Chip maker gets stake in digital-mapping venture backed by
German car makers
By William Boston
Intel Corp. is acquiring a 15% stake in Here International B.V.
for an undisclosed sum, joining the digital mapmaker's core
shareholders BMW AG, Daimler AG and Volkswagen AG's Audi unit in
developing navigation technology for self-driving cars.
Intel and Here aim to jointly develop technology needed to
support the real-time updates of traffic and road conditions that
are used to enable and ensure the safety of fully automated
vehicles. The companies also said they plan to explore other
business opportunities to develop services that use location data
generated by the vehicles and their passengers.
"Cars are rapidly becoming some of the world's most intelligent,
connected devices," Intel Chief Executive Brian Krzanich said
Tuesday.
The companies gave no details about the transaction. They said
the deal was expected to close in the first three months of the
year, pending regulatory approval.
The announcement comes after Germany's antitrust authority said
earlier in the day that Intel had filed a request for regulatory
approval in Germany to make a strategic acquisition of a stake in
Here. The agency said it had one month to decide on whether to
approve the acquisition, which is unlikely to pose competition
concerns.
Germany's big three premium-brand car makers bought Here from
Nokia in 2015 for about EUR2.5 billion ($2.6 billion). Based on the
original purchase price, Intel's stake could be worth around EUR375
million. The companies did not disclose any financial details.
The German auto makers, which together dominate the global
market for high-end luxury cars, set aside decades of bitter
rivalry to jointly acquire Here in a bid to control the mapping
technology they consider crucial for self-driving vehicles.
Intel appears to be positioning itself to enter the fast-growing
technology field, marking the latest illustration of how the lines
between the tech industry and conventional auto makers are
blurring.
As the automobile morphs into a platform for digital services
with the potential to generate huge profits, auto makers and tech
companies are finding common cause or are engaged in fierce
rivalries for control of the new mobility economy.
"Intel can help accelerate Here's ambitions in this area by
supporting the creation of a universal, always up-to-date digital
location platform that spans the vehicle, the cloud and everything
else connected," said Here CEO Edzard Overbeek.
Auto makers are entering such businesses as car-sharing and
ride-hailing to capture new revenue streams generated by their
vehicles. The car makers want to avoid being left behind because
such services could potentially become more lucrative than their
traditional businesses.
Tech companies such as Uber Technologies Inc., which is
essentially an app provider, Apple Inc. and Alphabet Inc.'s Google
are challenging the dominance of auto makers including BMW, VW,
Ford Motor Co. and General Motors Co. in providing personal
transportation.
They are eager to extend their dominance of tech systems, apps
and services to the automobile -- just as in the past they moved
from the personal computer to the smartphone.
New auto technology is driven by information technology, which
is why the auto industry has already outpaced computer makers as
the single biggest customer for the chip manufacturers such as
Intel and Germany's Infineon Technologie AG.
Illustrating the trend, U.S. chip-making giant Qualcomm Inc. in
October said it would buy Dutch NXP Semiconductors NV, the world's
largest developer of chips for automobiles, for $39 billion.
Chip makers provide the intelligent sensors and computing power
needed to control functions such as projecting information onto the
car's display, fuel injection and safety systems.
They also provide the eyes of the vehicle that enable cars to
ascertain temperature, weather and road conditions, identify other
vehicles and objects on the road and allow the vehicle to know its
own location.
Here is developing a real-time navigation system that creates a
3-D map of the world's roads and allows vehicles to exchange
information needed for navigation. The information will be stored
on a cloud-based computer network that individual vehicles can
access.
Intel's interest in taking a stake in Here indicates that chip
makers increasingly view the nascent digital-navigation industry as
a potential source of new revenue and innovation.
The German auto makers are eager to attract strategic investors
to Here. Last week, Here said Chinese internet group Tencent
Holdings Ltd., Chinese mapping company NavInfo Co. and Singaporean
sovereign-wealth fund GIC planned to jointly buy a 10% stake in the
company for an undisclosed price.
In December, Here unveiled a partnership with Mobileye NV, the
Israeli tech company that makes sensors for advanced
driver-assistance programs. Here is also close to announcing a
partnership in Japan, a key auto market, a person familiar with the
situation said.
If the Intel acquisition is completed, the Here stake held by
the German car makers would fall to about 75%.
Write to William Boston at william.boston@wsj.com
(END) Dow Jones Newswires
January 04, 2017 02:47 ET (07:47 GMT)
Copyright (c) 2017 Dow Jones & Company, Inc.
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