Article report on Israel

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Mobileye is an attractive target because of what it does now and what it will soon be capable of. Its EyeQ software is already used by most of the world’s carmakers to help their vehicles stay in their lanes and brake in emergencies, precisely what will also be required in autonomous vehicles. This system, which is currently fitted in over 15m vehicles but is set to be used by many millions more, can also collect information from installed cameras to continuously update the incredibly detailed maps that self-driving cars will require.

Israeli politicians are cock-a-hoop that the country’s prowess in technology had made headlines around the world. Yigal Erlich, a former chief scientist of the Israeli government, called it “a great achievement that a company like Intel is building its future on Israeli technology”. There was further delight that Intel will relocate its existing car-technology business, which is sizeable, to the country.

Mobileye is not the first Israeli car-technology firm to attract a foreign buyer. Waze, a driving-navigation app, was snapped up by Google in 2013 for $1.1bn. Last year Volkswagen paid $300m for a share of Gett, a ride-hailing startup. But this is by far the biggest deal.

Though not a vast sum by technology-industry standards, some analysts reckon that Intel has overpaid. The firm is under pressure. Its main business, of providing chips for PCs, is past its peak. Its record with deals to make up for that is unenviable. Intel has proved willing to write enormous cheques to chase growth. Last year it sold McAfee, a cyber-security business, for some $4.2bn, around half what it had paid for it six years earlier.

Having largely missed out on the transition to mobile devices, Intel may fear doing the same in autonomous cars. Competitors are beefing up. Last year Qualcomm, another big chipmaker, announced a deal worth $47bn for NXP Semiconductors, a firm that makes chips for cars. Nvidia, better known for chips used by the gaming industry, is developing them for cars, too.

Setting price aside, marrying Mobileye’s camera and mapping expertise with Intel’s chip and computing skills makes sense as the battle to establish predominance in the field of autonomous vehicles heats up. The priority for tech companies such as Intel and Google is to get their hands on the prodigious amounts of data that cars generate. Data are a vital commodity for perfecting the algorithms that underpin autonomy. Established car firms already have access to data from billions of miles of driving. Google’s self-driving vehicles throw off data of their own. For Intel, too, Mobileye’s value will be as a source of data as well as revenue and profit.

Tech firms have also tried striking alliances with carmakers to secure more data. Last year, in fact, both Intel and Mobileye teamed up with BMW to develop self-driving cars. Carmakers have at last caught on to the value of data and know that they should guard it jealously. The problem they face is that they are also under pressure to share their data in return for the new technology they badly need. Intel and Mobileye have recognised that becoming large and powerful gives technology firms more leverage in this relationship. As the battle for data heats up it would be no surprise if both tech and automotive companies were to come shopping for more of Israel’s car-tech wizardry.

http://www.economist.com/news/business/21718941-israeli-firm-and-tech-giant-team-up-shape-future-cars-mobileye-and-intel-join