When the Israeli startup NeoLogic began developing a more energy-efficient CPU for AI servers, industry insiders told its founders, Avi Messica and Ziv Leshem, that the idea was simply not feasible.
"Most people we met said it was impossible," Messica said in an interview. "Some told us that such innovation was impossible because you couldn't innovate in logic synthesis. You couldn't innovate in circuit design. The field was too mature."
Despite the skepticism, the fabless semiconductor startup was determined to prove them wrong. NeoLogic is developing a server CPU that uses a simplified logic processing approach—how the chip processes information—using fewer transistors and logic gates to achieve faster speeds while reducing power consumption.
NeoLogic was co-founded by CEO Messica and CTO Leshem in 2021, with combined experience of 50 years in the semiconductor industry. Leshem spent decades working on chip design at companies like Intel and Synopsys, while Messica focused on circuit design and manufacturing.
"We started the company more than four years ago because Moore's Law had failed," Messica said, referring to the observation from the 1960s that the number of transistors on a microchip doubles every two years.
Messica said that about ten years ago, companies stopped trying to shrink transistor sizes because they had become so small that further progress was nearly impossible.
But he said NeoLogic doesn't agree with this view. The company is currently collaborating with two large-scale cloud service providers to design a server CPU, although Messica refused to reveal the names of the partners. The company plans to complete a single-core test chip by the end of the year and hopes to bring its server CPU to the data center market in 2027.
NeoLogic recently closed a $10 million Series A round led by KOMPAS VC, with participation from M Ventures, Maniv Mobility, and lool Ventures. The company will use the funds to expand its engineering team and continue developing its CPU product.
This funding round comes at a time when data centers are placing significant pressure on existing energy resources, with no sign of relief in the near future. The ongoing AI boom is expected to double data center power usage within the next four years.
Messica hopes that NeoLogic's energy-saving potential will make its server CPU irresistible to the market.
"It affects everything," Messica said about the potential energy savings. "If you consider next-generation data centers, it affects construction costs; it affects the amount of capital you need to invest because you can cut costs by about 30%. It also affects water usage. This has social implications, which basically was our vision about five years ago."
The company's technology approach is innovative, reducing the number of transistors and logic gates required by simplifying the logic processing mechanisms inside the chip, thus significantly lowering power consumption while increasing performance. This method challenges traditional industry beliefs about limited space for semiconductor innovation.
With the explosive growth of AI applications and the increasing severity of data center energy consumption issues, technology companies like NeoLogic that focus on energy efficiency optimization are receiving growing attention. If the company can achieve its promised 30% cost reduction goal, it could have a profound impact on the entire data center industry.