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Axonica Labs, a chip company founded last June in Herzliya Pituah, is arousing great interest among venture capital investors. The company plans to develop an innovative chip designed to run artificial intelligence models and agents, specifically for the inference stage. This chip promises to be significantly cheaper and more energy-efficient than Nvidia\u2019s GPUs. It aims to compete with the chip produced by the US-based company Cerebras. Even before completing its pre-seed round, Axonica raised $50 million. Because of high investor demand, CEO and founder Assaf Touboul opened the funding round to additional investors, with the total amount potentially reaching up to $80 million.<\/p>\n
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The round is being led by prominent US funds Amplify Partners, Wing VC, and Qualcomm Ventures alongside a group of Israeli funds that includes Pitango, Viola, and 10D.<\/p>\n
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Touboul is one of the most senior Israelis to have worked at chip giant Qualcomm. As vice president of Technology at the San Diego-based company, he was responsible for developing cellular communication chips while also managing Qualcomm\u2019s innovation and AI labs. In this capacity, he spearheaded the development of ultra-low-power analog AI chips, language model compression technologies, and model training algorithms, and registered dozens of patents.<\/p>\n
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In recent months, Touboul has worked to build an international structure for Axonica, consisting of a US company with an R&D center in Herzliya Pituah, and a UK-registered company. The company currently employs only about 20 people, ten of whom hold PhDs, an impressive concentration of talent for a chip company at such an early stage.<\/p>\n
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Excitement amid disappointments<\/p>\n
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The excitement over Axonika comes against a backdrop of fluctuations in both the global and local chip markets. Investors familiar with the sector see great promise in the company, particularly at a time when investors are seeking firms capable of challenging Nvidia\u2019s dominance and companies like Cerebras (which experienced turmoil following its Nasdaq IPO last May and a sharp drop in its share price).<\/p>\n
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The sector in Israel has recently seen several notable setbacks, including the sale of Pliops to Astera and that of Hailo to Microchip, at losses of hundreds of millions of dollars. Consequently, most of the other promising chip companies-such as Element Labs and Excite Labs-remain concentrated in the hands of the same investors: Avigdor Willenz and his partner Gavin Baker (formerly of Fidelity).<\/p>\n
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Hardware sector gains<\/p>\n
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Investors are increasingly realizing that even though the business model for AI applications has yet to stabilize, and software companies in the field are viewed as risky, the chip industry continues to profit and grow driven by surging demand. This explains why companies like Nvidia and AMD keep expanding, while their customers (such as OpenAI and Anthropic) incur heavy losses, and cloud giants like Google and Amazon take on billions of dollars in debt to finance chip purchases and the construction of server farms.<\/p>\n
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Many investors now believe that the primary competition in the sector centers not on training new models, an expensive niche dominated by Nvidia, but on energy-efficient processors designed to run AI agents during routine operations.<\/p>\n
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Chips from companies like Groq, Cerebras, and SambaNova focus on the inference stage, which is considered more cost-effective and efficient. In the coming years, the bulk of computing activity is expected to shift to this stage, with a wide variety of servers and chips handling countless AI computations, rather than sole reliance on Nvidia processors.<\/p>\n
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No comment on the report was forthcoming from either Touboul or the company.<\/p>\n
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Published by Globes, Israel business news – en.globes.co.il – on October 14, 2026.<\/p>\n
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\u00a9 Copyright of Globes Publisher Itonut (1983) Ltd., 2026.<\/p>\n
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#Herzliyabased #aims #shake #chip #market<\/p>\n","protected":false},"excerpt":{"rendered":"
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