Is Mobileye Destined To Go The Way Of 3D Printing Stocks?

Come to think of it, Intel (INTC) is the largest semiconductor chip manufacturer, yet has struggled mightily trying to get a proper foothold into the mobile chip business. Intel has, as a result been forced to book heavy losses as it tried to lure mobile phone manufacturer to use its chips by offering generous subsidies and contra revenue. All this has not helped the company's mobile ambitions much. Apple (AAPL) might not have had as much cash as Intel to spend on R&D when it launched its first iPhone. Yet the company has managed to crush its competition in the high-end segment of the market due to a definitive first-mover advantage and making great products. While having a first-mover advantage might not inure you from future competition, it does count for a lot. And Mobileye has a large first-mover advantage in ADAS. So it’s erroneous to assume that competition will kill it off so easily. Mobileye might well turn out to be the Apple of self-driving car technology.

Citron Research, either deliberately or through an oversight, chose to compare Mobileye’s R&D spend to its EV instead of sales as is the usual practice. Though it’s okay to use EV, the more common practice is to use R&D/Sales. Mobileye spent 25% of its revenue on R&D in 2014. That compares very well with the percentage of revenue spent on R&D by the other companies on Citron’s list, and even higher than that by companies such as Qualcomm (QCOM) which spent 20% of its 2014 revenue on R&D. Moreover, it misleading to compare pure-play chip companies, including analog chip companies such as Texas Instruments, with Mobileye since these companies spend their R&D cash on diverse fields of research whereas Mobileye dedicates all its R&D spending on ADAS.

Citron compared Mobileye to 3D printing systems ostensibly because driverless cars are little more than hype. But that again is misleading. Large tech companies such as and Google (GOOG) (GOOGL) and Apple, which have heavily invested in self driving cars  . This is not something that we saw with 3D printing. Although many auto companies won’t be launching their first fully autonomous vehicles before 7-8 years, a few like Audi plan to launch in about two years’ time.

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Charles Howard 6 years ago Member's comment

I don't think that comparison is relevant in this case. It has a lot more juice than $DDD.