December 16, 2019 / 2:14 PM / 8 months ago

Intel buys Israeli AI startup Habana Labs for $2 billion

JERUSALEM (Reuters) - Intel Corp has bought Israel-based artificial intelligence (AI) firm Habana Labs for about $2 billion, the chipmaker said on Monday, seeking to expand its AI portfolio to bolster its data-center business.

FILE PHOTO: The Intel logo is shown at E3, the world's largest video game industry convention in Los Angeles, California, U.S. June 12, 2018. REUTERS/Mike Blake/FIle Photo

Intel expects the fast-growing AI chip market to exceed $25 billion by 2024, with its own AI-driven revenues this year seen rising 20% from 2018 to more than $3.5 billion.

Intel has increasingly been depending on sales to data centers as PC sales stagnate.

Habana, an AI processor firm, was founded in 2016 and has offices in Tel Aviv, San Jose, Beijing and Gdansk, Poland. It has raised $120 million to date, including $75 million in a funding round led by Intel Capital last year.

The deal follows a string of AI-related acquisitions by Intel in recent years, including Movidius, Nervana, Altera and Mobileye.

Navin Shenoy, who oversees Intel’s data center group, told Reuters in an interview that each set of chips is designed to solve a different problem, whether it is helping cars drive themselves or training machine-learning algorithms in data centers.

Shenoy said Habana’s chips are aimed at so-called deep learning, a subset of machine learning, being done in data centers.

“What we hear from our customers is that there’s a heterogonous set of needs,” Shenoy said. “The market opportunities are significant and large enough that we can build out a specialized portfolio to go solve those problems and do it in a way that customers feel good about and respond well to.”

Habana launched its new Gaudi AI training processor in June that it said will deliver much faster processing speeds to compete with similar offerings from Intel’s rival Nvidia Corp.

Nvidia outbid Intel last March to buy Israeli chipmaker Mellanox for $6.9 billion, boosting its data-center chip business.

Habana will remain an independent business unit led by its current management team and report to Intel’s data platforms group.

The company will continue to be based in Israel and its Chairman Avigdor Willenz will serve as a senior adviser to Intel, the companies said.

Willenz sold chip designer Galileo Technologies to Marvell Technology Group for $2.7 billion in 2001, and Annapurna Labs to Amazon for an estimated $370 million in 2015.

With five facilities, Intel already has a significant presence in Israel and has become one of the country’s top exporters since launching operations there in 1974.

The California-based chip giant moved its automotive technologies headquarters to Jerusalem after buying Mobileye for $15 billion in 2017. It is investing $11 billion to expand its local chip factory and also launched a tech accelerator in Israel in June.

Additional reporting by Tova Cohen in Tel Aviv; Munsif Vengattil and Amal S in Bengaluru; and Stephen Nellis in San Francicso; Editing by Sriraj Kalluvila, Kirsten Donovan and Mark Potter

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