Revealed in Globes: Israeli chip company Hailo sold at a stinging loss
The chip start-up Hailo, once considered a great promise and backed by investors like Idan Ofer, Gil Agmon, and Rakefet Russak-Aminoach, has been sold to Microchip. Globes revealed two weeks ago that the company would be sold for a pittance after carrying out aggressive layoffs.
Hailo, formerly one of the few Israeli chip companies considered a promising venture backed by big names like Zohar Zisapel, Rakefet Russak-Aminoach, Idan Ofer, and Gil Agmon, is being sold at a loss of hundreds of millions of dollars to the American company Microchip, which is making its first acquisition in Israel in its history. Globes revealed the moves toward the acquisition earlier this month.
Microchip is a company traded on the Nasdaq with a valuation of approximately $42 billion. Hailo has raised more than $350 million to date, and according to estimates, it is now being sold for a pittance to the American firm.
Following the acquisition, Microchip's stock fell by about 3% at the end of trading, though it rose by a fraction of a percent in after-hours trading. The companies are currently awaiting approval of the deal by American regulators by the end of the current quarter in September. In the announcement released by Microchip last night, the deal amount was not disclosed, but the acquirer, which generates annual revenues of approximately $4.7 billion, stated that it "will not materially affect its financial results" — a term indicating that this is a minor deal in financial terms.
Hailo developed AI accelerators for chips embedded in edge products, with an emphasis on computer vision, such as security cameras or vehicles, and was previously considered one of the most promising AI chip companies in Israel. It has dozens of customers, most of them in East Asia and specifically in China, but it struggled to generate significant revenue mass and grow as expected from a start-up. To support the ambitious dream of being one of the largest AI companies for edge devices, it raised about $350 million from various investors who saw it as the "next Mobileye" — from leading financial institutions like Poalim Equity to Israeli automotive giants like Delek Automotive of Gil Agmon, Shlomo Group, Carasso Motors, Mashkirei Tnu'a, and Talcar, as well as the Maniv Mobility fund.
Microchip is now interested in integrating the Israeli technology into a variety of products such as drones, industrial robots, and smart cameras. According to the acquirer, it is inheriting over 100 customers and a community of about ten thousand users from the Israeli company. While Hailo brings its AI accelerators and signal processing technology for video and computer vision, Microchip brings to the table field-programmable gate arrays (FPGA), inter-chip communication components, power management, and information security.
