American tech giant Intel is buying the Israeli startup Granulate, Intel said, confirming a report in Haaretz last week.
The official details of the deal have yet to be published, but according to sources with knowledge of the sale, Intel will pay about $650 million.
Intel and Granulate’s relationship began in late 2019, when Granulate was part of the first group of startups that finished Intel's Ignite, the startup accelerator program that taps into Intel’s resources to help early-stage companies succeed. Over the past year, Intel and Granulate have worked together under a commercial agreement to collaborate on workload optimization on Xeon deployments.
The transaction is expected to close in the second quarter of 2022, subject to typical closing conditions. At that time, Granulate’s approximately 120 employees will be integrated into Intel’s Datacenter and AI business unit.
"The acquisition of Granulate will help cloud and data center customers maximize compute workload performance and reduce infrastructure and cloud costs. Deal terms are not being disclosed," Intel said in a statement. “Granulate’s cutting-edge autonomous optimization software can be applied to production workloads without requiring the customer to make changes to its code, driving optimized hardware and software value for every cloud and data center customer,” the statement said.
Granulate was set up in 2018 by Assaf Ezra and Tal Sayag. Their product improves the real-time performance of cloud servers. Granulate’s system is installed on the servers that clients rent out from cloud providers. It then studies their performance and optimizes them without any need for programmers or developers. The optimization it provides saves computational power and thus reduces costs substantially.
Granulate has raised some $45 million since its inception and its latest valuation was at under $150 million (after the money). Investors are expected to make a massive return on their initial investment in the firm.
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The Israeli firm is active in a hot field, with competitor Turbonomic being sold for $1.5 billion. Intel has said it plans to turn software into a key focus for the firm, famous for its hardware and processors. Intel has already taken in $100 million from software in 2021, a fraction of the tens of billions the firm has in income.