Sony buys Israeli chip manufacturer Altair for $200 million

The $200 million tally may represent a low figure for a company more than a decade old and with nearly 200 employees. Altair reports annual revenues of about $45 million and have already taken in $125 million in private investments over the years, indicating a low cash out for those investors.

Altair was founded in 2005 by Eran Eshed, Oded Melamed, and Yigal Bitran, all former colleagues at Texas Instruments after that company bought the trio’s previous venture Libit Signal Processing for $365 million back in 1999.

Commentary: no choice but to sell

There was apparently no other choice for a company facing competition from titans like Qualcomm and Intel, whose own LTE chips dominate the industry, not to mention Alcatel-Lucent, MediaTek, and Samsung. Those companies also produce their own devices, so it’s no effort to find applications for their chips. Altair didn’t have that asset. Sustaining themselves would have required more investments, testing their investors’ patience.

But Sony makes major strategic gains here. A new chip manufacturer inside the Sony structure gives Sony’s devices that very same advantage that Qualcomm and Intel have. Sony long ago sold off its Vaio personal computers, but its Xperia mobile line will benefit immensely from the buyout. That might mean reports of Xperia’s death have been grossly exaggerated. The company’s Playstation brand is also going strong and will soon enter the VR market.

Another advantage to the acquisition is that it gives Sony a foothold in the dynamic Israeli startup ecosystem, the world’s most prolific outside of Silicon Valley.

Unlike Chinese companies in the last couple of years, Japanese companies have been slow to get their feet wet in Israel, with notable exceptions being Rakuten’s acquisition of Viber and the founding of the Israeli-Japanese incubator, Samurai.

Yaneev Avital