NVIDIA is said to be in advanced discussions to purchase an Israeli startup named AI21 Labs. The deal could be valued at between $2 billion and $3 billion, reports earlier this week said. If the purchase goes through it would mark the fourth time the American chip giant acquires a significant company in Israel. The move is the latest sign of how much Nvidia wants to recruit the best experts to help it remain a leader in artificial intelligence.
A Big Price for Top Talent
The primary justification for this deal, it seems, would be the people who work at AI21 Labs. The startup has some 200 employees and they are very good at developing complex AI systems. Most had advanced university degrees and years of experience. The $3 billion price tag would mean that at the very least, “Nvidia is essentially buying each of those employees for around $15 million,” according to this logic. It’s a measure of how challenging it has gotten for tech companies to gain access to and hire the smartest minds in their industry.
AI21 Labs was founded in 2017 by three founders, including Amnon Shashua, who also started the self-driving car company Mobileye. The start-up has developed its own popular A.I. tools, such as a system called “Maestro,” which helps businesses train their A.I. applications to be more accurate. Despite not turning a hefty profit, the company’s team is considered one of the best in the world.
NVIDIA has not officially gone on the record with the deal, but few doubt it would make much sense. NVIDIA has already invested some money in AI21 Labs, as did Google a few years ago. Acquiring the entire company would give Nvidia a fast way to bolt on about 400 experts as it scrambles to find even greater AI firepower it can use in building stuff for big business.
Growing a ‘Second Home’ in Israel
Israel has been referred to as his company’s “second home” by the leader of Nvidia, Jensen Huang. This new deal arrives as Nvidia is plotting a huge new home for its employees in the town of Kiryat Tivon. The company seeks to erect a massive research centre there that one day could accommodate 10,000 employees. Construction is expected to begin in 2027, and the completed campus will draw from the company’s famous “spaceship” headquarters in California.
N already employs about 5,000 people in seven offices throughout Israel. This is the tech company’s largest concentration of researchers outside the U.S. By constructing this campus and acquiring companies such as AI21 Labs, Nvidia is increasingly turning northern Israel into a crucial node in the technology industry’s global network, precisely at a time when, to Washington’s chagrin, many American companies are under pressure not to dabble in the region.
The new campus will not consist solely of offices. Big parks, cafes and open spaces are planned where workers can meet and share ideas. NVIDIA says this will enable it to have a closer working relationship with the other small startups in the region. The project is likely to cost billions and provide thousands of new jobs and opportunities for those living outside Israel’s big cities.
The Growing Race for AI
This is one small skirmish in a much broader war among the world’s biggest tech companies. Big companies including Google, Microsoft and Amazon are all using their billions to buy smaller AI startups. They plan to have the best technology and the top people in place to create what is likely to be the future of the internet and smart devices.
Last week, Nvidia struck another giant $20 billion deal to collaborate with an AI chip company called Groq. These twin announcements, back to back, show that Nvidia isn’t standing still. They’re no longer content simply to make the chips that underpin AI; they are now hiring the people who write the software as well. This allows them to provide what he described as a “complete package” to companies that are keen to use AI.
This deal, for AI21 Labs, would also be a dream come true for its founders. It would be another “exit,” which is when a start-up gets sold for a ton of money. NVIDIA Corp., meanwhile, might offer the company plenty of resources to help it achieve its original goal of challenging giants like OpenAI and making its technology used by millions of people worldwide.
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