Intel Investment Spotlights Drones’ Opportunity for Chipmakers

SAN FRANCISCO—Intel Corp. said Thursday (Aug. 27) it has invested more than $60 million in Chinese drone maker Yuneec Holding Ltd., the clearest indication yet of the opportunity that Intel and fellow chip makers see in the nascent commercial drone space.

“We’ve got drones on our roadmap that are going to truly change the world and revolutionize the drone industry,” said Brian Krzanich, Intel’s CEO, in a video announcing the deal.
In a very short period of time, drones have gone from being viewed as pricey hobbyist toys to an enticing technology with serious commercial applications, including agriculture, construction, product delivery and others.
According to a report published in January by ABI Research Inc., the small unmanned aerial vehicle market will be worth more than $8.4 billion by 2018. The report predicts that commercial drone revenue will grow at a compound annual growth rate of 51% from 2014 through 2019. By 2019, the commercial drone market will be worth roughly five times as much as the hobbyist drone market and more than twice as much as the market for military and civil service drones, according to the report.
[Listen: Pros and Cons of Drones Why regulate?]
Chipmakers, including both Intel and Qualcomm, have taken notice, investing in companies that supply drones and drone technology. According to Dan Kara, practice director for robotics at ABI Research, chip vendors and consumer electronics firms are looking at the drone market as another market where technologies that have been developed mainly for smartphones, such as processing and high-quality imaging technologies, can be applied.
“It’s just opening up another avenue for them [chip vendors] to sell product to,” Kara said.
Krzanich said Intel believes the Yuneec deal will be “a game changer in the drone industry.” He added that Intel believes “drones have the potential to positively change lives in many ways, whether that’s delivering consumer goods or inspecting disaster sites.”
Intel said it would collaborate with Hong Kong-based Yuneec on future products. A spokesperson for Intel said via email that the company is not providing details at this point on what Intel technologies might be used by Yuneec.
“Overall, our goals are to help the drone market grow both through our investments and by adding value via our technologies,” the spokesperson said.
Intel has previously announced investments in other drone makers. In May 2014, Intel’s venture capital arm contributed to a $10 million funding round for Raleigh, N.C.-based PrecisonHawk. Earlier this year the company made an undisclosed investment in San Francisco-based Airware.
In January, Intel announced a partnership with Ascending Technologies to develop collision avoidance technology and algorithms for drones. As part of that agreement, Intel took a minority stake in Ascending Technologies.
In February, Qualcomm acquired Philadelphia-based KMel Robotics Inc. and participated in a $50 million investment in Berkeley, Calif.-based drone maker 3DR Robotics Inc.
While the market potential of the commercial drone market is widely acknowledged, regulations covering drone use are still immature, and there are concerns about the potential for drone technology to be used for illicit means. In July, a video of a drone firing a handgun uploaded to YouTube raised alarms. Drones have also been reported to have been used to smuggle drugs into the United States from Mexico and to smuggle drugs and other contraband into prisons in the U.S.

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