NEW YORK • Nvidia is nearing an agreement to buy Israeli chipmaker Mellanox Technologies, which would help it gain technology used to speed the flow of information around data centres, sources familiar with the matter said.
The sale of Mellanox, which has a market value of about US$5.9 billion (S$8 billion), could be announced soon, the sources said, asking not to be identified.
Nvidia is the leading bidder ahead of rivals including Intel, though no final decision has been made and the outcome could still change, the sources said.
Representatives for Nvidia, Mellanox and Intel declined to comment.
Speculation that it would be acquired has sent Mellanox's stock surging. Shares of the company, which is based in Yokneam, Israel, and Sunnyvale, California, have risen 66 per cent from a low in October and 18 per cent just this year. Israeli newspaper Calcalist reported on Sunday that Nvidia and Intel were bidding for Mellanox, without saying where it got the information.
Mellanox's technology is crucial in transferring information from one component to another both within and between computers. The rate at which chips direct that traffic has become increasingly important as corporate computer networks and cloud service providers try to make sense of the growing flood of data being generated.
Multiple companies have an interest in adding such capabilities to their own array of products as they try to make themselves more attractive to major buyers of computer infrastructure, such as Alphabet's Google, Amazon.com's AWS and Microsoft's Azure.
Nvidia is the largest maker of graphics chips used by computer gamers. The company has been pushing its technology into new areas, arguing that it has the best solution to the tougher requirements of processing data related to artificial intelligence. It has already won over data centre owners: the unit that serves that market has tripled sales in the last three years.
Mellanox's revenue surged 26 per cent last year, topping US$1 billion for the first time.
Market value of Israeli chipmaker Mellanox Technologies.
The deal may signal a restart of consolidation in the US$470 billion semiconductor industry which has been reshaped over the past five years as companies have increasingly combined to add scale amid rising costs and shrinking customer lists. The transaction will still have to win approval from regulators. That process has become more complicated due to the US trade stand-off with China. The US is the world's largest producer of chips, while China is the biggest consumer.
The Trump administration has blocked deals over concerns about China's ambitions to acquire new semiconductor technology. China in turn has made it harder to secure its approval for transactions.