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UNITED STATES SECURITIES AND
    EXCHANGE COMMISSIONWashington, D.C.
    20549Form 10-K
  þ

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
    SECURITIES EXCHANGE ACT OF 1934For the Fiscal Year Ended:
    December 31,
    2009ORo

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
    SECURITIES EXCHANGE ACT OF 1934For the transition period
    from          to   Commission File Number
    001-33299
 MELLANOX TECHNOLOGIES,
    LTD.
 (Exact name of registrant as
    specified in its charter)
  Israel

98-0233400(State or other jurisdiction
    of
    incorporation or organization)

(I.R.S. Employer
    Identification Number)   Mellanox Technologies, Ltd.
 Hermon Building, Yokneam, Israel 20692
 (Address of principal executive
    offices, including zip code)
  +972-4-909-7200
 (Registrants telephone
    number, including area code)
  Securities registered pursuant to Section 12(b) of the
    Act:
  Title of Each Class:

Name of Each Exchange on Which Registered:Ordinary shares, nominal value NIS 0.0175 per share

The NASDAQ Stock Market, Inc.   Securities registered pursuant to Section 12(g) of the
    Act:
 None
 (Title of Class)
  o þ
  o þ
  þ o
  Regulation S-T o o
  Regulation S-K Form 10-K Form 10-K. o
  Rule 12b-2
  Large accelerated
    filer o

Accelerated
    filer þ

Non-accelerated
    filer o(Do not check if a smaller
    reporting company)

Smaller reporting
    company o   Rule 12b-2).  Yes o þ
      DOCUMENTS INCORPORATED BY REFERENCE




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##### 





MELLANOX
    TECHNOLOGIES, LTD.
  Page No.PART IITEM 1.

Business


3ITEM 1A.

Risk Factors


18ITEM 1B.

Unresolved Staff Comments


34ITEM 2.

Properties


34ITEM 3.

Legal Proceedings


34ITEM 4.

Submission of Matters to a Vote of Security
    Holders


34PART IIITEM 5.

Market For Registrants Ordinary Shares,
    Related Shareholder Matters and Issuer Purchases of Equity
    Securities


34ITEM 6.

Selected Financial Data


37ITEM 7.

Managements Discussion and Analysis of
    Financial Condition and Results of Operations


38ITEM 7A.

Quantitative and Qualitative Disclosures About
    Market Risk


52ITEM 8.

Financial Statements and Supplementary Data


53ITEM 9.

Changes in and Disagreements With Accountants on
    Accounting and Financial Disclosure


53ITEM 9A.

Controls and Procedures


53ITEM 9B.

Other Information


54PART IIIITEM 10.

Directors, Executive Officers and Corporate
    Governance


54ITEM 11.

Executive Compensation


55ITEM 12.

Security Ownership of Certain Beneficial Owners
    and Management and Related Shareholder Matters


55ITEM 13.

Certain Relationships and Related Transactions,
    and Director Independence


55ITEM 14.

Principal Accountant Fees and Services


55PART IVITEM 15.

Exhibit Index and Financial Statement
    Schedules


55Signatures


89EX-23.1EX-31.1EX-31.2EX-32.1EX-32.2   2




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PART I



SPECIAL
    NOTE REGARDING FORWARD-LOOKING STATEMENTS  and/or
  
    levels of capital spending in the semiconductor industry, in
    general, and in the market for high-performance interconnect
    products;
    our ability to achieve new design wins;
    our ability to successfully introduce new products;
    competition and competitive factors;
    our dependence on a relatively small number of customers;
    our ability to expand our presence with existing customers;
    our ability to protect our intellectual property;
    future costs and expenses; and
    other risk factors included under Risk Factors in
    this report.      ITEM 1 
    BUSINESS  Overview
   3




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
    processor vendors such as Intel, AMD, IBM and Sun Microsystems;
    operating system vendors such as Microsoft, Novell and Red Hat;
    and
    software applications vendors such as Oracle, IBM and VMware.        Industry
    Background
  High-Performance
    Interconnect Market Overview
   4




