Shares of Intel Corp (INTC.O) rose 7% on Tuesday as Wall Street applauded the chipmaker’s decision to go public with its self-driving car unit at a time when global automakers are spending billions of dollars to speed up their transition to electric vehicles.
As Intel struggles to speed up its technology and catch up with rivals in developing more energy-efficient microprocessors, its stock has barely moved this year, underperforming a 40 percent rise in the Philadelphia SE Semiconductor index (.SOX).
Intel’s market capitalization will increase by $17 billion as a result of Tuesday’s increases. In early trade, Qualcomm (QCOM.O), Nvidia (NVDA.O), and AMD (AMD.O) all saw gains.
Mobileye, an Israeli startup that Intel bought for $15 billion five years ago, might be worth more than $50 billion when it goes public in the United States in mid-2022, according to insiders.
“That is what would give a possible high valuation to Mobileye … that eventually this is going to be something that’s deployed to eventually most vehicles around the world,” Daiwa Capital Markets America’s Louis Miscioscia said.
Intel expects Mobileye’s revenue to grow over 40% this year.
“Rather than trying to compete with its potential foundry customers in the automotive market, it can serve as a foundry of choice to more automotive chipsets suppliers as well as (auto manufacturers) that may want to adopt its in-house chips,” Summit Insights Group analyst Kinngai Chan said.