In March 2019, Nvidia announced its acquisition of Israeli company Mellanox for approximately $6.9 billion, finalizing the deal by April 2020. Mellanox specializes in high-speed communications technology for data centers, and this acquisition became a cornerstone of Nvidia’s data center infrastructure strategy.
The deal was pivotal for the Israeli tech sector, as Mellanox was a leading technology firm in the country. It also allowed Nvidia to expand its research and development (R&D) footprint in Israel significantly.
By fiscal year 2026, Nvidia segmented its data center revenue into Compute and Networking, with Networking covering communication chips and systems developed significantly through Mellanox’s technologies in Israel. The growth of Nvidia’s networking business has been remarkable, with revenues leaping from $8.57 billion in fiscal 2024 to $31.38 billion in fiscal 2026.
In fiscal 2027, while the financial reporting changed focus, data from the first two quarters indicated strong growth, foreshadowing an optimistic trajectory for Networking revenue.
Estimations suggest around 70% of Nvidia’s connectivity business is rooted in Mellanox technologies. This translates to Nvidia’s Israeli operations contributing approximately $20 billion in 2025 and an expected rise beyond $40 billion in 2026.
Despite these figures not directly reflecting Israeli exports—due to manufacturing occurring outside Israel—the increase indicates a correlation with Nvidia’s growth in networking sales.
Moreover, Nvidia’s presence has significant implications for Israel’s economy, as evidenced by its tax payment of $1.287 billion in corporate tax in Israel during calendar 2025. This could further increase if revenue from Israeli operations continues to rise sharply.
Nvidia’s expansion has made Israel a focal point in the global AI landscape, bolstering its tech economy and establishing the country as a key hub for advancements in AI and data center technologies. However, this also creates a dependency, tying Israel’s economic health to Nvidia’s sustained success in the AI sector.
