A Nasdaq traded US chipmaker is in advanced talks to acquire the activity of Israeli edge AI chipmaker Hailo, sources inform “Globes,” in a deal worth just tens of millions of dollars.
Less than five years ago, Hailo looked set to become one of the largest chip companies to emerge in Israel. It operated in one of the hottest areas in the technology world, developing advanced AI chips, was founded by Unit 81 alumni, raised hundreds of millions of dollars and reached a valuation of more than $1 billion. For many in the industry, it symbolized the hope that Israel would succeed in growing another independent chip giant.
But now the company is seeking to sell its entire operations, although among the options being considered is also a scenario of selling only the intellectual property and some of the employees. According to the sources, the deal will be signed in the next two weeks, thus ending Halo’s journey as an independent company. The sources also said that the shareholders are expected to write off their investment.
The list of investors
Very few Israeli startups have managed to gather around them an impressive list of investors like Halo’s. Throughout its years of operation, a series of international venture capital funds, strategic investors and prominent businessmen in Israel have invested in the company – from leading financial institutions such as Poalim Equity and OurCrowd, to the Israeli automotive companies Gil Agmon’s Delek Motors, Shlomo Group, Carraso Motors, Automotive Equipment Group (Suzuki importer) and Telcar (Kia importer), as well as the Maniv Mobility Fund.
In addition there was an elite team of angels and prominent businessmen, including billionaire Idan Ofer, Alfred Akirov, Avi Baum (Chairman of Hilan), and the company’s first investor and legendary chairman, the late Zohar Zisapel, alongside Rakefet Roussak-Aminoach, who invested in the company and was even appointed chairman of the board of directors. The company’s efforts were also joined in professional and managerial roles by Eyal Waldman (founder of Mellanox), who was appointed a member of the advisory board, and Mooly Eden (former Intel) VP who was appointed to the board.
International investors were led by Japanese electronics corporation NEC and Swiss robotics and automation giant ABB, alongside a strategic collaboration in Japan with the distribution giant NEXTY Electronics from the Toyota Group.
The consensus in the industry is that the problem wasn’t in the technology
Despite the company’s demise, almost everyone who spoke to Globes repeats the same point: Hailo didn’t fail because of a bad product. “The technology was excellent,” says one source. “The engineers were some of the best in the field. The problem was that the company was ahead of its time.”
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According to other sources, the market for AI chips for edge devices has evolved at a significantly slower pace than the predictions that led to the hundreds of millions of dollars raised. The vision that cameras, robots, industrial machines and smart systems would run advanced AI models natively is still seen as relevant, but the pace of adoption has been slower than the market and investors had expected. “They built a product for a market that would eventually come,” says one source, “but they were ahead of their time.”
Beyond the market challenges, Halo operated in one of the most expensive areas in the technology world. Unlike software companies, a chip company cannot add another customer for free. Each new generation of chips requires years of development, design, simulations, manufacturing and testing, at costs of tens or even hundreds of millions of dollars.
“It’s an extremely capital-intensive business,” a source in the field tells Globes. “You bleed money very quickly. Every new generation of chip costs capital, and if there are no sales that cover the investment or additional capital raising, there comes a point where you have to make tough decisions.”
In recent years, there has also been an increase in production costs. Global demand for AI processors has soared, major chip manufacturers have competed for production capacity, and prices at manufacturing plants in Taiwan have risen accordingly. For a company like Hailo, which does not manufacture itself but relies on external chip manufacturers, this has put additional pressure on the cost structure. “There is not much room for error in a chip company,” says one of the sources. “When you burn cash at this rate, you ultimately have to choose between additional raising, a sale, or insolvency.”
At the same time, the market itself has changed rapidly. ChatGPT’s breakthrough and the race to develop large language models have directed the bulk of investments in chips to data centers. Nvidia became the big winner of the revolution, and billions of dollars flowed into the development of cloud computing infrastructures. Thus, Hailo continued to believe in the Edge AI market and even adapted some of its products for the new era, but the focus of attention of customers and investors had already shifted elsewhere. Even when the company presented impressive technological capabilities, it had difficulty attracting the volume of orders required to justify its cost structure.
Efforts to save the company and the future of the center in Israel Industry sources say that in recent months, intensive attempts have been made to find a solution that would allow the company to continue its operations. Along with the search for buyers and investors, various outlines were examined that were intended to preserve the company’s activities and the knowledge accumulated in the company. According to the same sources, the Ministry of Defense was also involved in efforts designed to examine how the company’s technological capabilities and human capital could be preserved in Israel. However, in the end, the solution that emerged was to promote a sales deal.
It is still unclear whether the buyer will agree to absorb all of the operations or will choose to purchase mainly the intellectual property and part of the engineering team.
Beyond the write-off of the investment and the termination of one of Israel’s most prominent chip companies, one of the main issues that concerns the parties involved is the future of human capital. Over the years, Hailo has built a team of chip engineers, architects and software engineers who specialize in developing AI accelerators, a field that is considered one of the most sought-after in the world.
One of the questions that is still open is what the cooperation with the American buyer will look like, and whether the development and knowledge center will continue to operate from Israel even after the deal is completed.
No response from Hailo has been forthcoming.
Published by Globes, Israel business news – en.globes.co.il – on July 15, 2026.
© Copyright of Globes Publisher Itonut (1983) Ltd., 2026.
