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With its $15.3 billion acquisition of Mobileye, Intel joins the growing number of technology firms and traditional carmakers racing into the self-driving car market.

The autonomous driving sector is estimated to be worth $25 billion annually by 2025, Bain & Company estimates. Google and Uber are at the head of the pack, having already invested billions developing their own technology and forming partnerships with automakers, such as Chrysler and Volvo, to put test vehicles on the road. Competition between Silicon Valley giants as well as traditional automakers is heating up.

Intel’s $15.3 billion Mobileye deal is one of the biggest so far in the sector. By acquiring the Israeli firm, which makes sensors and cameras for self-driving cars, Intel is positioning itself to be a major player in the market for the cars’ underlying technology. “This deal makes Intel a Tier 1 partner for the automotive industry”, said Martin Birkner, an automotive analyst at Gartner. “As the industry moves toward autonomous driving, new types of digital suppliers like Intel are developing quickly.”

Many driverless vehicles, the New York Times explains, “will require immense computing power, including the latest microchips able to crunch reams of data in seconds to keep the cars safe, and on the road”. This poses lucrative new opportunities for companies like Intel and Qualcomm, whose computer businesses are flagging in a dwindling market for PCs. Rival chip makers Nvidia and Qualcomm are slightly ahead of Intel as suppliers for self-driving cars.

Intel aims to offer not only high-powered chips, but a wider suite of products for carmakers that want to offer autonomous driving but do not have the in-house expertise “Scale is going to win in this market”, said Intel Chief Executive Brian Krzanich. “I don’t believe that every carmaker can invest to do independent development into autonomous cars.”

Over the past 18 months, Intel has made a series of moves to expand its presence in the field, including partnership deals with BMW and Delphi Automotive, a parts supplier. The company also acquired a 15% stake in Here, a digital mapping business, and announced in 2016 that it would invest $250 million in start-ups focused on driverless car technologies.

Apart from the allure of joining a burgeoning industry – which Intel expects will be worth about $70 billion by 2030 – the company is motivated to build on its high-growth businesses. Intel still earns more than half its annual revenue from traditional computer chips; however sales from its “internet of things” division, which includes the automotive team, grew 15% in 2016, to $2.6 billion.

Much of Intel’s success will depend on Amnon Shashua, Mobileye’s Co-Founder and Chief Technology Officer. With Mobileye’s technology, Shashua sees Intel providing carmakers with a complete line of digital services. “The collaboration that we want to do can’t happen if we are two different organizations”, he said. “The collaboration already runs deep.”

While analysts say autonomous cars still have a way to go, given regulatory as well as technological roadblocks, investments from technology companies and automakers will likely continue unabated. Stating that more acquisitions are “an absolute necessity”, Birkner of Gartner said, “Carmakers and Silicon Valley companies are realizing that they both bring different skills to the table.”

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