Key Takeaways
- Mobileye’s preliminary Q2 revenue of $504 million signals a powerful rebound from a difficult first quarter, suggesting the automotive inventory correction that hampered performance may be easing.
- A new strategic supply agreement with TSMC for imaging radar and next-generation EyeQ chips marks a crucial pivot, diversifying Mobileye’s technology stack beyond its camera-centric origins.
- Intel’s secondary offering of up to 42.55 million shares, coupled with a concurrent $100 million buyback by Mobileye, represents a managed divestment that grants Mobileye greater strategic independence while providing Intel with liquidity.
- The combination of recovering demand and a deeper technology moat through radar strengthens Mobileye’s competitive position against rivals like Nvidia and Qualcomm in the race to define the software-defined vehicle.
Mobileye appears to be navigating a complex series of strategic manoeuvres, pairing a robust preliminary second-quarter revenue forecast with a significant capital structure reorganisation. The autonomous driving technology firm has indicated Q2 revenues will reach approximately $504 million, substantially ahead of the $466 million consensus estimate, while simultaneously announcing a new supply partnership with TSMC. These developments occur as its majority shareholder, Intel, prepares to sell a significant portion of its stake, a move partially offset by a $100 million share repurchase from Mobileye itself.
A Rebound from the Inventory Trough
The preliminary revenue figure is perhaps the most immediate signal of a shift in market dynamics. After a challenging first quarter where revenues fell to $239 million due to significant inventory destocking by Tier-1 customers, the Q2 forecast suggests a sharp and welcome recovery. [1] This figure not only surpasses expectations but also indicates that automotive production cycles may be normalising, allowing demand for Mobileye’s Advanced Driver Assistance Systems (ADAS) to rebound. The performance suggests that the underlying end-market demand for its technology remains strong, even after the supply chain dislocations of the past year.
The Strategic Importance of TSMC and Imaging Radar
Beyond the immediate financial performance, the new supply agreement with Taiwan Semiconductor Manufacturing Company (TSMC) is of critical long-term importance. The deal focuses on producing two key product lines: next-generation EyeQ systems-on-a-chip (SoCs) and, crucially, imaging radar components. [2] This marks a deliberate and significant expansion of Mobileye’s technological base.
While the company built its dominant market position on camera-based vision systems, the move into imaging radar diversifies its sensor suite. Imaging radar provides rich, high-resolution data that complements vision systems, offering enhanced performance in adverse weather conditions and providing the redundancy essential for higher levels of vehicle autonomy (L3 and above). By securing production with a leading-edge foundry like TSMC, Mobileye not only ensures supply but also gains access to advanced manufacturing processes, a vital advantage in its intensifying competition with semiconductor giants like Nvidia and Qualcomm, both of whom are making aggressive inroads into the automotive sector.
Intel’s Divestment and Mobileye’s Growing Independence
The financial engineering surrounding the company is as notable as its technological advancements. Intel has announced its intention to sell up to 37 million shares of Mobileye’s Class A common stock, with an underwriter option for an additional 5.55 million shares. [3] Concurrently, Mobileye has agreed to repurchase $100 million of its shares directly from Intel. [4]
This transaction can be viewed as a managed and orderly reduction of Intel’s stake. For Intel, it provides a source of liquidity as it invests heavily in its own foundry services. For Mobileye, it is a step towards greater strategic and operational independence. While a large secondary offering can create a near-term overhang on a company’s share price, the concurrent buyback sends a signal of confidence from Mobileye’s management in the company’s intrinsic value. It effectively provides a degree of support for the share price while facilitating its parent company’s partial exit.
Financial Position and Path to Profitability
The dramatic revenue recovery in the second quarter is essential for Mobileye’s financial trajectory. The company is not yet consistently profitable on a GAAP basis; it reported a GAAP net loss of $218 million in Q1 2024. However, the operational leverage in its business model means that the significant sequential revenue growth forecasted for Q2 places it on a much firmer path toward sustained profitability. The key will be managing research and development expenditure as it pushes into more complex and capital-intensive technologies like radar and L4 autonomous systems.
| Metric | Q2 2024 (Preliminary) | Q1 2024 (Actual) | Q4 2023 (Actual) |
|---|---|---|---|
| Revenue | ~$504 Million | $239 Million | $637 Million |
| GAAP Net Income / (Loss) | Not Disclosed | ($218 Million) | $61 Million |
| Non-GAAP Net Income / (Loss) | Not Disclosed | ($34 Million) | $228 Million |
Source: Mobileye Q1 2024 Earnings Release & Q2 2024 Preliminary Results Announcement
Forward Outlook
Mobileye is at an inflection point. Operationally, it appears to be emerging from an industry-wide inventory correction. Strategically, it is broadening its technological moat with the move into radar. Financially, it is transitioning from a subsidiary into a more independent public company. The primary risk remains execution; competition is fierce, and the development timelines for full autonomy are long and costly.
A speculative hypothesis: the TSMC partnership is less about securing chip supply and more about accelerating a defensible “sensor fusion” ecosystem. By mastering both camera and radar at the silicon level, Mobileye could position its integrated platform as the indispensable core of the software-defined vehicle, making it profoundly difficult for automotive OEMs to switch providers. If successful, Mobileye could become the central nervous system for the majority of the world’s cars, a far more entrenched position than being just a component supplier.
References
[1] Mobileye. (2024, April 25). Mobileye Releases First Quarter 2024 Results. Mobileye Investor Relations. Retrieved from https://ir.mobileye.com/news-releases/news-release-details/mobileye-releases-first-quarter-2024-results
[2] Calcalistech. (2024, July 11). Mobileye signs strategic deal with world’s largest chipmaker TSMC. Retrieved from https://www.calcalistech.com/ctechnews/article/r16waps0kl
[3] StockTitan. (2024, July 11). Mobileye Announces Secondary Offering of Shares of Class A Common Stock by an Affiliate of Intel Corporation. Retrieved from https://stocktitan.net/news/MBLY/mobileye-announces-secondary-offering-of-shares-of-class-a-common-pcjs39de8o83.html
[4] Investing.com. (2024, July 11). Mobileye stock rises after prelim Q2 results beat consensus. Retrieved from https://www.investing.com/news/stock-market-news/mobileye-stock-rises-after-prelim-q2-results-beat-consensus-93CH-4127247
StockSavvyShay [@StockSavvyShay]. (2024, July 11). [$MBLY TOPS ESTIMATES — STRIKES NEW DEAL WITH $TSM]. Retrieved from https://x.com/StockSavvyShay/status/1811401968611390000
