Just two months ago, Altair was on the cusp of a US$50 million investment from Chinese conglomerate Infotmic. Much hoopla was made about it in China, but the company didn’t follow through.
Now it seems the Israeli startup has sailed out of the East China Sea and into the Sea of Japan with Sony buying out the chip maker for US$200 million.
Altair employs 190 engineers and software developers at its Israeli headquarters where it develops 4G chips to speed up communications without using excess energy. It works with several communications protocols like LTE, XG-PHS and WiMAX and have customers like Verizon Wireless in the US. It recently opened a development centre in Taiwan.
Altair’s investors include SanDisk Ventures, Bessemer Venture Partners, BRM Capital, ETV Capital SA, Giza Venture Capital, Jerusalem Venture Partners (JVP), Jerusalem Global Ventures and Pacific Technology Partners.
The company’s last funding round came two years ago in a US$25 million investment by Georgian businessman Yitzhak Mirilashvili’s fund, called Vaizra Investments.
The US$200 million tally may represent a low figure for a company that is more than a decade old and with nearly 200 employees. Altair reports annual revenues of about US$45 million and has already taken in US$125 million in private investments over the years, indicating a low cash-out for those investors.
Altair was founded in 2005 by Eran Eshed, Oded Melamed, and Yigal Bitran, all former colleagues at Texas Instruments after that company bought the trio’s previous venture Libit Signal Processing for US$365 million back in 1999.
Commentary: No choice but to sell
There was apparently no other choice for a company facing competition from titans like Qualcomm and Intel, whose own LTE chips dominate the industry, not to mention Alcatel-Lucent, MediaTek and Samsung.
Those companies also produce their own devices, so it’s no effort to find applications for their chips. Altair didn’t have that asset. Sustaining itself would have required more investments, testing investors’ patience.
But Sony makes major strategic gains here.
A new chip manufacturer inside the Japanese giant’s structure gives Sony’s devices the very same advantage that Qualcomm and Intel have.
Sony long ago sold off its Vaio personal computers, but its Xperia mobile line will benefit immensely from the buyout. That might mean reports of Xperia’s death have been grossly exaggerated. The company’s Playstation brand is also going strong and will soon enter the VR market.
Another advantage to the acquisition is that it gives Sony a foothold in the dynamic Israeli startup ecosystem, the world’s most prolific outside of Silicon Valley.
Unlike Chinese companies in the last couple of years, Japanese companies have been slow to get their feet wet in Israel, with notable exceptions being Rakuten’s acquisition of Viber and the founding of the Israeli-Japanese incubator, Samurai.
The article Sony buys Israeli chip manufacturer Altair for $200 million was first published on Geektime.