The offer price of $125 per share represents a premium of 14 percent to Mellanox's Friday close.
"This exciting transaction would unite two HPC industry leaders and strengthen the combined company's ability to create data-centric system architectures for the convergence of the HPC and hyperscale markets around AI and other HPDA tasks", said Steve Conway, COO and Research SVP at Hyperion Research.
Intel declined to comment on whether the company had for Mellanox.
"But going out and buying an asset right now, immediately after the recent spate of guide downs may raise a few eyebrows", said Rasgon. "It will probably spark questions as to whether Nvidia sees anything changing regarding the growth trajectory of their core data center business".More news: Dolphins cut WR Danny Amendola after just 1 season
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Nvidia and Intel, as is usual for the companies, have refused to speculate on the sources' claims, but an announcement from the successful bidder is expected early this week.
Mellanox's networking technology is used within data centres, the remote stacks of powerful computers used by companies to store and process vast amounts of information. Mellanox's market value, now at about $5.9 billion, started to run up a year ago when activist investors took stakes and talk that it was up for sale emerged. In January, the company posted disappointing results for the fourth quarter of 2018, chalking up $2.2 billion in revenue, which was far short of the $2.7 billion it had previously forecast. We should expect this deal to cement in this week, leading directly into NVIDIA's biggest event of the year: the GPU Technology Conference, or GTC.
Nvidia is set to acquire data center chipmaker Mellanox for around $7bn after reportedly outbidding Intel, accounts have claimed. That gap may reflect concern that chip deals have foundered on regulatory approval delays and blocks amid a trade dispute between China and the U.S.
"The deal will strengthen NVDA's ability to offer datacenter-scale computing solutions optimized across computing, networking and storage, that can accelerate datacenter-scale workloads", Seyrafi said in a note distributed Monday.