- Intel has announced the acquisition of German drone maker Ascending Technologies.
- This follows the company's investment in Chinese drone manufacturer Yuneec in October.
- Can Intel become a serious drone chip manufacturer?
Move over Ambarella (NASDAQ:AMBA); here comes Intel (NASDAQ:INTC). When Intel announced that it planned to invest $60M in Chinese drone maker Yuneec in October last year, most investors only gave fleeting thought to the announcement. But now, with Intel's acquisition of German Ascending Technologies, it appears that the chip-maker is really serious about the drone business. This time around, Intel has announced that it not only investing in, but is actually going the whole hog and buying, a drone maker. Intel has announced that it is buying drone maker Ascending Technologies for an undisclosed sum.
Ascending Technologies has been using Intel’s RealSense Technology in its drones. The RealSense System uses a combination of infrared lens, infrared laser projector lens, digital cameras, and dedicated image processing hardware. All these components are squeezed into a tiny module that helps the drone to capture 3D data including mapping the surrounding environment, tracking hand gestures, and scanning a face.
Working hand in hand with Intel, Ascending Technologies uses RealSense systems to create and incorporate highly advanced obstacle avoidance technology. These are the kinds of drones that can practically fly themselves with minimal human intervention. Intel showcased Ascending Technology’s FireFly drone during the Intel Future Showcase 2015. The drone is capable of flying completely unaided through the woods.
"We’ve already partnered to combine Ascending Technologies’ sense-and-avoid algorithms with Intel™ RealSense technology’s real-time depth-sensing capability. Together, these technologies can, among other things, improve drone safety – helping them avoid obstacles and collisions. With Ascending Technologies, Intel gains expertise and technology to accelerate the deployment of Intel RealSense technology into the fast growing drone market segment."
It’s not hard to see why Intel is interested in self-flying drones with advanced vision boosting system that boosts safety and overall navigation accuracy. Companies such as Amazon (NASDAQ:AMZN), DHL and several others are looking to soon start deploying delivery drones to improve on delivery times and lower delivery costs.
Part of the reason why Intel is so interested in the burgeoning drone industry is because your average drone is equipped with numerous chips. Intel hopes that by incorporating Ascending Technology’s best-in-class drone technology in its drone chips, the company can gain a leg up the likes of Qualcomm (NASDAQ:QCOM) and NVIDIA (NASDAQ:NVDA). Qualcomm has already developed a drone-specific Snapdragon Flight Board which can support 4K video as well as 720p FPV (First Person View) encoding. Qualcomm is pitching its drone platform to OEMs. Meanwhile Nvidia has Jetson TXI. Both Snapdragon Flight Board and Jetson TXI support a measure of autonomous flying.
Intel’s approach of buying companies, and specifically hardware companies to get its hands on their technology and provide a reference hardware platform for its OEM partners appears to be the best way for the company to attack new niches. In the past, Intel insisted on developing nearly everything in-house. When Intel closed the Altera merger, the company’s chief deal maker said the company will be doing things very differently from the way it has done in the past. That was another way of saying that Intel will be relying much more heavily on acquiring companies with specific strengths as a way of getting to the market earlier. The company’s latest acquisition is a perfect demonstration of this.
What is the revenue opportunity for Intel in the drone chip industry? Currently the opportunity is modest at best, but is one with good growth possibilities. Ambarella, the leading drone chip manufacturer, reported revenue of $248.4M or the first three quarters of 2015, or ~$331M for the year. The company’s revenue for the period grew a robust 61.7% Y/Y. But perhaps Intel has its eyes on autonomous driving industry, which could explode in the coming years. After all much of the technology that is used in autonomous flying has parallels in self-driving vehicle technology. So ultimately Intel might be able to become a player in this market, which promises to be much bigger than the drone market.