Israel’s Silicon-Chip Valley

Trade IL: Lachlan Corne

US-based Credo Technology Group has announced plans to acquire Israeli chip startup DustPhotonics in a deal that could reach up to $1.3 billion, marking a significant move into optical connectivity for AI infrastructure.

The transaction includes $750 million in cash and $123 million in shares, with additional earnout incentives tied to performance. The structure reflects both the immediate value of DustPhotonics’ technology and its longer-term growth potential as demand for high-speed data transfer accelerates.

At the centre of the deal is silicon photonics, a technology that integrates optical communication directly into chips. This allows data to move faster and more efficiently than traditional electrical connections, which are increasingly struggling to keep up with the scale of modern AI workloads.

DustPhotonics has already commercialised this capability, with its chips deployed in optical transceivers supporting 400G, 800G and emerging 1.6T data centre speeds. By bringing this technology in-house, Credo aims to reduce supplier dependency while offering a fully integrated connectivity platform across both electrical and optical layers.

The acquisition comes amid growing industry consensus that photonics will underpin the next generation of AI systems. Jensen Huang has recently pointed to optical interconnects as a critical component of future data centre architecture, reinforcing the strategic timing of the move.

DustPhotonics, founded in 2017 by a team with backgrounds in companies like Intel and Mellanox, pivoted in 2021 to focus on chip development rather than components. Backed by investors including Avigdor Willenz, the company has since positioned itself as a key player in the photonics space.

Alongside DustPhotonics, Israel is producing a broader wave of advanced chip innovators targeting AI infrastructure. NextSilicon is developing adaptive, software defined processors designed to optimise performance across diverse workloads, while ZutaCore focuses on advanced liquid cooling solutions that enable high-density data centres to operate efficiently at scale. Together, these companies highlight the depth of Israel’s contribution to next-generation computing.

For Australian stakeholders across data centres, telecommunications, cloud infrastructure and advanced manufacturing, this shift presents a clear opportunity. As AI adoption accelerates locally, access to cutting-edge connectivity, processing and cooling technologies will become increasingly important. The Israel Trade Commission works closely with companies like these to facilitate partnerships, pilot programs and commercial deployments in Australia. If you are exploring ways to future-proof infrastructure or gain a competitive edge in high-performance computing, we welcome the opportunity to connect and support relevant introductions.

NextSilicon: https://www.nextsilicon.com/
ZutaCore: https://zutacore.com/

For more information or how you can get in touch with Israeli Innovation, please contact Lachlan Corne: Lachlan.Corne@israeltrade.gov.il

Source: https://www.calcalistech.com/ctechnews/article/d9pizceo2