Cognex to buy Intel robotics spin-off RealSense for about $600M

Cognex, which is listed on Nasdaq, will pay about $500 million in cash for RealSense. It will also provide a three-year cash retention program worth $56.5 million for RealSense employees and grant them restricted stock units valued at about $50 million. That means most of RealSense’s 180 employees, who are shareholders in the company, will receive at least $330,000 from the deal.

RealSense’s main product is its depth camera line, which uses stereo vision, structured light and time-of-flight technology to determine depth. The cameras are commonly used in robots to judge how far away an object is, and in robots and drones to create 3D maps of their surroundings so they can navigate and avoid obstacles safely. RealSense also makes 3D scanning technology for creating 3D models of objects and environments, as well as gesture and facial recognition technology for touchless devices and security applications.

RealSense began in 2014 as a research project inside Intel and initially gained traction as the chipmaker bought various startups to build the unit into a force in 3D cameras and facial recognition. It ultimately failed to grow as Intel had hoped. Under a restructuring led by former Intel Chief Executive Pat Gelsinger, Intel decided to offload RealSense and spun it out as a separate entity led by CEO Nadav Orbach. The startup launched with $50 million in funding led by an unnamed private equity firm focused on the semiconductor industry, with participation from MediaTek Innovation Fund, Intel Capital and others.

Since the spin-off, RealSense says it has sharply expanded operations and workforce and tripled revenue. The Israeli company expects to generate about $80 million to $90 million in sales this year, up more than 50% from last year, and it has been profitable for the last two quarters. Intel will benefit from the sale because it still holds a 20% stake in RealSense and one seat on its board. Employees and executives also hold significant stakes, so the sale is a significant outcome for them as well.

The acquisition points to Cognex’s effort to push deeper into robotics and diversify beyond its traditional machine vision business. Cognex is known for advanced optical character recognition used in bar code readers and ID tag readers. It also sells specialized sensor cameras for factory floors that detect microscopic defects in products and electronics, and robotics guidance systems that direct mechanical arms and sorting bots in assembly lines and warehouses.

Cognex President and CEO Matt Moschner said he is primarily interested in RealSense’s 3D depth perception and robot navigation capabilities, which he plans to combine with Cognex’s existing machine vision technology. The goal is a broader visual intelligence platform for industrial identification, 2D and 3D machine vision measurement, 3D depth perception and robotic navigation. “RealSense represents a compelling strategic expansion for Cognex into robotic perception, one of the most attractive adjacent markets in machine vision,” Moschner said. “RealSense brings a leading 3D perception platform with proprietary technology, a strong developer community and a compelling value proposition for customers. It positions us to offer a full-stack visual intelligence platform… built to serve the full spectrum of physical AI.”

The transaction is expected to close in the fourth quarter, subject to regulatory clearance. After completion, RealSense will become Cognex’s primary development center, and its employees will continue to work there. RealSense said the deal does not include its smaller Facial Authentication business, which will be spun off into a separate company before the closing. That technology uses biometric identifiers and has been deployed at access-controlled sites including data centers, banks and office buildings, as well as at Israel’s largest airport, Ben Gurion Airport in Tel Aviv. The new biometrics firm will have about 25 former RealSense employees focused on expanding its customer base.

Editor's Summary

Cognex has agreed to acquire RealSense, the Intel robotics and computer vision spin-off, for about $600 million, with RealSense becoming its primary development center. The deal expands Cognex into 3D depth perception and robot navigation while excluding RealSense’s facial authentication business, which will be spun off separately. The transaction is subject to regulatory clearance and is expected to close in the fourth quarter.