Mellanox

Eyal Waldman, president of Mellanox Technologies, with others at the company during a press conference in Tel Aviv on March 11, 2019.

U.S. chip supplier Nvidia Corp has offered the highest bid for Israeli chip designer Mellanox Technologies and will acquire the company for $6.8 billion.

Mellanox will make chips to connect artificially intelligent servers together to create one giant computer in a bid to prioritize data centers, according to Nvidia Chief Executive Jensen Huang in an interview with Reuters.

Mellanox shares rose 8.2 percent, and Nvidia rose 7 percent by closing on Monday.

The purchase is considered a blow to its primary competitor, Intel, which announced in February that it would be investing $11 billion into an expansion of its Kiryat Gat facility.  

Intel has been operating in Israel since 1974 and employs approximately 13,000 people at Intel’s five Israeli research-and-development centers, exporting $4 billion dollars worth of products in 2018.

Mellanox will pay a $350 million termination fee to Nvidia if it accepts a rival offer, though Intel did not comment on whether it had bid for Mellanox.

The deal is expected to close by the end of 2019. JN

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