US chip company Credo Technology (Nasdaq: CRDO) has announced that it is acquiring Israeli startup DustPhonics in a cash and share deal worth at least $850 million and potentially up to $1.3 billion, including future milestone agreements. The financial details of the definitive agreement include an immediate $750 million cash payment, plus Credo stock.
Modi’in-based DustPhonics was founded in 2017 by Kobi Hasharoni, Amir Garon and Ben Rubovitch. The Israeli company develops technology for high velocity optical connectivity for data. The first investor and chairman of the company is Avigdor Willenz, one of the most prominent figures in Israel’s chip industry.
The company's technology is based on using light instead of electricity to transfer data between servers, which allows for extremely high speeds. This field, known as silicon photonics, has been gaining momentum in recent years due to the sharp increase in data loads at data centers.
The acquisition comes amid broad changes in data center infrastructure due to the surge in AI use, with AI systems requiring the transfer of huge amounts of data at the highest speeds.
Credo specializes in copper cables that connect servers within the same communications rack. However, as the required speeds increase, copper solutions are struggling to keep up, and the transition to communications using optics is expanding. The acquisition of DustPhotonics allows Credo to enter the field of optics. According to Credo's announcement, "DustPhonics integrates key optical functions onto a single chip, reducing component complexity, improving manufacturing yields, and enabling meaningfully lower cost at scale as port speeds advance beyond 800G. In combination, these factors improve AI cluster reliability, a critical factor for data center operators."
DustPhonics is developing components that allow for data transfer at speeds of hundreds of gigabits per second and even more, with plans to continue increasing capacity in the coming years.
DustPhotonics is currently working with companies in the cloud sector, with Amazon being a customer of both companies. According to Credo, after the transaction is completed, its revenue from the optical communications sector may exceed $500 million by 2027.
Willenz said, "Silicon photonics is becoming a critical building block for AI infrastructure, and DustPhotonics has built a truly differentiated technology platform in this space. We have been disciplined in focusing on the right architecture and execution, and the results are evident in both the product and customer traction. Combining with Credo creates a powerful platform with the scale, integration, and customer access required to fully capture the opportunity ahead."
Published by Globes, Israel business news - en.globes.co.il - on April 14, 2026.
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