Over the past year, the world has been made acutely aware of the relationship between chipmakers and auto makers and just how much modern vehicles rely on semiconductor technology.
Automakers have cut 656,200 vehicles from production in 2022 so far due to the shortage, according to Automotive News, which has been monitoring the situation for the past year.
However, the problem is trending in the right direction as the 13,100 vehicles that were removed from automakers' production plans last week were the smallest in months.
All told, automakers globally are expecting to produce about 1.4 million fewer vehicles than anticipated due to the chip issue.
The chip shortage in 2021 cost the U.S. economy, not just automakers, an estimated $240 billion, according to some estimates.
The issue is so dire that in June, the Senate approved a $52 billion package of subsidies aimed at bolstering the construction of more American chip factories.
This crisis has led to stronger ties between car companies and chip makers in recent month.
Last year, Ford (F) announced a strategic agreement with GlobalFoundries Inc. General Motors (GM)partnered with Qualcomm (QCOM) to co-develop and manufacture chips.
Now Intel (INTC), one of the world's largest chipmakers, is expanding its footprint in automotive in a move that could tie its own future to the future of automotive technology.
Mobileye Places Intel in the Automotive Business
This week, Intel announced that it filed paperwork to take its Mobileye self-driving car unit public about five years after it purchased the Israeli company for $15 billion.
The Wall Street Journal reported that the unit could fetch a valuation above $50 billion.
Mobileye uses a camera-based system with adaptive cruise control and lane change assistance in driverless cars. The company's clients include BMW (BMWYY) , Audi, Volkswagen (VWAGY), Nissan, Honda and GM.
Intel confidentially submitted a draft registration statement with the U.S. Securities and Exchange Commission for the proposed public offering. The company said it expects the listing to take place in mid-2022 with the company retaining a majority share of the company.
Mobileye had about $1.4 billion in revenue in 2021, a 40% year over year jump, according to CEO Amnon Shashua. The company has seen increased demand for its technology with a pipeline of about 50 million vehicles for its equipment at the start of the year, up from about 37 million in 2021, according to the Journal.
The IPO is expected to be one of the biggest stock market flotations this year.
Self-Driving Is the Future of Automotives
Plenty of companies are working on self-driving technology with a goal of making the driving experience completely automated.
Tesla is considered one of the leaders in this tech with the company's Autopilot feature getting praise even as it faces much scrutiny.
GM has had pressure to follow in Intel's tracks with its Curise autonomous car division. The company could spin off the unit and make it public like Mobileye, a recent RBC Capital report said.
Intel is in on the ground floor of this revolution with Mobileye. Whether it will be able to develop into an industry leader remains to be seen, but now investors can bet on whether Intel has the chops to make it happen or not.
