Intel and HERE to collaborate on the R&D of HD maps for fully automated driving
Intel Corp. (NASDAQ: INTC), which makes chips that run more than 90% of the world’s servers, is set to acquire a 15% stake in German digital mapping firm HERE, as reported by Reuters on January 03rd, 2016.
HERE is controlled by Bayerische Motoren Werke (BMW) AG, Daimler AG, and Volkswagen AG, which bought HERE for €2.8 billion ($2.9 billion) in 2015 from mobile equipment maker Nokia Corp. of Finland. Intel did not disclose how much it would pay for the stake but said the transaction is expected to close in Q1 FY17. At HERE’s sale price in 2015, the stake would be worth about $390 million. In December 2016, Singapore’s GIC, Tencent, and NavInfo together agreed to buy a 10% stake in HERE.
HERE provides digital maps, traffic updates, location-enabled data for navigation, and location-based platforms. It has almost 6,000 employees across 56 countries and developed and updates maps for almost 196 countries. The company is focused on providing high quality and accurate maps to its customers. It offers voice-navigated services in almost 95 countries and live traffic updates in almost 34 countries. The company depends on almost 80,000 outside sources for developing and updating map information. In September 2016, HERE introduced a new set of traffic services allowing drivers to see for themselves what live road conditions are like miles ahead using data from competing automakers, an industry first.
Race to develop self-driving technology
Intel and HERE also signed an agreement to collaborate on the R&D of real-time updates of high definition (HD) maps for fully automated driving, as Intel seeks to build its presence in automated driving technology powered with Intel Inside. Incidentally, in July 2016, BMW joined hands with Intel and Mobileye (NYSE: MBLY), an Israeli technology company that develops vision-based advanced driver assistance systems (ADAS), to develop self-driving cars by 2021.
Intel will also work with AUDI AG, BMW AG, and Daimler AG to test the architecture, and eventually offer it to other carmakers. With the HERE investment, Intel plans to design and deliver proof-of-concept architecture to improve driving safety and predictability. The deal highlights a shift in the dynamics of R&D in the car industry, which until recently saw automakers largely dictating terms for suppliers to manufacture their proprietary technologies at specified volumes and prices.
The latest deal is not Intel’s first investment in the automotive industry. Intel recently acquired Itseez and Yogitech for safety and navigation functionalities in autonomous cars and has committed at least $250 million for other buyouts in this space. In November 2017, Intel plans to launch a dedicated autonomous driving group. Doug Davis, who heads that group, will now sit on HERE’s board. Cars are a focus area for Intel as it looks to make next generation processors for intelligent computing devices and connected cars. At the Consumer Electronics Show in Las Vegas to be held during January 05th to 08th, 2017, Intel will be looking for its place under the spotlight among the gadgets of tomorrow, where self-driving cars are likely to be showcased.
Carmakers are increasingly striking partnerships with technology firms using open technology standards, seeking to harness their expertise in areas including machine learning and mapping as they race against technology giants such as Alphabet Inc.’s (NASDAQ: GOOG) Google, Tesla Motors Inc. (NASDAQ: TSLA), and Apple Inc. (NASDAQ: APPL) to develop driverless vehicles.
Tesla announced in October 2016 that all new vehicles, including Model 3 cars, will have the hardware needed for full self-driving capability. General Motors Company (NYSE: GM) also stated in October 2016 that it has 30 self-driving all-electric Chevrolet Bolt vehicles that it’s testing on public roads in Scottsdale, Arizona and San Francisco. The Ford Motor Co. (NYSE: F) has added 20 Fusion Hybrid autonomous vehicles in 2016, bringing the company’s autonomous fleet to about 30 vehicles being tested on public roads in California, Arizona, and Michigan. Both companies lag behind Google, whose self-driving fleet, as of September 2016, totaled 34 prototype vehicles and 24 modified Lexus RX450h SUVs testing on public roads.
Intel’s change in focus
Intel, which announced plans to lay off 11% of its total workforce, or 12,000 employees, aims to emerge a nimbler organization with a focus on the data center, cloud, memory, and IoT businesses. The Company is looking to move away from manufacturing chips for PCs, which still account for 60% of Intel’s sales and 40% of profits.
Intel launched its Xeon E7 v3 processors power AWS’ X1 instance, a high-performance cloud for memory-intensive workloads, in 2016. Intel also launched the Kaby Lake generation of processors ranging from the unlocked 91W-using 4.2GHz base frequency i7-7700K to the 1GHz 7W m3-7Y30 chip, for modern computing tasks like 4K video streaming and virtual reality gaming. Intel is also unveiling two Xeon processors for mobile workstations, the E3-1535M v6 and the E3-1505M v6.
Prior to the launch of its Optane 3D XPoint SSD later in 2017, Intel will be labeling motherboards with an M.2 slot using its 200 series chip as “Optane Memory Ready”. The chip giant has integrated a number of security features into the silicon, including biometrics, password management, and two-factor authentication.
As part of its change in focus, Intel is seeking to become future-ready by tuning its chips and systems with artificial intelligence (AI) functionalities. In August 2016, Intel announced that it has signed a definitive agreement to acquire startup Nervana Systems, a leader in deep learning and machine learning. The San Diego, California-based Nervana Systems will boost the deep learning performance of Intel Xeon and Intel Xeon Phi processors, as per Intel’s blog post.
Nervana Systems will collaborate with Intel’s Data Center Group (DCG), which needs products with built-in AI services such as voice and picture recognition. Such AI functions are expected to become a bigger portion of the functions carried out by servers powered by Intel’s chips. Intel’s DCG is the Company’s most-profitable and fastest-growing business, growing 18% to generate $16 billion in revenues in FY15. Adding Nervana Systems’ products and expertise will help it gain a foothold in a rapidly growing market and fend off rivals such as Nvidia Inc. (NASDAQ: NVDA), if it can swiftly turn its acquisition into products. With the PC market shrinking, Intel is largely counting on its DCG to drive its future growth.
Intel’s stock stood at $36.41, slipping 0.52%, at the close on Wednesday, January 04th, 2017, having vacillated between an intraday high of $36.77 and a low of $36.34 during the session. The stock’s trading volume was at 15,895,434 for the day. The Company’s market cap was at $174.40 billion as of Wednesday’s close.