Mobileye Stocks Plunge Amid Reduced Demand for Chips
Israeli company Mobileye, a subsidiary of Intel, experienced a significant drop in its share price following a decline in demand for its chips. A surge in chip stocks among automakers has led to an excess supply, causing a 25% decrease in Mobileye’s stock value in one trading session.
Dipping Demand for Mobileye Chips
As reported by CNBC, Mobileye has recently alerted investors about an imminent decrease in chip orders during the current quarter. The management of Mobileye was made aware of an overstock of their chips at client warehouses, necessitating a business forecast adjustment for the present quarter. Consequently, the delivery of products by Mobileye will notably decrease year-over-year. Nevertheless, Mobileye remains optimistic that most of the surplus will be utilized by clients before the quarter’s end, leading to a stabilization in demand.
Background: Mobileye and its Partnerships
Mobileye specializes in creating chips for driver-assist systems and was a former partner of Tesla in the early stages of developing such solutions. However, a high-profile fatal auto accident involving the usage of a Tesla autopilot system resulted in a strained relationship and eventual break-up between the two companies. Mobileye continues to supply its chips to major automakers, although it appears these manufacturers were hasty in their procurement planning, resulting in an overabundance of chips.