Israeli chip company Xsight Labs raises $300 million at a $2.8 billion valuation
Xsight Labs has raised $300 million at a $2.8 billion valuation. The funding follows the successful integration and testing of its X2 communication processor on SpaceX's V3 satellites, bolstering its position against competitors like Nvidia.
A chip company from Kiryat Gat has secured a massive investment at a valuation of $2.8 billion.
Xsight Labs, an Israeli chip company managed from Kiryat Gat that competes with Nvidia in the communication processor market, announced on Thursday that it has raised $300 million at a valuation of $2.8 billion. The round was backed by investors such as Fidelity and Atreides—early investors in SpaceX—alongside the Israeli fund Key1, Battery Ventures, Intel Capital, Aliya, Maverick Capital, Union Group, and Valor Equity Partners.
The connection to SpaceX investors, including Gavin Baker of Atreides, is significant. Xsight Labs supplies SpaceX with communication chips, specifically the X2 processor, which acts as a communication switch and competes with the Nvidia-Mellanox BlueField processor. The timing of the announcement follows a successful joint experiment in which Xsight’s chips were integrated into SpaceX’s new V3 satellites and tested in space. The X2 switch, capable of transferring nearly 13 terabits per second, is fully programmable, offering the flexibility required for space operations where software control is paramount.
After overcoming past organizational challenges and layoffs, the company has been on a growth trajectory for the last 18 months, driven by architectural improvements and new contracts. Today, it employs 250 people across Kiryat Gat, Tel Aviv, Boston, Silicon Valley, Poland, and Armenia. The company is led by CEO Yossi Meyouhas and CTO Gal Malach. A prominent figure behind the company is serial entrepreneur Avigdor Willenz, who previously founded and sold Galileo, Annapurna, and Habana Labs to Marvell, Amazon, and Intel, respectively.
Competing with Nvidia, Broadcom, and Arista
Xsight Labs focuses exclusively on communication chips, challenging products from Nvidia-Mellanox, Broadcom, and Arista. Its chips are designed for data center infrastructure, including storage management, communication, and information security (DPU), as well as intelligent switching. The company asserts that its chips are more cost-effective and energy-efficient, having been developed from the ground up with a unified operating system and software layer for ARM-based components. The enhanced heat dissipation of these processors makes them particularly well-suited for space, where cooling is a critical engineering constraint.
Refinements made between late 2024 and late 2025 have brought its flagship DPU and communication switch into closer alignment with customer needs, fueling the company's recent growth.
Industry estimates suggest that Avigdor Willenz's influence helps secure priority production capacity at TSMC factories in Taiwan. The company utilizes advanced 5-nanometer technology—similar to that used by Nvidia, Marvell, and Broadcom—necessitating high-capacity production lines.
