Why Is Intel Focusing Its Investments in Israel?


Nov. 20 2020, Updated 4:59 p.m. ET

Intel’s increasing investment in Israel

Recently, Israel has been in the limelight in the tech space. Intel (INTC) has been increasing its investment in Israel. In 2018, Intel acquired Israel-based ADAS (advanced driver-assistance systems) chipmaker Mobileye for $15.3 billion. Intel wants to compete with NVIDIA in the autonomous driving market.

On January 28, Israel’s finance minister, Moshe Kahlon, announced a $1 billion grant to Intel. The company plans to invest $11 billion in a new fabrication facility in Kiryat Gat. Intel hasn’t revealed any details about the new fabrication facility. However, the company plans to broaden its portfolio to include chips for automobile safety and mobile phone wireless communications.

In addition to the new fabrication facility, Intel plans to invest $5 billion to expand its existing Mobileye facility in Israel. The facility uses EyeQ chips to develop autonomous vehicle platforms and ADAS.

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Intel and Mellanox?

Intel’s increasing interest in Israel has fueled rumor mills. Globes stated that Intel has made a cash-stock bid of $5.5 billion–$5.6 billion for Mellanox Technologies (MLNX), which represents a premium of 30%. Neither of the companies commented on the news.

Mellanox, a big data connectivity company in Israel, has been in the pricing process for the past few months. Some media reports suggested that Xilinx (XLNX) was preparing a $5.5 billion bid to acquire Mellanox in November 2018. Since then, there hasn’t been an update.

Intel is expanding its data center and networking business as part of its transition to becoming a data centric-company. Mellanox supplies data center networking products like adapters, cables, switches, software, and silicon for enterprise data centers, high-performance computing, and cloud computing. The company supplies components to original equipment manufacturers like Dell and Hewlett Packard Enterprise. If the rumor about Intel acquiring Mellanox is true, it will help Intel gain share in the data center networking market.

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