A new AI chip startup founded by Israeli serial entrepreneur and billionaire Avigdor Wilentz is taking the technology industry by storm with its plans to compete with international semiconductor giants and the way it hires employees. Sources familiar with the matter told Globes that a startup called Element Labs has adopted a strategy in recent months to compete with rivals such as Broadcom, Marvell and, indirectly, Nvidia.
Broadcom stock, for example, rose 28% in the last month alone on reports that the company is developing graphics processors for Apple and OpenAI and graphics accelerators (TPUs) for Google. A new partnership to develop Amazon’s AI processors and Microsoft’s AI accelerators pushed Marvell’s stock price up nearly 9% last month.
Element Labs is currently building a development business that can compete with Marvell and Broadcom and provide companies such as Amazon, OpenAI, and Microsoft with end-to-end hardware systems, including communications chips, core processors, graphics processors, and software. Masu. A layer that manages all these components. Element Labs can be especially effective for companies that don’t have a hardware arm like Meta or OpenAI. It would also allow these tech giants to compete with Nvidia, which is interested in selling expensive end-to-end systems and may even be a direct competitor in the future.
How to break your dependence on Nvidia
A growing number of big tech companies are looking for ways to develop chips and communication systems that can overcome the growing demand for AI services, and in doing so, are becoming the world’s largest consumers of chips. Nvidia. They are trying to develop some of these in order to be as independent as possible from Nvidia, which offers graphics processors, communications processors, communications switches, and servers at high prices, and Intel, which has been unable to bring related chips to market. It is said that The components are in-house.
To this end, many high-tech companies have established in-house development departments, many of which are managed in Israel and based on managers from Intel and Marvell backgrounds, among others. For example, Google chose Uri Frank, a former Intel development vice president, to manage processor development, and Guy Azrad, a former CEO of Marvell Israel, as that vice president. Google is working with Broadcom to develop core processors and AI accelerators, and with Marvell to develop core processors.
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Apple has also established a chip development operation under the management of Israeli Johny Srouji, but this is primarily focused on developing hardware for edge devices. The company is currently using Broadcom to develop AI chips for servers. Amazon also began in-house development efforts through the acquisition of Annapurna Labs, which Willenz himself founded with entrepreneurs Bilic Hrvoje and Nafea Bshara.
Annapurna Labs currently develops communications chips, cloud core processors, and graphics processors for model training and execution for Amazon, and the company reports total revenue from Annapurna products is approximately $35 million annually. It is estimated that. At the same time, Amazon also uses Marvell to develop the core of its model training and execution processors.
The far-reaching vision of an Israeli company
The new move by Wilentz and his Element Lab partners includes a far-reaching vision for the Israeli company, which will require hundreds of millions of dollars in investments over the long term. As far as is known, the company has raised tens of millions of dollars from its founders, all of whom are wealthy private investors who have sold their companies for billions of dollars.
Willenz himself is an entrepreneur and serial chip investor who sold Habana Labs to Intel for $2 billion. He also sold Annapurna Labs to Amazon for $380 million in 2000 and Galileo to Marvell Technologies for more than $2 billion. Other founders of Element Labs are David Dahan and Ran Halutz, Willenz’s partners in founding Habana Labs, and Manuel Alba, a former partner at Galileo. Marquez.
Element Lab’s shareholders include Watt Capital, a US investment firm led by a local accountant and believed to represent several foreign private investors, according to the Companies Registration Authority. The potential valuation Wilentz is seeking is considered particularly high, in the billions of dollars, based on estimates that the Annapurna Institute would be worth at least $20 billion if sold today. are. Even Habana Labs, which can operate independently from Intel, could be a multibillion-dollar company today. The fact that Element Labs operates on a customized service model that sells complete systems, and the capital required for product development, made it difficult to sell the company easily. Either way, the industry is hoping that Element Labs plans an IPO and, if possible, avoids being acquired.
“There’s an uproar in the company.”
Senior tech industry sources and industry service providers talk about Element Labs’ stealth behavior, which is not typical of tech companies trying to hire workers. None of the company’s founders or employees have announced on social media that they have started working there. Additionally, many of its employees and senior executives are still listed on LinkedIn, for example as employees of Havana Labs, where the company’s entrepreneurs were previously employed. . The company’s founders avoid the media, haven’t built a website, and don’t hire employees through recruitment agencies.
The recruitment strategy is built entirely on word of mouth and networking, which creates a certain mystique within the company. “There’s a lot of hype going on internally,” says a hiring manager at a technology company, who asked not to be named. “Candidates are asking me to help them get there or connect them with the people who work there.”Furthermore, senior CEOs face stiff competition for experienced development engineers. He admits that he lost employees to Element Labs on several occasions, even when he was in the early stages of hiring.
Wilentz, who moved to Switzerland in protest against the Israeli government and Israeli tax authorities, told Globes last year that he would stop making new investments in Israel, but would support Israeli entrepreneurs who set up companies abroad. spoke. But industry executives say Mr. Wilentz continues to travel to Israel and visit the company’s Tel Aviv office.
Dahan and Halutz left Habana Labs last year. Habana Labs was sold to Intel for $2 billion six years ago, but was unable to integrate into the market, probably because it was sold to Intel early on. Intel, which had maintained the company’s independence, recently integrated Havana Labs into its operations as part of a reorganization process, and many of the Havana employees left, many of whom moved to Element Labs.
Element Labs did not respond to this article.
Published by Globes, Israel Business News – en.globes.co.il – on January 9, 2025.
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