Rescue deal for Hailo: Microchip acquires the Israeli AI chip company
Microchip expands its edge AI portfolio with the acquisition of Hailo, stepping in as the troubled startup faces heavy investor write-downs
American semiconductor giant Microchip Technology announced the signing of an agreement to acquire the Israeli company Hailo, which develops artificial intelligence processors and computer vision systems for the Edge AI technology. The acquisition comes after a particularly difficult period for the Israeli company, which struggled with cash flow problems and severe liquidity difficulties. Hailo was forced to take out emergency loans, carried out extensive workforce cuts, and saw its planned merger with a SPAC company collapse as its valuation plunged below the $500 million mark.
The acquisition amount has not been disclosed, but according to estimates, it is very low. The deal is expected to close near the end of the quarter ending September 30, subject to regulatory approvals and customary closing conditions. The financial terms of the deal were not disclosed, but Microchip noted that it is not expected to have a material impact on the acquiring company's financial results.
The deal marks a bittersweet finish line for the Israeli startup, which since its founding in 2017 has raised a total of approximately $340 million in various funding rounds, at a most recent valuation of over a billion dollars. Notable investors in the company include the Zisapel family, the OurCrowd fund, Alfred Akirov, and Delek Motors, controlled by Gil Agmon. Delek Motors, which was one of the company's major investors and supported it with emergency loans to enable it to continue operating, has already announced that it will write off most of its investment in the company in its upcoming financial reports, meaning the current exit does not prevent the painful accounting write-down.
For the acquirer, Microchip - a company spanning a market cap of tens of billions of dollars, considered a global leader in microcontroller solutions, FPGA components, communications, and analog components - the deal grants immediate access to Hailo's intellectual property and the Edge AI technology it has developed. Hailo's product portfolio, which includes the Hailo-8, Hailo-10, and Hailo-15 chip series, is designed to bring AI processing and computer vision capabilities directly to edge devices such as robots, drones, smart cameras, and industrial automation systems, without full reliance on the cloud. In addition, the deal transfers to the acquirer a cooperative customer base of over 100 active customers and a developer community numbering more than 10,000 users.
“The acquisition of Hailo accelerates Microchip’s expansion into high-performance edge AI processing,” said Mark Reiten, Senior Corporate Vice President. “Hailo’s AI acceleration, advanced vision processing and software ecosystem directly complements Microchip’s embedded processing, FPGA, connectivity, security, power and analog portfolio. Together, we can help customers build more capable intelligent edge systems with the right balance of performance, power efficiency, reliability and system cost.”
Orr Danon, CEO and co-founder of Hailo, noted that the move will give the Israeli technology the backing it needs to grow: “Joining Microchip would give Hailo the opportunity to scale our accelerated edge AI technology through a global embedded systems leader,” said Hailo CEO Orr Danon. “Microchip’s customer reach, channel scale and broad technology portfolio would create a strong platform for bringing advanced vision processing and AI acceleration to broader range of intelligent edge applications.”
