Intel prepares to list Mobileye at a valuation of $16 billion • The Register

Intel expects the IPO of its Mobileye business unit to raise a valuation of $16 billion, a fraction of the nearly $50 billion the autonomous driving division expected earlier this year.

According to an SEC filing [PDF] On Tuesday, Intel will offer 41 million common shares at a price between $18 and $20, which should bring in $738 million to $820 million.

Intel announced in December its intention to take Mobileye public via an IPO in mid-2022. By April, the chip giant appeared to be taking the first steps toward realizing that plan, bringing on Goldman Sachs and Morgan Stanley to lead the IPO, which is targeting a valuation of up to $50 billion.

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But even then, deteriorating market conditions were a cause for concern. The x86 giant reportedly put the brakes on its IPO in July over fears that market volatility would derail the effort. Despite the delay, Intel remained aggressively optimistic, with a spokesperson insisting Mobileye would go public later this year, but noting that the timing is yet to be determined.

By September, it was widely reported that Intel had trimmed its expectations to a $30 billion valuation given deteriorating market conditions. But even that seems to have been optimistic, as the chipmaker now expects Mobileye’s valuation to be a little more than half that at $16 billion. For comparison, that’s about $1 billion more than Intel paid for the Israel-based company in 2017.

As we previously reported, the lower-than-expected valuation could prove problematic for the chipmaker’s recovery. CEO Pat Gelsinger bet heavily on Mobileye’s IPO to fund the company’s transition to contract semiconductor manufacturing. To date, the chipmaker has committed more than $70 billion in new fab and packaging sites in the United States and Europe.

The high cost of the facilities, which can range from $10 billion to $20 billion each, and uncertainty about the U.S. government’s award of CHIPS Act subsidies have forced Intel to get creative. In August, the company turned to Canadian private equity firm Brookfield Asset Management to fund half of its Arizona fab project, the price of which had risen 50 percent due to changing market conditions — particularly inflation.

To make matters worse, Intel, which is due to report third-quarter results on Oct. 27, is expected to face severe economic headwinds amid rapidly declining PC demand across the industry. Gartner reported last week that PC shipments fell nearly 20 percent during the quarter compared to this time last year.

Intel is also expected to announce thousands of layoffs by the end of the month, with some teams — notably sales and marketing — losing up to 20 percent of their workforce. The business, which announced over the summer that annual sales will be up to $11 billion below its previous forecast, employs more than 110,000 people worldwide. ® Intel prepares to list Mobileye at a valuation of $16 billion • The Register

Rick Schindler

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