On October 7, a large-scale conflict broke out between Israel and Palestine.On that day, the Palestinian Islamic Resistance Movement (Hamas) announced a military operation against Israel, launching thousands of rockets and sending armed personnel into Israeli territory to engage in clashes with the Israeli military. In response, the Israeli military conducted multiple airstrikes on the Gaza Strip.As of the time of writing, according to reports from the Jerusalem Post on the evening of October 8, the Israeli embassy in the United States reported that the conflict had resulted in 2,243 injuries in Israel, with over 300 people in serious condition. On the same day, the Palestinian health department reported that Israeli airstrikes on the Gaza Strip had led to 413 deaths on the Palestinian side, including 78 children and 41 women. Additionally, the airstrikes caused 2,300 injuries.According to CCTV International News, an Israeli military spokesperson confirmed that “Hamas has taken over a hundred Israeli hostages into the Gaza Strip,” and several Israeli soldiers and commanders have died in clashes with Hamas.On October 8, Palestinian President Abbas held phone calls with leaders of Arab countries, including Egyptian President Sisi, Jordanian King Abdullah II, and Qatari Emir Tamim, to discuss the current tense situation between Israel and Palestine.On the same day, Hamas issued a statement saying that Hamas political bureau leader Haniyeh spoke on the phone with Iranian President Raisi. Haniyeh stated that Hamas’s military operations are far from over.Currently, in 22 areas along the Gaza Strip border, exchanges of fire and battles are still ongoing, with the Israeli military having deployed four additional divisions to the area.Why is it called the ‘Chip Kingdom’?As a small country with a land area not much larger than that of Beijing and Tianjin combined, Israel has a population of less than 9.4 million (data from the World Bank as of 2021), is constantly at war, lacks oil, fresh water, and has resources so scarce that it has nothing but sand.However, to the outside world, Israel is seen as a technologically advanced and militarily powerful nation, accounting for only 0.2% of the global population but winning 20% of the Nobel Prizes, ranking second in the global innovation index, and boasting a per capita GDP of over $40,000, making it the undisputed ‘Chip Kingdom.’
2022 Israel Semiconductor Landscape; Source: Intel Ignite, Cardumen C., UCT | 2022Israel’s semiconductor industry has a development history of over 40 years and is one of the countries with the most complete semiconductor industry ecosystems in the world. The world’s first handheld mobile phone, the first computer processor, SanDisk’s first USB flash drive, and Intel’s first mobile chip were all born here.Since Intel established its first R&D center in Israel in 1974, Israel has played an increasingly important role in the global semiconductor industry. The head of this R&D center was an Israeli named Dov Frohman, who was born in Amsterdam just before World War II. His parents were killed in the Nazi genocide against the Jews, and Frohman was hidden by a Belgian farmer until after the war when he was discovered by a distant relative in Israel.
Dov Frohman in 1976After serving in the military, Frohman attended the Technion, known as the ‘MIT of the Middle East,’ and then went to the U.S. for his master’s degree, eventually joining the renowned Fairchild Semiconductor.In 1969, Frohman, who obtained his Ph.D., joined Intel, founded a year earlier by the three giants Gordon Moore, Robert Noyce, and Andrew Grove. During his over 30 years at Intel, Frohman’s greatest contribution was the invention of EPROM.In 1974, having achieved great success, Frohman decided to return to build his homeland and persuaded Intel to establish a research center in Israel, marking the origin of Israel’s semiconductor industry.The Haifa R&D team led by Frohman did not disappoint, designing one of Intel’s milestone products, the 8088 chip, in 1980. Due to its small size, the 8088 was the first CPU aimed at the PC market. In 1981, the IBM PC, equipped with Microsoft MS-DOS and the 8088 chip, was launched and achieved great success.Israelis take great pride in this; local entrepreneur Jon Medved once joked that Intel should change its slogan from ‘Intel Inside’ to ‘Israel Inside.’Similarly, when Apple designed its first mobile processor, the A4, it recruited Israeli Johny Srouji, who had worked at Intel for over a decade. Like Frohman, Srouji graduated from the Technion and quickly became the head of Apple’s chip division, leading the chip R&D center in Tel Aviv, and was referred to by Bloomberg as ‘the most important Apple executive you’ve never heard of.’According to data from the Israeli Venture Capital Research Center (IVC), as of January 2018, Israel had 163 chip companies, 35 R&D centers, 67 companies in the initial revenue stage, 30 chip design companies, 20 semiconductor equipment companies, 10 optical communication companies, and 8 wafer fabs. Almost all leading global semiconductor companies, including Intel, Qualcomm, Samsung, and Broadcom, have established a presence here.In the increasingly competitive semiconductor industry, many excellent chip companies in Israel are being sought after for acquisition by international semiconductor giants, and a large number of emerging chip startups are attracting the attention of more and more international investors, including those from China.It is hard to imagine that on this land, which covers only 15,000 square kilometers, more than 160 chip companies have emerged; it is equally hard to imagine what impact a war would have on Israel and the global semiconductor industry.Next, let’s take a look at the chip companies that have emerged from Israel.Chip Companies in IsraelIf we analyze Israel’s semiconductor market closely, memory occupies the largest share, followed by power management ICs, logic chips, OSD (On Screen Display), and analog chips.
