Amazon's Israeli Chip Strategy: From Annapurna Labs to Decart Acquisition
Translated & summarized from Calcalist by baba
Amazon is reportedly in advanced talks to acquire Israeli startup Decart for around $7 billion, aiming to replicate the success of its 2015 acquisition of Israeli chip designer Annapurna Labs for $350 million. Annapurna's custom chip development transformed Amazon's AWS cloud infrastructure, saving billions and enhancing capabilities. The Decart acquisition would further Amazon's strategy of in-house technology development to control costs and performance in AI infrastructure.
The story in 5 lines · by baba
- Amazon is negotiating to acquire Israeli startup Decart for approximately $7 billion.
- This potential acquisition follows Amazon's highly successful 2015 purchase of Israeli firm Annapurna Labs for $350 million.
- Annapurna Labs' custom chip development significantly improved Amazon's AWS cloud infrastructure and profitability.
- The strategy aims to increase Amazon's independence and control over AI infrastructure costs and performance.
- Amazon's CEO Andy Jassy has emphasized the importance of in-house chip development for AI cost reduction.
Reports indicate Amazon is in advanced talks to acquire Israeli startup Decart for approximately $7 billion, a move seen as a continuation of a decade-old strategy. This strategy was cemented by Amazon's highly successful acquisition of Israeli chip designer Annapurna Labs in January 2015 for about $350 million. Annapurna Labs, founded in 2011 in Yokneam by Nafaa Bashara and Ronen Boneh, with significant backing and strategic guidance from investor Avigdor Willenz, developed custom chips that transformed Amazon's cloud infrastructure (AWS).
Prior to Annapurna, AWS relied heavily on external hardware providers like Intel and AMD, limiting cost reduction and customization. Annapurna's custom chip solutions, including the Graviton, Nitro, Trainium, and Inferentia series, enabled AWS to improve efficiency, security, and AI capabilities, significantly reducing reliance on third-party vendors. The acquisition is considered one of Amazon's most strategic and profitable, with the chip development stemming from Annapurna now supporting cloud services generating tens of billions of dollars annually.
Analysts estimate that if Annapurna were an independent company, its valuation could exceed $50 billion. This internal chip development has saved Amazon tens of billions in capital expenditures over the years and enhanced AWS's profitability and competitiveness. Amazon CEO Andy Jassy has highlighted the importance of in-house chip development for reducing AI costs for customers, underscoring the strategic value of the Israeli operations, as evidenced by his and AWS CEO Matt Garman's visit to Amazon's Haifa development center in January 2025.
The potential acquisition of Decart, whose technology allows for efficient AI model execution and cross-chip compatibility, mirrors the Annapurna strategy. Amazon aims to replicate its success by acquiring Israeli technology to bolster its AI infrastructure independence and reduce reliance on external suppliers, controlling costs, performance, and development.
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