Intel has placed a $5.5 billion bid on Israel’s Mellanox Technologies, according to media reports. The news come just a day after Intel announced it would invest about $11 billion in its Israel-based operations.
An Intel spokesperson declined to comment on the reports, stating “Intel doesn’t comment on rumors and speculation.”
In October Mellanox allegedly hired a financial advisor to explore a sale after it received interest from two companies. The Israel-based firm makes chips and hardware for cloud computing data center servers. It also has locations based in the U.S. Mellanox has sales and manufacturing deals with a number of large firms including Alibaba, Dell, and Hewlett Packard Enterprise (HPE).
Though Intel and Mellanox compete on several fronts, including Ethernet, the purchase would certainly boost Intel’s data center offerings.
“Mellanox has a rich portfolio of high performance Ethernet and Infiniband interconnect technologies and products, and a healthy list of data center vendors, including Dell Technologies and HPE that leverage those offerings in their servers, storage arrays, and other gear,” said Charles King, president and principal analyst at Pund-IT. “The bigger picture finds Mellanox playing a significant role in burgeoning big data workloads and scenarios.” This includes analytics, artificial intelligence (AI), and high-performance computing (HPC) use cases.
King added that should Intel succeed in purchasing Mellanox, “it will add significant muscle to its data center portfolio and deepen its relationships and sales opportunities among numerous data center customers. Mellanox would also benefit Intel’s long term strategies and efforts in AI, big data, advanced analytics, HPC, and technical computing.”
Intel is not the only bidder. In November, semiconductor and programmable silicon company Xilinx also reportedly hired Barclays to advise it in a purchase of Mellanox. At that time, Xilinx was considering a bid of $100 per share, which would value the customer at $5.5 billion, the same price that Intel is reportedly offering. And in December, local Isreali sources reported that Microsoft joined the bidding war, hiring Goldman Sachs to handle negotiations.
Intel’s Israel Investment
Just this week, local Israeli news reported that Intel is planning to invest $11 billion to build a new semiconductor plant in Kiryat Gat, Israel. Intel scored a $1 billion grant from the Israeli finance ministry for the plan.
Intel already plays a big role in the country’s local economy. Israeli government officials have said that this new plant will add 1,000 employees to Intel’s Israeli workforce, which is currently at around 13,000. Intel’s exported approximately $4 billion from the country in 2018, a $300 million increase. It also reportedly spent $1.7 billion on local products.
This will be the company’s largest investment in the country to date, since it first established a presence there in 1974. Just in the last two years, it bought Mobileye, an Israeli company that builds advanced driver assistance technology, for $15.3 billion. And in May 2018 it said it would spend $5 billion to upgrade its local facilities.