Dec 7 (Reuters) - Intel Corp will keep most of the
money it raises next year when it sells a stake in its Mobileye
self-driving-vehicle components unit in a planned initial public
offering, targeting some of those funds to build more Intel chip
plants, Chief Executive Pat Gelsinger said on Tuesday.
Intel shares were up 4.1% at midday Tuesday after surging as
much as 8% during the session, as Wall Street cheered the chip
giant's move to take Mobileye public. Gelsinger said the IPO
will allow Mobileye to grow more easily as global carmakers
spend billions of dollars to accelerate their transition to
electric and self-driving vehicles.
"This is the right time," he said on a conference call.
"This is a unique asset and we're going to make the right moves
to fully realize that potential."
Gelsinger said Intel will retain a majority stake in
Mobileye and will also receive "the majority of the proceeds"
from the IPO. He declined to specify the size of the stake that
would be sold or a fundraising target, but said that "certainly
it will be helpful in our overall aggressive buildout of
Intel has said it plans to build two chip plants in Arizona,
and add other plants in the United States and Europe at sites
that have not been announced.
A chip shortage has afflicted industries globally including
the auto sector. U.S. President Joe Biden's administration wants
Congress to approve $52 billion to expand U.S. semiconductor
Before Tuesday's gains, Intel shares had barely budged this
year, vastly underperforming a more than 40% rise in the
Philadelphia SE Semiconductor index, as the chipmaker
struggles to ramp up its technology as rivals have been making
more energy-efficient microprocessors.
Mobileye, an Israeli company that Intel bought for about $15
billion five years ago, could be valued at more than $50 billion
during its U.S. IPO in mid-2022, a source previously told
Reuters. Gelsinger said that value would be set closer to the
IPO and he declined to say how much of Mobileye will be sold,
repeating Intel would retain a majority stake.
Mobileye has a rich roster of clients, including BMW, Audi,
Volkswagen, Nissan, Honda and General Motors.
Its technology has been deployed by automakers as they equip
their cars with driver-assistance systems or experiment with
self-driving technology in their shift toward electric vehicles.
Intel expects Mobileye's revenue to grow over 40% this year.
WestPark Capital analyst Ruben Roy liked the deal for the
cash and greater strategic focus it could bring Intel. Roy said
Mobileye should see compound annual growth of around 25% to 30%
over the next several years.
(Reporting by Nivedita Balu and Chavi Mehta in Bengaluru, and
Ben Klayman in Detroit; Editing by Anil D'Silva and David