Main Highlights:
- According to reputable sources, the Intel-Granulate deal would cost $650 million. However, Intel and Granulate did not specify the amount in their press statement announcing the agreement today.
- The purchase is expected to close in Q2 2022, with all 120 employees of Granulate joining Intel.
- Granulate’s new approach to real-time optimization software complements Intel’s existing capabilities by supporting clients with performance optimization, cloud cost reductions, and continuous workload learning.
Chipmaker Intel announced the acquisition of Granulate to expand its operations in Israel and the tools Intel gives to clients for improved traffic management on Intel-powered hardware. The purchase had been a well-guarded secret in Granulate’s home market for nearly a week, with several outlets claiming that it was imminent.
According to reliable sources, the transaction would cost $650 million, but Intel and Granulate did not provide an exact figure in their press release announcing the announcement today. The transaction is slated to finalize in Q2 2022, with all 120 Granulate workers joining Intel.
Cloud and data center clients now want scalable, high-performance software to maximize the performance of their hardware installations, according to Sandra Rivera, executive vice president, and general manager of Intel’s Datacenter and AI Group. Granulate’s cutting-edge autonomous optimization software may be deployed to production workloads without the client modifying its code, resulting in optimal hardware and software value for each cloud and data center customer.
They are expanding their portfolio of software optimization tools to include flexible and scalable capabilities that will enable them to meet the growing demand for ubiquitous computing, according to Greg Lavender, Intel’s chief technology officer, senior vice president, and general manager of the Software and Advanced Technology Group. Granulate’s novel approach to real-time optimization software complements Intel’s current capabilities by assisting clients in achieving performance improvements, cloud cost savings, and continuous workload learning.
According to PitchBook, Granulate has raised $45.6 million at a low valuation of $110 million, with prior investors including Insight Partners, Red Dot Capital, and Dawn. It received money a little over a year ago in a $30 million Series B that we detailed here, and based on that timeline; it appears as though this deal resulted from the firm soliciting investment from other companies (a moment that often leads to acquisition offers, when the conversations are with would-be strategic backers).
On several levels, the acquisition is part of Intel’s larger strategy. First, it demonstrates how Intel is continuing to develop new tools and services to assist customers in managing Intel-powered networks more effectively, in part to compete more directly with the likes of Nvidia, which has been acquiring smaller companies to expand its high-performance computing capabilities and management capabilities.
Granulate’s Network
Granulate operates across numerous cloud and on-premise settings, claiming that its software can increase response times by up to 40%, throughput by up to five times, and expenses by up to 60% for an organization’s workloads. As previously stated, while larger technology companies such as Netflix, Google, and Amazon typically invest significant sums in developing their optimization technology, smaller organizations (and yes, you can be huge while being smaller than Google) would lack the bandwidth — pun intended — to address it in the same way.
Asaf Ezra, co-founder, and CEO of Granulate told me last year that they are aware of parallels between what they have constructed and what is happening within Netflix. To them, though, it demonstrates how massive you must be to handle this issue and the skill you must acquire to answer the essential difficulties.
Granulate will be a natural match in one respect: the two companies have already worked closely together to develop solutions that improve resource management for clients that employ Intel-powered computing architecture. Granulate’s other partners are Microsoft, IBM, Google, and Datadog.
According to Granulate, Intel-Agent is optimized for use on servers powered by Intel CPUs and features Intel’s AVX instruction set binary translation (Intel built to improve performance and lower overhead). Granulate states that once installed on a task (which it claims takes 15 minutes), the agent utilizes AI to learn how the workload operates and then optimizes kernel-level resource management and prioritization to enhance responsiveness.
There has also been some talent cross-pollination between the two companies: last year, former Intel sales director Ron Whitfield joined Granulate as vice president of business development to expand the company’s client base globally and into new industry categories. Granulate’s size increased the likelihood that it would have been acquired by Intel’s significant rivals, notably Nvidia. Acquiring another firm will enable the company to grow its operations in ways that would have been more difficult to do on its own.
They think that by partnering with Intel, they can help clients achieve considerable cost savings and fivefold throughput across workloads, Ezra said today. Granulate will be able to offer autonomous optimization capabilities to an even broader global client base as an Intel company and will be able to swiftly expand its offering with the assistance of Intel’s 19,000 software engineers.
Second, the acquisition looks to be part of Intel’s more significant attempt to continue extending its influence in Europe, particularly in Israel. Earlier this month, the business announced a massive €33 billion investment in R&D and production in Europe, the first tranche of an anticipated €80 billion investment across several EU nations, including Germany, France, Ireland, Italy, Poland, and Spain. Israel’s activities have been highly complementary to that and have undoubtedly been at the forefront of Intel’s efforts on this side of the globe.
Intel’s Mobileye branch — which is about to be spun off as an independent firm with Intel keeping a sizable stake — was at the center of a pledge last year to invest $600 million in Israel’s research and development activities. Additionally, it has completed several additional M&A transactions to expand its reach in the country.
Most recently, in February, it announced a $5.4 billion acquisition of Tower Semiconductor to expand its custom foundry capabilities. Other recent additions include Cnvrg.io, which acquired automated machine learning skills, and Habana Labs, an AI chipmaker. Notably, it has also lost out on a few significant acquisitions: after being believed to be interested in Mellanox, Nvidia eventually acquired the big data chip startup.
Intel has always been a believer in Israeli innovation, believing that it may help [them] remain ahead of the market in various categories. Intel employs 12,000 workers in Israel and four research and development and production centers, according to Avihai Michaeli, an investor and startup advisor. Mobile and Tower Semiconductor are two of its most notable purchases. They realize that the company’s plan for 2022 will be to acquire other software firms in the region.
