INTC Intel Corporation

By Rory Jones 

TEL AVIV -- Israeli startups have new incentive to hit the gas in a race to develop the next big vehicle-automation technology.

Intel Corp.'s $15 billion acquisition of Jerusalem-based Mobileye NV -- the biggest technology deal in the so-called Startup Nation -- has raised hopes that Israel can produce companies that may attract massive investments from multinationals.

"It shows that we can build big companies that sell with 11-figure numbers," said Ben Volkow, the founder of Otomono, a data company that helps car firms gather information from connected vehicles.

From cybersecurity to artificial intelligence, Israeli entrepreneurs have turned this Mediterranean country into a global innovation hub. Now they are disrupting almost every element of the car manufacturing chain, using local expertise to create cutting-edge technologies in everything from combustion engines to quick-charge batteries.

The country has come to occupy a prominent position in the global automotive supply chain despite not having much of an auto industry at home.

Mobileye -- known globally for its chip-based camera systems that power automated driving features -- has said its operations and roughly 600 employees will remain in Israel.

"This [Intel] deal will be looked at as the new phase for the industry," Eran Shir, chief executive of Israeli startup Nexar Ltd., said of the Mobileye buyout. "Data is now the new oil."

Intel's investment is expected to further spur development of Israel as an automotive hub, with more than a hundred Israeli firms already working in this space.

Mr. Volkow's Otonomo, for instance, is focused on the data collected by cars. His platform takes hundreds of parameters that new connected cars communicate to manufacturers in real time -- tire pressure, driving habits and what is on the radio -- and sells the data to third parties such as insurance companies, retailers and maintenance firms to boost car manufacturers' margins.

The Israeli firm is working with eight car manufacturers, including Daimler AG, and aims to become a marketplace like Apple' Inc.'s iTunes for car data.

The Nexar app is attempting to make motorists more accountable, with just a smartphone and a dashboard holder. It uses cameras and sensors in the smartphone to create a network of phones that monitors cars and drivers.

The app warns individuals about potential hazards one or more cars ahead and can reconstruct collisions for insurance claims. The app is being piloted with professional drivers that work with ride-hailing apps such as Uber Technologies Inc.

About 400 Israeli companies and entrepreneurs in the transportation and automotive sector have raised roughly $4 billion from investors in four years, according to EcoMotion, a nongovernmental organization set up in partnership with the Israeli Prime Minister's Office and Economy Ministry.

The figure includes an initial public offering from Mobileye and Volkswagen AG's purchase of a $300 million stake in Israeli taxi app Gett last year. Israeli-founded ride-hailing app Via Transportation Inc. raised $100 million last year. And Ford Motor Co. purchased an Israeli machine-learning company last year for an undisclosed sum. Fast-charge battery company Storedot Ltd. raised $18 million in 2015 to power electric cars.

"We believe the auto industry is being transformed," said Emanuel Timor, a partner at Vertex Ventures, which originally bought a stake in Israeli mapping firm Waze, purchased by Google in 2013 for $1 billion. "There's a great opportunity for startups."

The country's expertise in cybersecurity is providing one such opportunity.

Young Israelis trained by its defense forces in cyberintelligence have gone on to establish some of Israel's biggest tech firms. They also are creating security products to ensure cars aren't easily hacked.

"If there's a defined problem, Israeli startups are focused on solving that problem and monetizing it," said Ian Simmons, vice president of business development at Canadian parts supplier Magna International Inc. in a recent interview. It invested in Tel Aviv-based startup Argus Cybersecurity Ltd in 2015.

Write to Rory Jones at rory.jones@wsj.com

(END) Dow Jones Newswires

March 14, 2017 14:34 ET (18:34 GMT)

Intel (NASDAQ:INTC)
Historical Stock Chart
From Mar 2024 to Apr 2024

Intel (NASDAQ:INTC)
Historical Stock Chart
From Apr 2023 to Apr 2024