Habana Labs co-founder and chairman Avigdor Willenz.  image: Habana Labs

Intel has announced it has acquired Habana Labs, an Israel-based startup that makes AI chips. The semiconductor giant is paying roughly $2 billion for Habana, one year after leading a $75 million Series B investment in the company. The acquisition represents another score for Habana co-founder and chairman Avigdor Willenz, a serial entrepreneur who previously founded and led Galileo Technology (acquired for $2.7 billion by Marvell Technologies) and Annapurna Labs (acquired for $350 million by Amazon). Unsurprisingly, both companies were chip makers, crowning Willenz as a whizz in the chip-making sector with sequential successful exits.

Prior to this acquisition, Habana had raised $120 million in funding from investors including Intel Capital, Battery Ventures, Bessemer Venture Partners and WRV Capital. As of November last year (when it last raised funding), Tel Aviv-based Habana had just over 120 employees. The company was founded in 2016, and maintains only two offices globally, one in Tel Aviv and the other in San Jose, California. A $2 billion acquisition for a three-year old company isn’t a norm, and hints of something special that Intel doesn’t want to miss out on.

Habana is one out of several startups that have sprang up recently to capitalize on a growing market for AI chips, a market Intel forecasts will be worth more than $25 billion by 2024. Two other startups in this sector that comes to mind are Graphcore, which raised funding at a $1.7 billion valuation last year, and Cambricon, a Chinese AI chip maker valued at $2.5 billion. It’s clear that there’s a market for AI chips, driven by a constant increase in AI computational power and its use.

Although acquired, Habana Labs will remain an independent business unit under Intel and will continue to be led by its current management team. Habana chairman Avigdor Willenz will take on a new role as a senior adviser to Intel. Habana as a company will report to Intel’s Data Platforms Group, and will take advantage of Intel’s AI resources to help scale and accelerate.

“We have been fortunate to get to know and collaborate with Intel given its investment in Habana, and we’re thrilled to be officially joining the team,” Habana CEO David Dahan said in a statement. “Intel has created a world-class AI team and capability. We are excited to partner with Intel to accelerate and scale our business. Together, we will deliver our customers more AI innovation, faster.”