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Mellanox Not Quite Intel's Yet, NVIDIA Joins Competitive Bidding

Late January it was reported that Intel is looking to buy out Israeli networking hardware maker Mellanox Technology, in what looked like a cakewalk USD $6 billion deal at the time, which was a 35 percent premium over the valuation of Mellanox. Turns out, Intel hasn't closed the deal, and there are other big tech players in the foray for Mellanox, the most notable being NVIDIA. The GPU giant has reportedly offered Mellanox a competitive bid of $7 billion.

NVIDIA eyes a slice of the data-center networking hardware pie since the company has invested heavily in GPU-based AI accelerators and its own high-bandwidth interconnect dubbed NVLink, and now needs to complete its hardware ecosystem with NICs and switches under its own brand. Founded in 1999 in Yoqneam, Israel, Mellanox designs high performance network processors and fully-built NICs in a wide range of data-center relevant interconnects. Intel is by far the biggest tech company operating in Israel, with not just R&D centers, but also manufacturing sites, in stark contrast to NVIDIA, which opened its first R&D office in 2017 with a few hundred employees.

Update: NVIDIA's bid for Mellanox stands at $7 billion.

Intel Looking to Buy Out Mellanox to Challenge Huawei in the 5G Infrastructure Gold Rush

Intel is in the fray to acquire Israeli networking infrastructure manufacturer Mellanox Technology for $6 billion in cash and shares, which constitute a 35 percent premium over its most recent valuation. Mellanox designs and manufactures infrastructure-scale networking hardware, such as high-bandwidth switches, adapters, and other data-center networking hardware, and when acquired by Intel, could give the company sufficient IP and manpower to take on Chinese networking equipment giant Huawei, in the gold-rush to bring 5G to the world, in addition to sustaining the cloud-computing boom. Huawei has been banned in several western nations (particularly NATO member states) for political or strategic reasons, and a large vacuum has been built that's being approached by other "Kosher" players such as Mellanox, Cisco, etc.

Intel Prepares a Mammoth $11 Billion Investment in Israel

With a combination of tax-sops and State support, Intel loosened its purse-strings for a massive investment in Israel, where the company already has substantial investments in manufacturing and R&D. The investment consists of a 40 billion Shekel (~USD $11 billion) semiconductor foundry. "Intel's global management has informed us about its decision to invest another 40 billion shekels in Israel, an unprecedented decision that is expected to bring thousands of jobs to the south (of Israel)," said the country's Minister of Finance, Moshe Kahlon.

This $11 billion investment closely follows news of Intel committing $5 billion last year toward expanding its existing facility in Kiryat Gat. Expansion of this plant in the southern part of the country, is expected to complete by 2020. As part of that agreement, Intel will spend $3 billion on sourcing materials, labor, and services from local Israeli businesses. The new factory is slated to come up in the same city, although it's not known if the site is contiguous with the existing factory. Intel is one of the largest multinational employers in Israel.

Intel Cutting Retail Processor Supply for Holiday 2018

Prices of retail packages of Intel Core desktop processors could continue to rise over Q4-2018, as the company has reportedly cut their supply, in favor of tray/reel shipments to OEMs. This could mean DIY favorites such as the Core i5-8400, the i5-8600K, i5-9600K, or even Core i7 models such as the i7-8700K, i7-9700K, and the flagship i9-9900K could be severely in short supply, or heavily marked up wherever available. Intel recently devised a strategy to increase its Core processor volumes by pumping in an additional $1 billion to its usually-$15 billion capital expenditure, to fire up small-scale manufacturing facilities around the world, to augment its bigger fabs located in Malaysia and Vietnam.

Sites like Mexico, Israel, and Ireland are beneficiaries of this move, and are being expanded. Much of Intel's efforts appear to be focused on making sure notebook and pre-built PC manufacturers aren't starved of processor inventory. The DIY retail channel, which consists of boxed processors, will foot the bill for this move. A good example of understocked retail channel would be the $499 Core i9-9900K processor being sold for upwards of $900 in some online stores. AMD is in an enviable position to fill the void, comments PCGamesN. Prices of its Ryzen desktop processor PIBs are either flat, or marginally cut; and socket AM4 motherboards are generally cheaper than LGA1151 ones.

Intel to Expand its Manufacturing Base in Israel

The Israeli Government revealed that chipmaker Intel plans to expand its presence in the country for manufacturing and R&D. The company is reportedly preparing an ILS 18 billion (around USD $5 billion) investment toward expanding its Kiryat Gat manufacturing facility in southern Israel. The expansion will also include an ILS 3 billion expenditure by Intel on local suppliers. In return, Israel is giving Intel tax-breaks running up to 2027, where the company will be taxed at a reduced rate of 5 percent. The Government is also considering an ILS 700 million grant to the company. Intel is one of the largest employers and manufacturers in Israel. The company exported $3.5 billion worth goods and services from the country in 2017.

Intel Plans $5 billion Investment in Israel Plant for Expanded 10 nm Production

Israeli Economy Minister Eli Cohen today revealed that after talks with Intel, the company shared plans for a $5 billion investment in its Kiryat Gat plant, located in southern Israel. The Kiryat Gat plant currently features tools and manufacturing facilities that allow only 22 nm chips to be produced - definitely not cutting edge, but still somewhat relevant in the semiconductor market for simpler technologies. Intel's investment would bring this plant's capabilities to 10 nm manufacturing levels. The minister further stated that Intel will begin its investment this year, and was looking towards a full 2020 payoff with increased manufacturing capabilities. Naturally, with investment comes tax opportunities and government incentives, and Intel is expected to receive a 10% grant from the Israeli government to help it in this investments' funding.
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