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Intel has joined the self-driving car race

  • Intel said on Wednesday that it will build a fleet of 100 cars to test self-driving technology.
  • The cars will be highly automated "level 4" vehicles — one notch below fully autonomous cars.

Intel said on Wednesday that it will build a fleet of 100 cars to test self-driving technology, as the chip company tries to leapfrog rivals like Qualcomm and Nvidia.

The cars will be highly automated "level 4" vehicles — one notch below fully autonomous cars but well above autopilot and other commonly used features that are already on the road.

Intel said the project, which includes tests in the U.S., Israel and Europe, won't replace Intel's new autonomous driving lab. The latest version of that lab, which helps build self-driving car systems for other companies, including BMW, Delphi and Ericsson, was just announced in May.

Intel Corp. CEO Brian Krzanich
Ethan Miller | Getty Images
Intel Corp. CEO Brian Krzanich

The fleet will instead highlight Intel's $15 billion acquisition of Mobileye, which closed this week. Israel-based Mobileye makes technology that helps vehicles "see," a boon for Intel, which makes the chips used in many cars. Intel bought 84 percent of Mobileye's shares and expects to see cars with the Intel-Mobileye technology on the road in 2018.

The tie-up comes as competitors like Qualcomm (which gained popularity during the advent of mobile phones) and Nvidia (which has ridden a wave of rising popularity of gaming devices) are also investing heavily in self-driving vehicles. It's also a different direction for Mobileye, which had a public spat with Tesla last year.

Qualcomm announced last fall it would buy NXP Semiconductors in a $47 billion deal. And Nvidia CEO Jensen Huang gave an ambitious self-driving car demonstration earlier this year at technology tradeshow CES.

The chip company that ultimately corners this market stands to gain immensely.

Chips are already a crucial component in many vehicles, powering the growing suite of electronic devices in cars. But when self-driving car sensors must collect, analyze and transmit data about the outside world constantly, a powerful chip becomes much more critical.

That said, Intel is also faced with a challenge: Deciding how far to go in competing with some of its biggest customers, like Apple. Despite Intel's rapid expansion into self-driving cars, Intel CEO Brian Krzanich told CNBC that he doesn't expect fully autonomous vehicles to completely take over for at least a generation.

"My two daughters' children will never learn to drive," Kranazich told CNBC's "Squawk on the Street" on Tuesday.