Race for AI Talent Drives Deals -- WSJ

Date : 12/27/2019 @ 8:02AM
Source : Dow Jones News

Race for AI Talent Drives Deals -- WSJ

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Apple and Intel scoop up artificial-intelligence experts, the startups where they work

By Asa Fitch 

This article is being republished as part of our daily reproduction of WSJ.com articles that also appeared in the U.S. print edition of The Wall Street Journal (December 27, 2019).

Technology giants are opening their checkbooks to keep pace in the hot field of artificial intelligence, where some of the best ideas and most sought-after talent reside in small startups and academia.

Intel Corp.'s purchase of Israeli startup Habana Labs for $2 billion this month is the biggest AI deal in a year when those transactions have already hit a record. Other tech giants, including Amazon.com Inc. and Microsoft Corp., have made acquisitions in recent years to strengthen their ability to apply complex algorithms to improve the performance of everything from delivery robots to self-driving cars. Apple Inc. has snapped up 17 AI startups since 2013, according to market-data firm PitchBook.

"AI is strategically important to many industries, and getting it right or wrong can mean the difference between a company thriving or becoming irrelevant," said Andrew Ng, the founder of a number of AI startups, including Landing.ai, in which Intel's venture-capital arm is an investor.

Many of the deals are driven as much by buyers wanting to land talent as to acquire a specific product, said Oren Etzioni, who heads the Allen Institute for AI, a Seattle research outfit started by late Microsoft co-founder Paul Allen.

"Often, half of what you're buying is a team that's jelled together, that's showed they can do stuff," Mr. Etzioni said.

When Apple, in June, said it had bought the struggling self-driving startup Drive.ai for an undisclosed amount, it was widely seen as a bid to snag its engineers, a common justification for deals across the tech world. Apple didn't respond to a request for comment.

Securing the human brain power can also be a rationale for hefty premium prices. Intel paid up for Habana even though the unit only recently began selling its first products and likely has minimal sales, said Mitch Steves, an analyst at RBC Capital Markets. Intel and Habana haven't disclosed the startup's revenue.

Habana Chairman Avigdor Willenz will continue to serve as an adviser to the business and to Intel, the chip maker said.

"We're super-committed to investing to win in this market," said Navin Shenoy, who oversees Intel's data center and AI business. Buying Habana, which specializes in chips suited for machine-learning applications, is part of Intel's bet on rapidly rising demand for AI computing needs, Mr. Shenoy said. The company estimates industrywide sales of chips made for AI computing will reach $25 billion within the next five years.

David Dahan, Habana's chief executive, praised Intel's strategy and said the companies would deliver more AI innovation faster together.

Intel has been bulking up on AI for some time. It paid $400 million in 2016 for Nervana, an AI chip maker based in San Diego. Then it shelled out $15.3 billion in 2017 for Mobileye NV, an Israeli startup specializing in automotive-camera technology with self-driving-car applications.

Even before Intel's latest purchase, AI-related deals globally had surged to $35 billion in value through early November, topping the previous high of $32 billion two years ago and $11 billion in transactions last year, according to a report from Stanford University's Institute for Human-Centered Artificial Intelligence.

Salaries reflect the high demand. AI engineers, most with advanced degrees, make $224,000 a year on average, according to MMC Ventures Ltd., a U.K.-based venture-capital fund. That is more than double the $104,480 average salary for software developers in the U.S., according to 2018 data, the most recent available from the U.S. Bureau of Labor Statistics.

Companies have long sought to lure AI experts away from academia.

Ride-hailing giant Uber Technologies Inc. hired away many of Carnegie Mellon University's robotics professors in 2015 and built a self-driving lab near the Pittsburgh institution to bolster its autonomous-driving efforts. The company sought to build mutually beneficial partnerships with academia, an Uber spokeswoman said.

A University of Rochester assessment in August found that 221 AI professors in North America decamped for tech companies in the past decade and a half. They either took full-time jobs or split their time between teaching and private industry. The pace has accelerated, with nearly 40 professors going into private industry last year alone, the study found.

Last year, private industry also lured away 60% of AI doctoral graduates, compared with just 20% in 2004, according to the study by the institute at Stanford.

Facebook Inc., which has struck several AI deals in recent years, has set up AI labs near universities to help attract talent. Last year, it attempted to hire a number of professors at the University of Washington, according to university leaders and some of those who were approached. Facebook offered higher compensation -- potentially double or more what a professor might make when including stock options and other perks, two of the people Facebook reached out to said.

"Anyone in the department who could spell AI was approached," said Ed Lazowska, who holds the Bill and Melinda Gates chair in computer science at the Seattle-based university. Mr. Lazowska wasn't one of the people Facebook recruited.

Only one professor ultimately took a part-time role at Facebook.

Jerome Pesenti, a Facebook executive who led the recruiting drive, said the company allowed academics it hired to maintain positions at their universities so that they could continue to develop new talent.

"We also work closely with university administrations to make sure we don't impede their research," he said.

Write to Asa Fitch at asa.fitch@wsj.com


(END) Dow Jones Newswires

December 27, 2019 02:47 ET (07:47 GMT)

Copyright (c) 2019 Dow Jones & Company, Inc.

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