Intel buys Israeli chipmaker Habana Labs to power data center push

Santa Clara, California headquartered chipmaker Intel has acquired Habana Labs, an Israeli startup for $2 billion to boost its AI (artificial intelligence) chips for data centers. 

Founded in 2016, Habana Labs is an AI-based chip maker firm that aims to improve the processing performance and power consumption of chips and lower the costs of producing them.

The acquisition will strengthen Intel's AI portfolio and accelerate its efforts in the nascent, fast-growing AI silicon market, which the company expects to be greater than $25 billion by 2024. Within that, AI silicon for data centers is expected to be greater than $10 billion within the same timeframe.

“This acquisition advances our AI strategy, which is to provide customers with solutions to fit every performance need – from the intelligent edge to the data center.  More specifically, Habana turbo-charges our AI offerings for the data center with a high-performance training processor family and a standards-based programming environment to address evolving AI workloads,” Navin Shenoy, executive vice president and general manager of the Data Platforms Group at Intel, said in a statement.

In 2019, Intel expects to generate over $3.5 billion in AI-driven revenue, up more than 20% year-on-year. Together, Intel and Habana, the companies believe, can accelerate the delivery of AI products for data centers.

“Habana will remain an independent business unit and will be led by the current management team. The team will report to Intel’s Data Platforms Group, home to Intel’s broad portfolio of data center class AI technologies,” the statement said. Habana chairman Avigdor Willenz will continue to serve as a senior adviser to the business unit as well as to Intel. It will continue to be based in Israel where Intel also has a presence and a long history of investment, the statement added.

Prior to this transaction, Intel Capital, the corporate venture capital arm of the US firm, was an investor in Habana. In November last year, Intel Capital led a $75 million Series B round in the Israeli company. as part of a series B funding round for the startup. Habana’s other investors include WRV Capital, Bessemer Venture Partners and Battery Ventures. Including the Series B round, the company had raised a total of $120 million from multiple investors since inception.

“We have been fortunate to get to know and collaborate with Intel given its investment in Habana, and we’re thrilled to be officially joining the team. We are excited to partner with Intel to accelerate and scale our business," David Dahan, CEO of Habana, said.