Purple Hat bets massive on AI with its Neural Magic acquisition

Purple Hat, the IBM-owned open-source software program big, has accomplished its acquisition of Neural Magic, a pioneering synthetic intelligence (AI) optimization startup. Initially introduced in November 2024, the deal closed on January 13, 2025, marking a major step in Purple Hat’s technique to boost its AI capabilities throughout hybrid cloud environments.

Whereas the value was not disclosed, Neural Magic had beforehand raised $50 million in enterprise capital funding from numerous traders, together with Andreessen Horowitz, New Enterprise Associates, Amdocs, and Comcast Ventures. We are able to safely assume that the deal wasn’t made for peanuts. The trigger in all probability wasn’t harm, I am positive, by the truth that Neural Magic’s CEO earlier than the deal closed was Brian Stevens, Purple Hat’s former CTO and government VP. 

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When the merger was first introduced, Stevens mentioned: “At Neural Magic, our imaginative and prescient is that the way forward for AI is open, and we’ve got been on a mission to allow enterprises to seize the highly effective innovation from AI whereas on the identical time being freed from friction and restriction. Open-source fashions, optimization algorithms, and inferencing methods are the center of this — enabling enterprises to personal their very own AI fashions, privately customise them to their datasets, and deploy them on their personal multi-vendor infrastructure — cloud, information heart, or edge.”

Neural Magic, an MIT spinoff based in 2018, has developed revolutionary software program and algorithms that speed up generative AI inference workloads. 

The corporate’s know-how permits advanced AI fashions to run effectively on commodity {hardware}, together with customary CPUs and GPUs, probably lowering the necessity for costly, specialised AI accelerators. 

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So, what does that functionality imply? Nicely, Neural Magic introduced a number of key applied sciences to Purple Hat by way of the acquisition:

1. vLLM Experience: Neural Magic is a number one contributor to vLLM, an open-source mission for environment friendly massive language mannequin (LLM) serving. Particularly, vLLM is already Purple Hat Enterprise Linux (RHEL) AI and Purple Hat OpenShift AI’s inference engine. This transfer clearly advantages Purple Hat’s present AI packages. 
2. DeepSparse: An inference runtime that delivers GPU-class efficiency on commodity CPUs by way of algorithms that scale back computation and reminiscence wants for neural community execution. Particularly, apart from LLMs, DeepSparse can be helpful for laptop imaginative and prescient (CV) and pure language processing (NLP).
3. SparseZoo: For those who use DeepSparse, Neural Magic already offers a repository of pre-optimized CV, NLP, and LLM fashions. 
4. Mannequin Compression Methods: Neural Magic has developed superior strategies for mannequin quantization and sparsification, which might considerably scale back mannequin dimension and computational necessities with out substantial loss in accuracy.
5. Cross-platform Optimization: Neural Magic’s know-how allows AI mannequin optimization for deployment throughout cloud, information heart, and edge environments.

These applied sciences align with Purple Hat’s imaginative and prescient of creating AI workloads extra accessible, environment friendly, and deployable throughout hybrid cloud environments, probably lowering the necessity for specialised and costly AI {hardware}. In a nutshell, Neural Magic’s know-how allows its customers to do AI on a budget. It is also, at its vLLM coronary heart, an open-source AI strategy. 

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For Purple Hat, as the corporate’s CEO Matt Hicks mentioned in an announcement: “We’re thrilled to enrich our hybrid cloud-focused AI portfolio with Neural Magic’s groundbreaking AI innovation, furthering our drive to not solely be the ‘Purple Hat’ of open supply, however the ‘Purple Hat’ of AI as properly.” 

On X, Hicks wrote: “At @RedHat, we consider the way forward for AI is open. That is why I am extremely enthusiastic about our acquisition of @NeuralMagic. Collectively, we’re furthering our dedication to our prospects and the open-source group to ship on the way forward for AI — and that begins at this time.”

Strategically, Purple Hat hopes its Neural Magic acquisition will bolster Purple Hat’s place in its capacity to deploy AI workloads throughout numerous computing environments, from on-premises information facilities to public clouds, and to enhance the effectivity of AI workloads already operating on RHEL AI, OpenShift AI, and InstructLab, an open-source Purple Hat and IBM AI group mission to enhance open source-licensed IBM Granite LLMs.

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So, will this strategy work out? Dave McCarthy, IDC’s Cloud and Edge Companies analysis vp, thinks so: “Purple Hat’s acquisition of Neural Magic is a strategic enhancement to its AI capabilities, facilitating AI deployment throughout hybrid clouds by leveraging Neural Magic’s experience in mannequin optimization and inference acceleration. This transfer aligns with Purple Hat’s dedication to open-source innovation and positions the corporate to supply cheaper, scalable AI options that scale back dependency on specialised {hardware}.”