Israeli AI-chip co Element Labs aims to rival tech giants

A new AI chip startup founded by Israeli entrepreneur and billionaire Avigdor Wellens has taken the technology industry by storm with plans to compete with international chip giants and the way it hires employees. Sources familiar with the matter told Globes that the new startup called Element Labs has adopted in recent months a strategy that has put it in the path of competing companies such as Broadcom, Marvell, and indirectly Nvidia.

In the past month alone, for example, Broadcom’s stock price has risen 28% on reports that it is developing graphics processors for Apple and OpenAI and a graphics accelerator for Google (TPU). Marvell’s stock price jumped nearly 9% over the past month due to new partnerships to develop Amazon’s AI processors and Microsoft’s AI accelerator.

Element Labs is now setting up a development process that will allow it to compete with Marvell and Broadcom and provide companies like Amazon, OpenAI, and Microsoft with an integrated hardware system that includes chipsets, core processors, a graphics processor, and the software layer that manages all of these components. For companies without hardware departments, such as Meta and OpenAI, Element Labs can be particularly effective. It would also allow the tech giants to compete with Nvidia, which is not only interested in selling expensive all-in-one systems, but in the future may compete with them directly.

To reduce dependence on Nvidia

More and more big technology companies are looking for a way to develop chips and communications systems that will allow them to overcome the growing demand for artificial intelligence services, thus becoming the largest consumers of chips in the world, which has been a big boost for them. Nvidia. In order to rely as little as possible on Nvidia, which offers graphics processors, communications processors, communication switches, and servers at high prices, or on Intel, which has failed to launch the relevant chips on the market, it is seeking to develop some of these chips. Ingredients at home.

To this end, many technology companies have created in-house development departments, many of which are run in Israel, based, among other things, on managers who come from Intel and Marvell. For example, Google chose former Intel development vice president Uri Frank to manage the development of its processors and former Marvell Israel CEO Guy Azarad as his deputy. Google is developing core processors and AI accelerators in collaboration with Broadcom, as well as core processors in collaboration with Marvell.

Apple has also set up a chip development business under Israeli Johnny Srouji, but this is mainly focused on hardware development for high-end devices. To develop AI chips for servers, the company is now using Broadcom. Amazon also created an internal development business through the acquisition of Annapurna Labs, which Wellens himself founded with entrepreneurs Bilić Hrvoji and Nafi Bishara.

Annapurna Labs is currently developing communications chips for Amazon, a core processor for the cloud, and graphics processors for training and running models, and the company indicates that total revenues from Annapurna’s products are estimated at about $35 million annually. Meanwhile, Amazon is also using Marvell to develop the core of its training model and power the processors.

Long-term vision for an Israeli company

The new move by Wellens and his partners at Element Labs includes a long-term vision for an Israeli company, which will require an investment of hundreds of millions of dollars in the long term. As far as is known, the company has so far raised tens of millions of dollars from founders, all of whom are wealthy private investors who have sold billion-dollar companies.

Wellens 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 and Galileo to Marvell Technologies for more than $2 billion in 2000. Other Element Labs founders are Willenz’s co-founders of Habana Labs – David Dahan and Ran Halutz, and his former Galileo partner, Manuel Alba. Marquis.

According to the Registrar of Companies, Element Lab’s shareholders also include a US investment firm called What Capital, which is headed by a local accountant and is believed to represent several foreign private investors. The potential valuation Wellens is seeking is thought to be particularly high at several billion dollars, and is based on estimates that if Annapurna Labs were sold today, it would be worth at least $20 billion. Even Habana Labs, which could operate independently of Intel, could today become a multibillion-dollar company. Because Element Labs operates on a model that provides a custom service, selling a complete system, and because of the capital required to develop the product, the company could not have been sold easily. In any case, the industry believes Element Labs is planning an IPO and avoiding a takeover, if possible.

“There is a lot of buzz around the company.”

High-level sources in the technology industry and industry service providers speak of Element Labs’ cryptic behavior, which is not typical for technology companies scrambling to hire employees. None of the company’s founders or employees have announced on social media that they started working there — moreover, many of its employees and senior executives are still listed on LinkedIn, for example, as employees of Habana Labs, where the company’s entrepreneurs previously worked. . The company’s founders avoid the media, have not built a website and do not hire employees through staffing firms.

The entire recruitment strategy is built on word of mouth and networking, which creates a certain mystique around the company. “There’s a lot of hype around the company,” says a hiring manager at a technology company on condition of anonymity. “Candidates ask me to help them get there or connect with people who work there.” In addition, senior executives admit that they face stiff competition for experienced development engineers and have lost employees to Element Labs on several occasions, even when they were in advanced stages of hiring.

In an interview with Globes last year, Wellens, who moved to Switzerland as an act of protest against the Israeli government and the Israeli tax authority, said he would stop making new investments in Israel, but would support Israeli businessmen who set up their companies abroad. However, according to high-ranking industry figures, Wellens continues to come to Israel and visit the company’s offices in Tel Aviv.

Dahan and Halutz retired last year from Habana Labs, which was sold to Intel for $2 billion six years ago but failed to consolidate in the market, perhaps because it was sold to Intel at an early stage. Intel, which has maintained the company’s independence, recently integrated Habana Labs into its operations as part of a reorganization, and several employees at Habana resigned, many moving to Element Labs.

There has been no response to this article from Element Labs.

Published by Globes, Israel Business News – en.globes.co.il – on January 8, 2025.

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