Delek Automotive to Write Off Most of Its Investment in Chipmaker Hailo After Mass Layoffs

AI edge chip company Hailo Technologies announced today, Monday, that it is laying off about 110 employees, roughly 50% of its workforce, as part of an effort to stabilize the company and turn it into a leaner organization for investors and potential buyers. At the same time, Delek Automotive said it is expected to write off most of its investment in the company, which stood at about 197 million shekels at the end of March this year. The move follows Hailo’s announcement that there had been no progress in its merger with a SPAC company and that it had no intention of merging with another provider.

In a company statement, Hailo said that its core products had already reached commercial maturity and are distributed by a global partner network, allowing it to reduce internal support teams and shift focus to emerging markets for physical AI, such as robotics and drones, while giving up on areas where the pace of technology adoption had been slower than expected.

Hailo, founded by veterans of the intelligence community, develops and manufactures AI chips and processors intended for edge devices. Unlike AI models running on cloud server farms, Hailo’s processors enable AI applications and generative AI to run locally on smart devices such as security cameras, drones, autonomous vehicles, robots and personal computers. This solution saves energy, reduces costs and eliminates dependence on a continuous internet connection.

Hailo has long been considered a major promise in the Israeli chip industry, especially in auto tech. Since its founding, it has raised a total of about 340 million dollars, and in 2021 it raised money for the first time at a company valuation of more than 1 billion dollars. Its most significant financing round was in April 2024, when it raised about 120 million dollars at a valuation of about 1.2 billion dollars, with participation from prominent investors including the Zisapel family, Alfred Akirov and Gil Agmon.

However, over the past year and a half, Hailo has faced a crisis because of changes in the global market and significantly increased competition. The company burned cash at a rapid pace, and at the beginning of the year it had to take a 12 million dollar emergency loan from related parties at a high interest rate. Under financial pressure and changing market conditions, the company signed a memorandum of understanding in April this year for a merger with a SPAC company in order to go public on Wall Street, at a valuation of less than half a billion dollars. Delek Automotive had already recorded a huge write-off of 242 million shekels on its investment in Hailo. As noted, the merger did not materialize, and now Delek is writing off the remainder of its investment. It should be noted that, following Delek Automotive, other car importers in Israel also invested in Hailo, including private investments by senior executives in the industry.