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.