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
    Enterprise Data Center or EDC.  EDCs are
    facilities that house both virtualized and non-virtualized
    servers, storage and communication infrastructure equipment and
    embedded systems that enable deployment of commercial
    applications, such as customer relationship management,
    financial trading and risk management applications, enterprise
    resource planning,
    E-commerce
    and web service applications. EDCs typically provide multiple
    data processing and storage resources to one or many
    organizations and are capable of supporting several applications
    at the same time.
    High-Performance Computing or HPC.  HPC
    encompasses applications that utilize the computing power of
    advanced parallel processing over multiple servers, commonly
    called a supercomputer. The expanding list of HPC applications
    includes financial modeling, government research, computer
    automated engineering, geosciences and bioscience research and
    digital content creation. HPC systems typically focus data
    processing and storage resources on one application at a time.
    Embedded.  Embedded applications encompass
    computing, storage and communication functions that use
    interconnect solutions contained in a chassis which has been
    optimized for a particular environment. Examples of embedded
    applications include storage and data acquisition equipment,
    military operations, industrial and medical equipment and
    telecommunications and data communications infrastructure
    equipment.    Trends
    Affecting High-Performance Interconnect
    
    Transition to blade systems, clustered computing and storage
    using connections among multiple standard
    components.  Historically, enterprises addressed
    the requirements for high-end computing and storage using
    monolithic systems, which are based on proprietary components.
    These systems typically require significant upfront capital
    expenditures as well as high ongoing operating and maintenance
    expense. More recently, enterprises have deployed systems with
    multiple
    off-the-shelf
    standardized servers and storage systems linked by high-speed
    interconnects, also known as clusters. Clustering enables
    significant improvements in performance, reliability,
    scalability, cost and power savings. The need for better
    utilization of floor space and power consumption has driven the
    adoption of compact form factor (size and shape) blade servers.
    Transition to multiple and multi-core processors in
    servers.  In order to increase processing
    capabilities, processor vendors have integrated multiple
    computing cores into a single processor device. In addition,
    server original equipment manufacturers, or OEMs, are
    incorporating several multi-core processors into a single
    server. While this significantly increases the computing
    capabilities of an individual server, the total performance of a
    cluster of these servers is impacted by the total input/output,
    or I/O, bandwidth. Inadequate 5




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cluster I/O bandwidth results in processor underutilization,
    thereby reducing the overall capability and performance of the
    cluster.  
    Data center infrastructure consolidation.  IT
    managers are increasingly faced with the need to optimize total
    cost of ownership associated with the data centers they manage.
    As the demand for I/O to servers increases, so does the need for
    a unified I/O interconnect. In the past the solution was to add
    more I/O adapters and cables to each server, which resulted in
    increased costs, power consumption and management complexity.
    This has led to a widespread trend of consolidating network
    infrastructures to reduce costs and generate a higher return on
    investments.
    Increasing deployment of virtualized computing resources.  Enterprises are turning to virtualization
    software, which allows multiple applications to run on a single
    server, thereby improving resource utilization and requiring
    increased I/O bandwidth in the EDC.
    Cloud computing.  Cloud computing is a
    convergence of two interdependent IT trends  IT
    efficiency (converting IT costs from capital expenses to
    operating expenses) and business agility. The recent emergence
    of massive network bandwidth and virtualization technologies has
    enabled this transformation to a new services-oriented
    infrastructure. Cloud computing enables IT organizations to
    increase their hardware utilization and to scale up to massive
    capacities in an instant without having to invest in new
    infrastructure or license new software. With increased I/O
    bandwidth and lower latency, cloud providers can perform system
    provisioning, workload migrations and support multiple
    users requests faster and in the most efficient way.
    Increasing deployments of mission-critical, latency sensitive
    applications.  There is an increasing number of
    applications that require extremely fast response times in order
    to deliver an optimal result or user experience. Reducing
    latency, the absolute time it takes for information to be sent
    from one resource to another over a high-performance
    interconnect, is critical to enhancing application performance
    in clustered environments. Some examples of applications that
    benefit from low-latency interconnect include financial trading,
    clustered databases and parallel processing solutions used in
    HPC.
    Virtual product design.  A significant
    reduction in cost and turn-around time of product design can be
    accomplished by carrying out the design activities using
    simulation and optimization tools and reducing the number of
    prototypes and physical testing. To accomplish this, a detailed
    representation of the products physical properties, high
    capability simulations software tools and an intensive compute
    environment are required. Such environments mandate high-speed
    networking to become effective and carry the compute intensive
    simulations.
    Green computing.  With the growth in IT
    capacity, data centers have become major consumers of electrical
    energy. Furthermore, data center networks have increased in size
    and managing a growing
    multi-infrastructure
    has become a daunting task. Enterprise data centers currently
    use three different networks  Storage Area Networks
    using Fibre Channel transport for storage access, Local Area
    Network using Ethernet transport for standard network access and
    System Area Networks using InfiniBand transport for
    inter-process communication and high-performance clustering. In
    order to reduce energy, real estate, management and
    infrastructure costs of modern data centers, a new field of data
    center architecture was defined  the green data
    center. The new architecture leverages from I/O virtualization
    and consolidation to enable green, simple-managed,
    highly-utilized modern data centers. The ability to consolidate
    data center I/O mandates the use of high-throughput networks to
    deliver the needed bandwidth equal or greater than the sum of
    the separate networks.  Challenges
    Faced by High-Performance Interconnect
    
