Another Israeli chip company is being absorbed into the hardware race of the AI era. Unconventional AI, a US startup developing highly energy-efficient chips, announced on Monday that it is acquiring Israeli chip company NeuReality. The price was not disclosed, but according to estimates cited by Globes, it is $150 million to $200 million in cash and shares of the acquirer. Reuters reported that it is a cash-and-stock deal, expected to close in the fourth quarter of 2026.
Who is buying
Unconventional AI is led by Naveen Rao, one of the best-known names in AI chips. Rao previously sold Nervana to Intel, and later MosaicML to Databricks. His current company has raised $475 million at a $4.5 billion valuation and aims to develop computing inspired by biological systems, with a stated goal of a thousandfold improvement in energy efficiency. Rao also sat on NeuReality's board and was one of its early investors, so he knows the team well.
"Things have gone a lot faster than anticipated," Rao told Reuters. According to reports, the company has already built a first test chip and is close to finishing a second. It now needs people who know how to turn experimental chips into finished products, which is exactly the experience NeuReality's team has.
Buying a team, not a product
NeuReality was founded in 2019 by Moshe Tanach, Tzvika Shmueli and Yossi Kasus, and developed chips and systems for running AI models efficiently in data centers. According to Globes, the company raised about $105 million over the years, a relatively modest sum in a capital-intensive field like chips.
About 40 employees in Caesarea and Tel Aviv will move to Unconventional AI, including Tanach and most of the management and R&D teams. According to Globes, some employees in sales, marketing and finance will be laid off. The acquirer said it will maintain operations in Israel.
What it means for Israeli tech
The deal joins a series of acquisitions in which US AI companies are mainly buying Israeli talent in hardware and infrastructure. For NeuReality's shareholders, including funds that invested over seven years, $150 million to $200 million, partly in shares of a private company, is not a huge exit relative to the capital raised. But for the industry, it is further proof that Israeli chip engineers are among the most sought-after assets in the race for next-generation computing.
The open question is whether the Israeli operation will grow under the new ownership, or gradually shrink to a small R&D team. For now, Unconventional AI promises that the Israeli center will remain a significant part of the company.
