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........

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