    Performance limitations.  In clustered
    computing, cloud computing and storage environments, high
    bandwidth and low latency are key requirements to capture the
    full performance capabilities of a cluster. 6




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With the usage of multiple multi-core processors in server,
    storage and embedded systems, I/O bandwidth has not been able to
    keep pace with processor advances, creating performance
    bottlenecks. Fast data access has become a critical requirement
    to accommodate microprocessors increased compute power. In
    addition, interconnect latency has become a limiting factor in a
    clusters overall performance.  
    Increasing complexity.  The increasing usage of
    clustered servers and storage systems as a critical IT tool has
    led to an increase in complexity of interconnect configurations.
    The number of configurations and connections have also
    proliferated in EDCs, making them increasingly complicated to
    manage and expensive to operate. Additionally, managing multiple
    software applications utilizing disparate interconnect
    infrastructures has become increasingly complex.
    Interconnect inefficiency.  The deployment of
    clustered computing and storage has created additional
    interconnect implementation challenges. As additional computing
    and storage systems, or nodes, are added to a cluster, the
    interconnect must be able to scale in order to provide the
    expected increase in cluster performance. Additionally,
    government attention on data center energy efficiency is causing
    IT managers to look for ways to adopt more energy-efficient
    implementations.
    Limited reliability and stability of
    connections.  Most interconnect solutions are not
    designed to provide reliable connections when utilized in a
    large clustered environment, which can cause data transmission
    interruption. As more applications in EDCs share the same
    interconnect, advanced traffic management and application
    partitioning become necessary to maintain stability and reduce
    system down time. Such capabilities are not offered by most
    interconnect solutions.
    Poor price/performance economics.  In order to
    provide the required system bandwidth and efficiency, most
    high-performance interconnects are implemented with complex,
    multi-chip semiconductor solutions. These implementations have
    traditionally been extremely expensive.    
    Proprietary interconnect solutions have been designed for use in
    supercomputer applications by supporting low latency and
    increased reliability. These solutions are only supported by a
    single vendor for product and software support, and there is no
    standard organization maintaining and facilitating improvements
    and changes to the technology. The number of supercomputers that
    use proprietary interconnect solutions has been declining
    largely due to the availability of industry standards-based
    interconnects that offer superior price/performance, a lack of
    compatible storage systems, and the required use of proprietary
    software solutions.
    Fibre Channel is an industry standard interconnect solution
    limited to storage applications. The majority of Fibre Channel
    deployments support 2, 4 and 8Gb/s. Fibre Channel lacks a
    standard software interface, does not provide server cluster
    capabilities and remains more expensive relative to other
    standards-based interconnects. There have been industry efforts
    to support the Fibre Channel data transmission protocol over
    interconnect technologies including Ethernet (Fibre Channel over
    Ethernet) and InfiniBand (Fibre Channel over InfiniBand).
    Ethernet is an industry-standard interconnect solution that was
    initially designed to enable basic connectivity between a local
    area network of computers or over a wide area network, where
    latency, connection reliability and performance limitations due
    to communication processing are non-critical. While Ethernet has
    a broad installed base at 1Gb/s and lower data rates, its
    overall efficiency, scalability and reliability have been less
    optimal than certain alternative interconnect solutions in
    high-performance computing, storage and communication
    applications. An increase to 10Gb/s, a significant reduction in
    application latency and more efficient software solutions have
    improved Ethernets capabilities to address specific
    high-performance applications that do not demand the highest
    scalability. There are also ongoing efforts to standardize
    additional features within the Ethernet specification to improve
    its reliability and scalability in EDCs. These 7




