Intel has forked out $15 billion for Mobileye, the company that develops technology for autonomous cars. Why?

Intel faces one big challenge. Moore’s Law is ending. And that is a big deal because the company is structured, and its core speciality, all revolve around the idea that computers double in speed every 18 months to two years. In fact, Moore’s Law is named after its co-founder, Gordon Moore. Intel is good at developing technology that enables chips to go smaller, and thus faster.

But it seems we are fast approaching the point when it is physically not possible for silicon based integrated circuits to go much smaller.

So, Intel faces a choice, you can call it a dilemma, named after Innovator’s dilemma, the theory created by Harvard Professor Clayton Christensen to describe what happens to key players in an industry when new technology transforms that industry.

Critics say Intel should not bother. They say it has huge cash balances sitting overseas, it should pay this money out as dividends.

But those who study innovator’s dilemma type scenarios say there is another way, and that is to diversify, act a bit like a venture capital firm, and invest in third parties – or indeed buy them out entirely – which have technology that in some way complements your own.

With the purchase of Mobileye, Intel has chosen to go down this route.

Mobileye is in the business of autonomous cars. It is also in the AI business and its into machine learning.

As we approach the post Moore’s Law era, we will see more specialist technologies, for example computers and chips designed for very specific purposes. Intel, by contrast has always relied on raw power, and the inexorable march of Moore’s Law. In an era when computers were doubling in speed every 18 months or so, there was little mass market demand for expensive specialist technology that would very rapidly be surpassed by Intel’s more general technology – the obvious exception to this was ARM, with its less energy intensive chips more suitable for mobile phones and tablets.

To remain relevant, Intel needs a different approach.

Mobileye is a key player in the autonomous vehicles business. This is the company, by the way, that rowed with Tesla, concerning the safety of autonomous mode in Tesla vehicles.

Although many people are cynical about autonomous cars, they will offer one incredibly important benefit: safety. It will be the safety aspect of autonomous cars that will charge their initial success – they will save lives, reduce the number of accidents, leading to less traffic congestion and lower car insurance premiums. Cynics overlook this all-important evolving benefit of autonomous cars.

Mobileye itself emphasises how its technology will promote safety.

By buying the company, Intel has made an important step. And while some say it would have been better off buying Nvidia, this company is valued at over $60 billion, even for Intel that would have been a big reach.

Intel is taking steps to answer its innovator’s dilemma.

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