According to people familiar with the matter, in the face of a broader stock market slump, Intel is lowering its expectations for the initial public offering (IPO) of its self-driving subsidiary Mobileye. If the situation does not improve, Intel may delay the listing plan until next year.
Intel expects the IPO to value Mobileye at $30 billion (about 208.2 billion yuan), lower than initially expected, people familiar with the matter said. According to the original plan, Intel hopes that Mobileye will be listed in mid-2022, with a potential valuation of more than 50 billion US dollars (about 347 billion yuan).
Intel CEO Pat Gelsinger is trying to take advantage of the business it acquired in 2017 by divesting some of its shares. Mobileye, which makes cameras and chips that support driver-assist functions, is seen as a valuable asset as the auto industry moves toward fully autonomous vehicles. But Intel is facing a bear market in chip stocks and a lack of IPOs, making it more difficult to complete the sale.
If chip stocks rebound, Mobileye could still go public in 2022, people familiar with the matter said. Otherwise, the program will be delayed until next year. Representatives for Mobileye and Intel declined to comment.
A successful listing of Mobileye could help break the stalemate of indecision while chip-related assets wait to go public. SoftBank Group is trying to push its chip design company Arm to go public early next year. Ampere Computing, a startup that makes processors for data centers, is also planning an initial public offering.
For Intel CEO Henry Kissinger, Mobileye's successful IPO will help prove that its turnaround plan is bearing fruit. Intel has been hurt by declining sales and earnings, and market share has been taken away by rivals such as AMD. Kissinger has outlined an ambitious spending plan to rebuild Intel's manufacturing capabilities, enter new businesses and restore its technology leadership.
Intel said in December that Mobileye would remain a major shareholder after it went public. Most of the proceeds will be retained by Intel, Kissinger said, but Mobileye will make its balance sheet public, allowing it to drive expansion plans.
Since being acquired by Intel for about $15 billion, Mobileye has been doing great and has been growing faster than its parent company, which could see its revenue drop as much as 16% this year. In the second quarter, Mobileye's revenue reached $460 million, up 41% year over year. That helped the company's operating income jump 43% to $190 million.
Shares of Intel fell 1.1 percent to $31.1 on Monday after the latest news, falling to a session low. At the close, though, the stock resumed its gains. Intel shares have fallen 39% this year, worse than the overall performance of chip stocks, and the Philadelphia stock market semiconductor index is down 31% in 2022.