US-based Credo Tech buys Israeli maker of silicon chips for up to $1.3 billion

Israeli startup DustPhotonics, a maker of silicon photonics chips for high-performance data centers and AI applications, is being acquired by US-based Credo Technology Group, in a cash and share deal worth up to $1.3 billion.

Credo has agreed to buy DustPhotonics for $750 million in cash and 920,000 of its shares, the companies announced late on Monday. Under the terms of the agreement with the Nasdaq-listed chip connectivity company, the Modiin-based startup will receive an additional 3.21 million shares contingent on meeting certain financial milestones.

Founded in 2017 by Kobi Hasharoni, Amir Garon and Ben Rubovitch, DustPhotonics is the developer of silicon photonics — a technology that uses light, instead of electricity, to transmit data between servers. Demand for silicon photonics technology has been growing in recent years as it promises to significantly speed up the transfer of large amounts of data and is becoming a key enabler for AI infrastructure.

The optical technology can process and transfer data at higher bandwidths and speeds than traditional electrical conductor technology, solving connectivity bottlenecks while lowering cost and power consumption, the startup said.

To date, DustPhotonics has raised about $150 million from investors, including Intel Capital, the VC arm of tech giant Intel Corp., and serial semiconductor entrepreneur Avigdor Willenz, who also serves as the startup’s chairman. Willenz, in 2000, sold chip maker Galileo to Marvell Technologies for $2.7 billion. Over the past two decades, the entrepreneur sold chip companies to Amazon, Intel and Cisco.

“Silicon photonics is becoming a critical building block for AI infrastructure, and DustPhotonics has built a truly differentiated technology platform in this space,” said Willenz.

According to data from Research and Markets in 2026, the silicon photonics market will grow to $3.55 billion from $2.84 billion in 2025, driven by rising demand for high-performance computing. The market value of silicon photonics is expected to increase to $8.77 billion by 2030.

Commenting on the deal, Credo Technology CEO William Brennan said that the acquisition comes as the firm has built a “strong position in high-speed electrical solutions” and seeks to expand into silicon photonics amid broad changes in data center infrastructure due to the fast surge in AI adoption and connectivity.

“We are building a vertically integrated connectivity platform that spans from copper to optical and from chip to cluster — allowing us to solve for the two constraints that matter most at scale: reliability and power efficiency,” said Brennan.

DustPhotonics has about 70 employees, of which 65 are based at its headquarters in Modiin and the remainder at its office in Cupertino, California. Following the transaction, the startup will remain in the country and grow Credo’s footprint in Israel.