Source: reogmaHowever, with the wave of AI sweeping the globe, AI chips have quickly become one of the hottest focuses. As a leading chip nation, Israel has also seen the emergence of many AI chip companies in recent years. According to market segmentation, Israel’s largest semiconductor market is data processing, followed by communications, industrial, consumer electronics, and autonomous driving.
Source: reogma1. Hailo TechnologiesIsraeli startup Hailo Technologies was founded in 2017. In May of this year, the company launched its first processor designed specifically for deep learning applications in endpoint devices, supporting autonomous vehicles, smart cameras, smartphones, drones, and VR/AR devices. Unlike processors used in data centers, the most important features of this chip are low power consumption, small physical size, low cost, and high operational flexibility. The first batch of samples is about to be delivered to major manufacturers and suppliers in the automotive and camera industries for performance testing.In 2018, Hailo Technologies raised $12.5 million in Series A funding and completed $60 million in Series B funding in 2020.2. InuitiveIsraeli semiconductor startup Inuitive was founded in 2012 and is a manufacturer of advanced 3D computer vision and image processors. Utilizing the licensed CEVA-XM4 smart vision DSP, it runs complex real-time depth sensing, feature tracking, object recognition, deep learning, and other vision-related algorithms targeting various mobile devices. Its products, NU3000/NU4000, are ASIC chips supporting 3D image processing and computer vision (CV) processing. Inuitive is said to be the first and only company to provide dedicated and complete 3D image processing and CV co-processors.In 2017, Inuitive reached a cooperation agreement with SoftBank Corp., a subsidiary of Japan’s SoftBank Group, which will use the chips developed by the startup for its future IoT (Internet of Things) projects. In addition to SoftBank, Inuitive has also collaborated with Baidu and Tencent in robotics and has established a team in Shenzhen for customer support. In 2022, Inuitive launched the NU4100, expanding its edge AI chip product portfolio.3. Vayyar ImagingVayyar is a 3D sensor company founded in 2011, with three co-founders who have strong backgrounds, having held key positions in high-tech companies like Intel and possessing 20 to 30 years of R&D experience in their respective fields. Two of the founders were also entrusted with important roles in the Israel Defense Forces.As a global leader in 3D imaging technology, Vayyar not only provides sensors for applications such as breast cancer screening, leak detection, and safety monitoring but also develops system-on-chip solutions for millimeter-wave 3D imaging. Its chips cover imaging and radar frequency bands from 3GHz to 81GHz, with a single chip containing 72 transmitters and receivers.On December 28, 2017, Vayyar Imaging announced a close collaboration with SoftBank Corp. in the IoT field, with SoftBank becoming the preferred channel partner for Vayyar’s products in the Japanese market, stating that Vayyar’s sensor technology has significant synergy with SoftBank’s customer needs.In 2022, Geely’s parent company, Geely Holding Group’s GLy New Mobility Fund, announced that it had completed an investment in Vayyar Imaging, with this round of financing involving $108 million.4. NeuroBladeNeuroBlade was founded in 2017 and develops processors for AI applications called SPU (SQL Processing Unit), which can be used for autonomous vehicles, video analysis, and image recognition. The company’s goal is to become the ‘Nvidia of data analytics.’NeuroBlade SPU is primarily used to accelerate SQL instruction processing. The company’s CEO stated that by using specially designed processors to accelerate SQL processing, end-to-end SQL analysis acceleration can be achieved. In terms of deployment, the chip is inserted via the PCIe bus of the host server, transparently taking over SQL-related processing without modifying the host application software.5. NeuRealityNeuReality was founded in 2019 and is headquartered in Israel, positioning itself as a disruptor in deep learning and AI solution architecture. The company has redefined AI-centric inference architecture and developed accompanying NAPU (Network Addressable Processing Units) chips to replace traditional CPU-centric AI inference solutions. Compared to existing technologies, NeuReality’s solutions are designed for optimized deployment in data centers and near-edge local locations that require higher performance, lower latency, and greater efficiency, with applications in public safety, e-commerce, social networking, healthcare, and more.Strong Chip Companies in IsraelTowerjazzTowerjazz (Tower Semiconductor) is a global leader in specialty process wafer foundry, formed by the merger of Tower Semiconductor and Jazz Semiconductor. Towerjazz produces smartphone chips, chargers, direct AC adapters, and image sensors. Towerjazz’s clients span automotive, medical, industrial, consumer, aerospace, and defense sectors. In recent years, Towerjazz has achieved record growth while driving customer success and will continue to pursue excellence in technology and quality, maintaining a strong growth outlook.In 2022, Intel planned to acquire Tower, but