Intel CEO Aims to Capitalize on Increased Car Automation With Mobileye IPO

“When you think about the automotive sector, we think that we’re at this inflection point,” Mr. Gelsinger said. As cars are developed with more autonomous and smart features, they will become bigger users of processors, he said.

Mr. Gelsinger said listing Mobileye would give the unit a higher profile and ability to attract more business. He called the Israeli business Intel bought in 2017 for around $15 billion an underappreciated asset, adding it “may be too hidden, which is what we’re trying to address.”

The IPO plan comes after months during which the semiconductor and auto industries have drawn closer together, driven both by an unprecedented global chip shortage and the growing belief that cars will consume ever more processors as they become more electric and autonomous.

Intel earlier this year pledged to allocate some semiconductor-making capacity to help produce chips for cars.

Qualcomm Inc.

in October teamed up with an investment firm to buy Swedish auto-technology company

Veoneer Inc.

in a $4.5 billion deal to further its autonomous-driving ambitions.

Ford Motor Co.

last month announced a strategic agreement with chip maker

GlobalFoundries Inc.

to develop chips and

General Motors Co.

said it would team up with Qualcomm to co-develop and manufacture chips.

GM could follow a similar path with its Cruise autonomous-car division as Intel is with Mobileye, RBC Capital said Tuesday. “We believe it is important for GM to retain control of Cruise, but similarly it is important for Cruise to have its own currency and identity to attract talent and additional capital,” RBC analyst

Joe Spak

wrote in a note. GM declined to comment.

Mobileye was founded in Israel in 1999 and went public in 2014 before being acquired by Intel. It has expanded to more than 2,500 employees and seen rapid growth under Intel, roughly tripling its revenue. The company specializes in chip-based camera systems used in some self-driving car features and has partnerships with companies like

Bayerische Motoren Werke AG

. Next year, Mobileye plans to launch its self-driving robotaxis. Mobileye CEO

Amnon Shashua

said the rules for autonomous vehicles, including regulatory standards, are starting to become clearer, which would drive demand for the company’s products.

Mr. Gelsinger said Intel will decide on the valuation it will seek for Mobileye closer to the public offering. Mobileye could fetch a valuation above $50 billion, according to people familiar with the matter.

Mr. Gelsinger said Intel didn’t need the money Mobileye’s public listing is likely to generate, but it comes as the company embarks on a spending spree to build up its contract chip-making business. Mr. Gelsinger this year has announced plans to pour more than $100 billion into new chip-making facilities in the U.S. and Europe over the coming years and said more investment commitments were likely.

Some of that chip-making capacity will be aimed at making chips for cars, Mr. Gelsinger, as Intel looks to widen its auto-industry sales. Setting up a contract chip-making business and listing Mobileye all are part of a plan to “bring a full menu to the auto makers,” Mr. Gelsinger said.

—Mike Colias contributed to this article.

Write to Meghan Bobrowsky at [email protected]