Amazon Buys Stealthy Israeli Chip Startup Annapurna Labs

Amazon has acquired Israeli startup Annapurna Labs for an estimated $350-$400 million, according to The Wall Street Journal and other sources. The semiconductor development firm has been in stealth mode since 2011, so not much is known about the company. It develops networking chips and designs to make data centers run efficiently and has close to a hundred employees.

Amazon Web Services, the company's public cloud infrastructure services business, aims to run as efficiently as possible leveraging economies of scale and in-house engineering. One potential reason for the acquisition could be to further improve data center efficiency.

AWS revenue is in the billions (cloud revenue isn't broken out in earnings). With increasing cloud pricing pressure from the likes of Google and Microsoft, Annapurna’s technology might help Amazon stay a step ahead by improving margins.

The cloud war is dependent on the data center. Google is known to be investing deeply in the data center, which recently prompted Fidelity Contrafund to cut its stake in the Internet giant.

Annapurna’s webpage has very little information, featuring a barren landscape. The company lists job openings for those with passion for computer architecture, chip design, software architecture, open source projects, or system design.

“Annapurna Labs put together some of the best talent to address significant industry challenges,” a quote from Avigdor Willenz, founder and CEO of Galileo Technology, states. “In my experience their talent, innovation, and open culture is unmatched in the semiconductor industry.”

The Israeli tech scene, full of talent and innovative startups, continues to be important for the IT industry at large. Amazon has an office in Israel to help Israeli startups work with AWS. Its recent event in Tel Aviv had 15,000 or so in attendance.

Cloud document and storage firm Dropbox acquired Israeli-based startup CloudOn earlier this week, which brought mobile document editing capabilities for Microsoft Office to the Dropbox platform. Chinese e-commerce giant Alibaba invested in Israel's Visualead, which develops QR codes that are flashier than the typical black and white ones you see in magazines.