announced the termination of this acquisition in August 2023 due to the inability to obtain timely approval from (Chinese) regulatory authorities.SckipioSckipio, founded in 2012 and headquartered in Ramat Gan, Israel, primarily develops modems and broadband application chips for G.fast Modem. In 2014, Sckipio launched the world’s first G.fast modem chipset, which can provide up to 2Gbps broadband over existing copper lines, offering ‘last mile’ wireless broadband access to home users. This fundamentally changed how telecom service providers deliver 1Gbps ultra-broadband internet access to bandwidth-demanding users at the lowest cost. It is reported that over 20% of the G.fast standard comes from Sckipio technology. Sckipio has ranked first in Israel’s emerging technology company rankings and can be considered a global leader in the G.fast field.Xsight LabsFounded in 2017 and headquartered in Kiryat Gat, Israel, Xsight Labs LTD is a startup manufacturing chipsets for the semiconductor field for data centers and the automotive industry. It is dedicated to accelerating the next generation of cloud-based data-intensive workloads, such as machine learning, data analytics, and disaggregated storage. In this data-centric era, where bandwidth is growing exponentially, Xsight provides a new chipset design that enhances scalability, performance, and efficiency.Acquired Israeli Chip CompaniesThe strength of Israel’s chip industry is also reflected in the fact that many Israeli chip companies with outstanding innovative thinking and R&D capabilities have been acquired by tech giants from both home and abroad. According to research from OurCrowd, a well-known equity crowdfunding platform in Israel, over 70% of Israeli chip-related companies successfully achieved IPOs or were acquired after reaching revenues of one million dollars in the past decade.1. MellanoxMellanox Technologies was founded in 1999 and is headquartered in Yokneam, Israel, with an office in the United States. The company primarily focuses on data center server chips and is a leading supplier of end-to-end connectivity solutions for servers and storage. Mellanox specializes in producing chips for high-speed Ethernet and InfiniBand connections for servers.In March 2019, Nvidia officially announced its acquisition of Mellanox for up to $6.9 billion, which was Nvidia’s largest acquisition at the time. With the help of Mellanox, Nvidia is also expected to achieve greater development in the server market (which accounts for about one-third of Nvidia’s business).2. Habana LabsHabana Labs is a fabless semiconductor company located in Tel Aviv, Israel, and San Jose, California, founded in 2016. The company specializes in using artificial intelligence to enhance chip processing performance while reducing chip costs and power consumption. It focuses on developing AI processors optimized for the specific needs of deep training neural networks and inference deployment in production environments. Among all AI semiconductor startups, Habana Labs is the first and only company to launch production-ready AI processors.In September 2018, Habana Labs launched the world’s highest-performing AI inference processor samples, claiming that its AI processor’s performance exceeds that of half of the solutions currently deployed in data centers by one to three orders of magnitude. The PCIe card based on its Goya HL-1000 processor can achieve a throughput of 15,000 images per second under the ResNet-50 inference benchmark, with a latency of 1.3 milliseconds and a power consumption of only 100 watts. The Goya platform from Habana Labs is designed from the ground up to achieve deep learning inference.On December 16, 2019, Intel officially announced its acquisition of Habana Labs for $2 billion. This was Intel’s third acquisition of a large AI startup, following the $15.3 billion acquisition of Mobileye and the $350 million acquisition of Nervana.3. ColorChipColorChip was founded in 2001 and is headquartered in Yokneam, northern Israel. The company primarily designs and manufactures communication components for telecom suppliers and data centers. ColorChip mainly develops hybrid integrated technology known as SystemOnGlass, utilizing glass material wafers to produce optical devices, thereby bringing semiconductor manufacturing technology into the optical communication field. ColorChip has its own fab in Israel, where it produces various devices. Its business mainly includes passive PLC splitter product lines for the FTTx market and transceiver product lines for high-speed networks. Facebook is one of ColorChip’s clients.In 2018, Chinese chip design company Sanan Optoelectronics acquired ColorChip for $300 million, which will further strengthen Sanan’s R&D efforts in integrated circuits, especially in the communication chip field.4. MobileyeMobileye is an Israeli company that produces visual systems to assist drivers in ensuring passenger safety and reducing traffic accidents. Founded in 1999, the company is a world leader in the development of monocular vision advanced driver-assistance systems (ADAS), providing chips and computer vision algorithms for DAS client functions. It supplies ADAS and autonomous driving technology to 27 major automotive manufacturers, including BMW, Audi, Tesla, Volvo, and Ford.On March 13, 2017, Intel