest-ever acquisition of an Israeli technology company at the time. Intel took Mobileye public again in October 2022, raising $861 million at a $17 billion valuation.

It was the largest US IPO of 2022 in a year when the IPO market was essentially frozen. Before the Intel acquisition, Mobileye had raised from Goldman Sachs, Fidelity, and Chinese investors including Hangzhou-based Nio Capital.

The company's first IPO in 2014 valued it at $5.3 billion.