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enhancements are in the definition and standardization process
    as part of the IEEE 802.1 Working Group and are generally
    referred to as Data Center Bridging.    Overview
    of the InfiniBand Standard
  off-the-shelf
    Advantages
    of InfiniBand
    
    Superior performance.  In comparison to other
    interconnect technologies that were architected to have a heavy
    reliance on communication processing, InfiniBand was designed
    for implementation in an IC that relieves the central processing
    unit, or CPU, of communication processing functions. InfiniBand
    is able to provide superior bandwidth and latency relative to
    other existing interconnect technologies and has maintained this
    advantage with each successive generation of products. For
    example, our current InfiniBand adapters provide bandwidth up to
    40Gb/s, and our current switch ICs support bandwidth up to
    120Gb/s, which is significantly higher than the 10Gb/s or less
    supported by competing technologies. The InfiniBand
    specification supports the design of interconnect products with
    up to 120Gb/s bandwidth, which is the highest performance
    industry-standard interconnect specification. In addition,
    InfiniBand fully leverages the I/O capabilities of PCI Express,
    a high-speed system bus interface standard.    Proprietary

Fibre Channel

Ethernet

InfiniBandSupported bandwidth of available solutions

2Gb/s 10Gb/s

2Gb/s 8Gb/s

1Gb/s 10Gb/s

10Gb/s  40Gb/s server-to-server 
    10Gb/s 120Gb/s switch-to-switch     
    Reduced complexity.  While other interconnects
    require use of individual cables to connect servers, storage and
    communications infrastructure equipment, InfiniBand allows for
    the consolidation of multiple I/Os on a 8




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single cable or backplane interconnect, which is critical for
    blade servers and embedded systems. InfiniBand also consolidates
    the transmission of clustering, communications and storage and
    management data types over a single connection.  
    Highest interconnect efficiency.  InfiniBand
    was developed to provide efficient scalability of multiple
    systems. InfiniBand provides communication processing functions
    in hardware, relieving the CPU of this task, and enables the
    full resource utilization of each node added to the cluster.
    Reliable and stable connections.  InfiniBand is
    the only industry standard high-performance interconnect
    solution which provides reliable
    end-to-end
    data connections. In addition, InfiniBand facilitates the
    deployment of virtualization solutions, which allow multiple
    applications to run on the same interconnect with dedicated
    application partitions. As a result, multiple applications run
    concurrently over stable connections, thereby minimizing down
    time.
    Superior price/performance economics.  In
    addition to providing superior performance and capabilities,
    standards-based InfiniBand solutions are generally available at
    a lower cost than other high-performance interconnects.  Our
    InfiniBand Solution
      Our
    Ethernet Solution
   9




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VPI:
    Providing Connectivity to InfiniBand and Ethernet
    Our
    Strengths
    