announced its acquisition of Mobileye for $15.3 billion, making it the largest acquisition of a high-tech company in Israel.5. OrbotechOrbotech is a technology company located in Yavne, Israel, founded in 1981. After more than 30 years of development, Orbotech has become a leader in advanced precision manufacturing solutions. Without their machines, companies like Apple, Samsung, and LG would be unable to produce chips and develop new devices.In March 2018, American semiconductor company KLA-Tencor acquired Orbotech for $3.4 billion, hoping to gain new opportunities in high-growth markets such as printed circuit boards, flat panel displays, semiconductor manufacturing, and packaging through this acquisition.6. Toga NetworksToga Networks, located in Hod Hasharon, Israel, was founded in 2009 and provides advanced technology research and high-level design for the IT and telecom markets. The company has designed and developed a range of products for the telecom industry, including switches and routers, while also expanding its business into cloud storage systems and data center applications.In December 2016, Huawei acquired Toga Networks, with both parties keeping the commercial terms of the transaction confidential. Huawei did not provide further details.7. RocketickCadence acquired Israeli chip startup Rocketick for $40 million in April 2016. Cadence’s parallel simulation platform Xcelium, based on multi-core parallel computing technology, was brought about by Rocketick’s technology.8. WilocityWilocity, founded in 2007, is a fabless chip manufacturer in Israel, primarily developing WiGig chips. WiGig is a new wireless transmission technology standard that uses 60GHz transmission technology to achieve wireless transmission speeds of up to 7Gbps over short distances of 10 to 20 meters. In July 2014, Qualcomm announced its acquisition of Wilocity for $300 million.9. Annapurna LabsAnnapurna Labs is an Israeli chip manufacturer founded in 2011, primarily developing microprocessors that enable low-power computing servers and storage servers to run data quickly. Annapurna Labs is one of the outstanding startup chip manufacturers that have grown in Israel over the past decade. In January 2015, it was acquired by Amazon.10. PrimeSensePrimeSense was founded in 2005 and is an Israeli company that has revolutionized how digital devices perceive and understand the world. In November 2013, Apple acquired PrimeSense for $345 million. PrimeSense’s technology is now used in ‘3D touch,’ and it is speculated that this technology will also be used in Apple TV.11. BroadLightIsraeli chip developer BroadLight was established in 2000 and is a leading supplier of highly integrated network and embedded processors, providing semiconductor and software for fiber communication networks. Before its acquisition, it had raised a total of $55 million in funding. In March 2012, Broadcom announced its acquisition of BroadLight for $195 million. Additionally, Broadcom had previously acquired another Israeli chip developer, Provigent, for $313 million in April 2011.12. AutotalksAutotalks was founded in 2008 and is a fabless semiconductor company dedicated to providing vehicle-to-everything (V2X) communication for both manned and autonomous vehicles. It is a private company, and Autotalks’ first and second-generation chipsets offer the highest performance and reliability, deployed in numerous exciting connected and autonomous driving projects driven by global OEMs and Tier 1 suppliers. Autotalks is the only company providing a global V2X solution compatible with any V2X technology while adhering to the strictest automotive safety, functional safety, and reliability requirements.In May 2023, to accelerate the development and adoption of V2X solutions, Qualcomm announced that its subsidiary Qualcomm Technologies had reached a final acquisition agreement with Autotalks.
In addition to the aforementioned acquired Israeli chip companies, there are countless similar cases. In August 2015, ARM acquired Sansa Security; in March 2016, Cisco acquired Leaba; in January 2016, Sony acquired Altair Semiconductor; in January 2015, Amazon acquired Annapurna; in July 2014, Qualcomm acquired Wilocity; in December 2011, Apple spent about $400-500 million to acquire Israeli flash design company Anobit; in November 2007, Samsung announced its acquisition of Israeli chip design company TransChip for $70 million; and in 2000, Marvell spent $2.7 billion to acquire LAN chip provider Galileo Technology, among others.Most of the acquired companies share similar characteristics: strong technical capabilities but almost no sales and operational capabilities, and often no mature products. Anobit, acquired by Apple in 2011, is a typical example.Similar stories abound; Israeli companies often gamble on cutting-edge technology fields such as AI and autonomous driving, and then seek a safe exit once the technology matures, making Israel a hotspot for venture capital.Statistics show that one-third of Israeli companies exit through IPOs, while two-thirds exit through acquisitions, with most being acquired by American companies. These entrepreneurs then start their nth round of startups, and as a result, most of Israel’s hundreds of startup semiconductor companies focus on refining technology rather than business and operations.
