Silicon Valley is heavily invested in Israel's chip talent

Welcome to Runtime! Today: why U.S. chip companies have invested billions in making Israel into an alternative chip-making powerhouse, Ampere and Qualcomm team up to tackle AI inference, and the latest enterprise moves.

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Silicon Wadi

Israel has long been a key component of the global chip supply chain, thanks to the presence of the world’s biggest chip makers— including Intel and Nvidia. But over the last several years as worries about the industry's reliance on Taiwan have spread, big tech giants like Apple, Google, and Amazon opened chip design groups in Israel and chip makers doubled down on their existing investments.

With billions of dollars recently invested in Israel, it stands right at the nexus of a new era in semiconductor production. It also stands at the center of a decades-old conflict between Israel and its Arab neighbors, which escalated dramatically last October after Hamas attacked several towns in southern Israel, killing over 1,000 people, and Israel followed with a devastating response in Gaza that has killed 30 times that many people.

• Chip companies are attracted to Israel thanks to its thriving ecosystem of innovation, which is driven by a culture of risk-taking and entrepreneurship, said Orr Danon, co-founder and CEO at AI chip manufacturer Hailo.
• Danon also pointed to the Israeli government’s favorable policies toward chip investment, including R&D grants and tax incentives, as another major reason the country is seeing all this investment and talent emerge.

Israel has a long history of technology innovation dating back to the 1960s, when the term "Silicon Wadi" was created to describe a growing sector of companies around Tel Aviv and along the Israeli coast. For decades, U.S. companies have snapped up cybersecurity talent and companies emerging from founders who served in Israel military operations, and more recently chip companies have based their AI strategies around technology developed in Israel.

• For example, Intel acquired Israeli AI firm Habana Labs for $2 billion in 2019, and it has become the cornerstone of its AI strategy during the generative AI craze.
• Over the last three decades, Intel Capital has invested more than $20 billion in Israel, across areas from artificial intelligence to semiconductor manufacturing.
• In 2019, Nvidia won a bidding war against other giants like Microsoft, Xilinx, and Intel, completing the acquisition of Mellanox Technologies for $7 billion.
• Back in 2015, Amazon acquired Israeli chipmaker Annapurna Labs to design chips for AWS, which powered the development of Amazon’s Graviton processors, which were the first production-ready Arm-based server processors released by a major enterprise tech vendor.

John Medved, founder of Israeli VC firm OurCrowd, explained why chip-related investment in Israel has only grown stronger over the last few years.

• “Israel is a very critical piece of the puzzle because it remains a vital chip production location due to its massive (base of) tech talent.” 
• In addition to Israel’s technological skills, Avi Baum, CTO at Hailo, believes that this trend is also a result of Israel being “the Switzerland for technology,” meaning neutral and adaptable.
• “My personal belief is that innovation thrives on the grounds of sharing. It goes back to the former point about being in an open ecosystem or a closed one,” he said.

The next few years may witness even more geopolitical rivalry in the development and production of chips, especially in the AI era. And U.S. military experts continue to believe that China intends to invade Taiwan by 2027, which nearly everyone involved believes would cause incredible disruption to the global chip supply chain.

• Under that scenario, Israel could emerge as a credible backup supplier for the world's insatiable demand for chips.
• It has the talent base and backing from the big tech powers to break through, but it will need the support of the international community to supplant Taiwan as the chip capital of the world as the catastrophic war in Gaza drags on.

Read the full story on Runtime here.

Package deal

While Nvidia continues to dominate the AI conversation, cloud providers and other chip makers are churning out alternatives for cost-conscious buyers. Ampere and Qualcomm joined the conversation Thursday with plans to work together on energy-efficient AI servers for inference.

New Supermicro servers will use Ampere's Arm-based server CPUs alongside Qualcomm's Cloud AI 100 accelerator. "Treat this as ... the first of the things that we're working on," Jeff Wittich, Ampere's chief product officer, told Reuters.

Inference — the process of actually using an AI model — requires much less computing power than training the model in the first place, but it is expected to be the most prominent AI workload once the model-training frenzy dies down. AI customers will have a lot of options for running inference, however, including chips from all three major clouds.

Enterprise moves

Mike Krieger is the new chief product officer at Anthropic, and the Instagram co-founder will "work to expand our suite of enterprise applications and bring Claude to a wider audience."

Craig Martell is the new chief technology officer at Cohesity, joining the company after nearly two years as the chief digital and AI officer for the Department of Defense.

Dave Rosenthal is the new chief technology officer at Sentry, with former CTO David Cramer moving over to the chief product officer role.

Emily He is the new chief marketing officer at Gong, following three years at Microsoft overseeing marketing for the Dynamics 365 and Power Platform products.

Pilar Santamaria is the new vice president of AI at Suse, joining the company from Google Cloud where she launched Vertex AI.

The Runtime roundup

Cisco reported a 13% drop in quarterly revenue, its worst performance since 2009, but analysts were expecting even worse results.

Microsoft plans to introduce its Cobalt CPU next week at Build, according to Techcrunch.

Palo Alto Networks acquired IBM's QRadar security software and plans to merge it into its Cortex XSIAM service.

Oracle adopted OpenTofu, the Linux Foundation-supported fork of HashiCorp's Terraform, in its Oracle EBS Cloud Manager product.

ServiceNow hiring managers are going on a raid of Salesforce talent, according to Bloomberg.

Replit laid off nearly 20% of its employees, and the coding-assistant startup now plans to focus on winning enterprise deals.

Dell employees will be given different-colored flags on their Workday profiles symbolizing how frequently they show up to the office, which sounds super fun.

Thanks for reading — see you Tuesday!