    We have expertise in developing high-performance interconnect
    solutions.  We were founded by a team with an
    extensive background in designing and marketing semiconductor
    solutions. Since our founding, we have been focused on
    high-performance interconnect and have successfully launched
    several generations of InfiniBand products in addition to
    launching our first Ethernet products. We believe we have
    developed strong competencies in integrating mixed-signal design
    and developing complex ICs. We have used these competencies
    along with our knowledge of InfiniBand to design our innovative,
    next generation, high-performance products that also support the
    Ethernet interconnect standard. We also consider our software
    development capability as a key strength, and we believe that
    our software allows us to offer complete solutions. We have
    developed a significant portfolio of intellectual property, or
    IP, and have 27 issued patents. We believe our experience,
    competencies and IP will enable us to remain a leading supplier
    of high-performance interconnect solutions.
    We believe we are the leading merchant supplier of InfiniBand
    ICs with a multi-year competitive advantage.  We
    have gained in-depth knowledge of the InfiniBand standard
    through active participation in its development. We were first
    to market with InfiniBand products (in 2001) and InfiniBand
    products that support the standard PCI Express interface (in
    2004) and PCI Express 2.0 interface (in 2007). We have
    sustained our leadership position through the introduction of
    several generations of products. Because of our market
    leadership, vendors have developed and continue to optimize
    their software products based on our semiconductor solutions. We
    believe that this places us in an advantageous position to
    benefit from continuing market adoption of our products.
    We have a comprehensive set of technical capabilities to
    deliver innovative and reliable products.  In
    addition to designing our ICs, we design standard adapter card
    products and custom adapter card and switch products, providing
    us a deep understanding of the associated circuitry and
    component characteristics. We believe this knowledge enables us
    to develop solutions that are innovative and can be efficiently
    implemented in target applications. We have devoted significant
    resources to develop our in-house test development capabilities,
    which enables us to rapidly finalize our mass production test
    programs, thus reducing time to market. We have synchronized our
    test platform with our outsourced testing provider and are able
    to conduct quality control tests with minimal disruption. We
    believe that because our capabilities extend from product
    definition, through IC design, and ultimately management of our
    high-volume manufacturing partners, we have better control over
    our production cycle and are able to improve the quality,
    availability and reliability of our products.
    We have extensive relationships with our key OEM customers
    and many end users.  Since our inception we have
    worked closely with major OEMs, including leading server,
    storage, communications infrastructure equipment and embedded
    systems vendors, to develop products that accelerate market
    adoption of InfiniBand. During this process we have obtained
    valuable insight into the challenges and objectives of our
    customers, and gained visibility into their product development
    plans. We also have established end-user relationships with
    influential IT executives who allow us access to firsthand
    information about evolving EDC, HPC and embedded market trends.
    We believe that our OEM customer and end-user relationships
    allow us to stay at the forefront of developments and improve
    our ability to provide compelling solutions to address their
    needs. 10




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Our
    Strategy
  end-to-end
  
    Continue to develop leading, high-performance interconnect
    products.  We will continue to expand our
    technical expertise and customer relationships to develop
    leading interconnect products. We are focused on extending our
    leadership position in high-performance interconnect technology
    and pursuing a product development plan that addresses emerging
    customer and end-user demands and industry standards. In order
    to expand our market opportunity, we have added products that
    are compatible with the Ethernet interconnect standard in
    addition to InfiniBand. These products will allow our customers
    to capture certain advantages of InfiniBand while providing
    connectivity to Ethernet-based infrastructure equipment. Our
    unified software strategy is to use a single software stack to
    support connectivity to InfiniBand and Ethernet with the same
    VPI enabled hardware adapter device.
    Facilitate and increase the continued adoption of
    InfiniBand.  We will facilitate and increase the
    continued adoption of InfiniBand in the high-performance
    interconnect marketplace by expanding our partnerships with key
    vendors that drive high-performance interconnect adoption, such
    as suppliers of processors, operating systems and other
    associated software. In conjunction with our OEM customers, we
    will expand our efforts to promote the benefits of InfiniBand
    and VPI directly to end users to increase demand for high
    performance interconnect solutions.
    Expand our presence with existing server OEM
    customers.  We believe the leading server vendors
    are influential drivers of high-performance interconnect
    technologies to end users. We plan to continue working with and
    expanding our relationships with server OEMs to increase our
    presence in their current and future product platforms.
    Broaden our customer base with storage, communications
    infrastructure and embedded systems OEMs.  We
    believe there is a significant opportunity to expand our global
    customer base with storage, communications infrastructure and
    embedded systems OEMs. In storage solutions specifically, we
    believe our products are well suited to replace existing
    technologies such as Fibre Channel. We believe our products are
    the basis of superior interconnect fabrics for unifying
    disparate storage interconnects, including back-end, clustering
    and front-end connections, primarily due to their ability to be
    a unified fabric and superior price/performance economics.
    Leverage our fabless business model to deliver strong
    financial performance.  We intend to continue
    operating as a fabless semiconductor company and consider
    outsourced manufacturing of our ICs and adapter cards to be a
    key element of our strategy. Our fabless business model offers
    flexibility to meet market demand and allows us to focus on
    delivering innovative solutions to our customers. We plan to
    continue to leverage the flexibility and efficiency offered by
    our business.  Our
    Products
  ® ® ® ®
  Direct
 11




