Don’t mind if I DPU: Pliops and Kalray continue merger talks as former shows off Hammerspace integration

Two DPU startups, Kalray and Pliops, have been working on a merger for several months, with Pliops recently announcing an integration with data orchestrator Hammerspace.

Pliops is an Israeli data processing unit (DPU) startup that, like Nebulon, has had to differentiate itself from the generalized storage and network accelerating DPUs popularized by Nvidia (BlueField), Intel (IPU), Pensando, and Fungible. The Pliops XDP (Extreme Data Processor), with key:value store technology, offloads and accelerates low-level storage stack processing from a host x86 server for applications like RocksDB and RAID.

France-based Kalray is another DPU developer of Massively Parallel Processing Array (MPPA) accelerator technology. It was started in 2008 as a fabless semiconductor business spun off from CEA, the French Atomic Energy Commission, and developed MPPA chips and cards using them, such as its K200-LP storage accelerator card. It has a partnership with Arm for CPUs. 

Kalray CEO Eric Baissus said in a prepared statement: “This proposed merger with Pliops represents a major strategic opportunity. By combining our strengths, we aim to become the global leader in data acceleration solutions for storage and AI GPUs.”

Pliops chairman Eyal Waldman added: “By combining Pliops and Kalray’s exceptional assets, we are poised to enhance business opportunities for both companies.”

Pliops CEO Ido Bukspan said: “The potential in this proposed merger between our two companies is tremendous. Combining our technological expertise, teams, and products to make this new entity a global leader will significantly accelerate our time to market with a novel storage paradigm for AI data acceleration solutions.”

Kalray ran an IPO on the Euronext Paris Stock Market in 2018, raising €47.7 million ($51 million). It achieved break-even EBITDA by mid-2023, won an FMS award for its DPU tech that year, and also exhibited at Dell Technologies World as a Dell Technologies ETC (Extended Technology Complete) partner. That means it can combine its products with Dell’s servers, storage, and networking gear.

This parallels Pliops’ partnership with HPE. It has collaborated with HPE to validate its XDP with HPE ProLiant servers. Pliops will be present at, and a sponsor of, this week’s HPE Discover event where it will preview an upcoming offering that tackles the issues surrounding large language models (LLMs) inference optimization. Pliops is also collaborating with scaleout software provider Hammerspace and will introduce a new offering integrating its XDP PCIe gen 5 card with Hammerspace’s Global Data Environment. 

Pliops integrates with Hammerspace
Hammerspace Global Data Environment with participating Pliops XDP-front-ended NVMe storage systems

AI has become a common factor in both Kalray and Pliops’ technology development. Kalray announced its Ngenea for AI data acceleration platform in May this year.  Google, Lenovo, and Pliops collaborated in April to develop AlloyDB Omni, an integrated offering designed to accelerate traditional database and generative AI applications.

DPU startups have generally had a hard time gaining traction and taking off in the face of competition from Nvidia and Intel. Pensando was acquired by AMD for $1.9 billion in 2022 in the most successful DPU startup exit to date. 

Microsoft bought Fungible for a reported $190 million in 2020, less than the $300 million funding Fungible raised. Nebulon has seemingly been absorbed by Nvidia earlier this year in a messy transaction that neither company will confirm, with many Nebulon staff hobbled by NDAs, although others put an Nvidia move or acquisition on their LinkedIn profiles. For example, Laleh Rongere, Director of People and Resources, left in March 2024. Her LinkedIn profile says “Director of People and Resources at Nebulon (Acquired by Nvidia).”

Now Pliops and Kalray are negotiating with the aim of joining forces. The former was founded in 2017 by then-CEO Uri Beitlar, CTO Moshe Twitto, and chairman Aryeh Mergi, and has raised $215 million in VC funding to date. Ex-Nvidia chip design SVP Ido Bukspan became Pliops’ CEO in June last year, with Beitler becoming chief strategy and business development officer. Mellanox founder Eyal Waldman joined the board in late 2020 and became chairman earlier this year. 

The merger proposal envisages the combined business, with some 120 Pliops employees, being owned 65 percent by Kalray shareholders and 35 percent by the Pliops ones, with Kalray issuing new shares to the Pliops stockholders. The 35 percent stake could rise to 40 percent if certain business milestones are met, according to Israel’s Calcalist media outlet. Kalray is capitalized at €140 million ($150 million) and the new entity will be worth €240 million ($257.3 million). This implies a Pliops valuation of between €84 million to €96 million ($90-103 million), which is less than the $215 million it raised, and much lower than the $650-700 million valuation at the time of the last VC round in August 2022. 

The enlarged Kalray business, strengthened by Pliops technology and business relationships, can look forward to a storage access acceleration product combining Kalray and Pliops IP built for GenAI applications. Kalray could also inherit the Pliops-Hammerspace partnership.