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and/or
      
  and/or
       12




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Technology
    High-performance
    mixed-signal design
    Specialized
    communication processing and switching functions
    ®
  Advanced
    interfaces
  5Gb/s chip-to-chip
  Customers
   13




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CommunicationsServer

Storage

Infrastructure Equipment

Embedded SystemsDell

HP

Sun Microsystems

GE FanucHP

LSI/Engenio Corporation

Voltaire

Toshiba MedicalIBM

Network Appliance

Xsigo

Seachange InternationalSun Microsystems

Isilon       Sales and
    Marketing
            
    assuming leadership roles within IBTA, OFA, Blade.org and other
    industry trade organizations; 14




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
    participating in trade shows, press and analyst briefings,
    conference presentations and seminars for end-user
    education; and
    building and maintaining active partnerships with industry
    leaders whose products are important in driving InfiniBand and
    Ethernet adoption, including vendors of processors, operating
    systems and software applications.  Research
    and Development
      Design-for-Test
    Manufacturing
    Manufacturing and Testing. 12-month up-to-date
 15




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Quality Assurance.
  Requirements Associated with the OCS.
  Employees
        Intellectual
    Property
   16




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day-to-day
      Competition
    
    price/performance;
    time to market;
    features and capabilities;
    wide availability of complementary software solutions;
    reliability;
    power consumption;
    customer support; and
    product roadmap.     17




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Additional
    Information
    (408) 970-3400,
  Available
    Information
  Form 10-K, Form 10-Q, Form 8-K Form 10-K, Form 10-Q, Form 8-K c/o Mellanox Form 10-K 1-800-SEC-0330.
  ITEM 1A 
    RISK
    FACTORS  Investing in our ordinary shares involves a high degree of
    risk. You should carefully consider the following risk factors,
    in addition to the other information set forth in this report,
    before purchasing our ordinary shares. Each of these risk
    factors could harm our business, financial condition or
    operating results, as well as decrease the value of an
    investment in our ordinary shares.
  Risks
    Related to Our Business
  The
    global recession and the downturn in the semiconductor industry
    may cause our revenues and profitability to
    decline.
   18




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We do
    not expect to sustain our historical revenue growth rate, which
    may reduce our share price.
    InfiniBand
    may not be adopted at the rate or extent that we anticipate, and
    adoption of InfiniBand is largely dependent on third-party
    vendors and end users.
    We
    have limited visibility into end-user demand for our products,
    which introduces uncertainty into our production forecasts and
    business planning and could negatively impact our financial
    results.
   19




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We
    depend on a small number of customers for a significant portion
    of our sales, and the loss of any of these customers will
    adversely affect our revenues.
    We
    face intense competition and may not be able to compete
    effectively, which could reduce our market share, net revenues
    and profit margin.
        If we
    fail to develop new products or enhance our existing products to
    react to rapid technological change and market demands in a
    timely and cost-effective manner, our business will
    suffer.
   20




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We
    rely on a limited number of subcontractors to manufacture,
    assemble, package and production test our products, and the
    failure of any of these third-party subcontractors to deliver
    products or otherwise perform as requested could damage our
    relationships with our customers, decrease our sales and limit
    our growth.
        
    reduced control over product cost, delivery schedules and
    product quality;
    potential price increases;
    inability to achieve sufficient production, increase production
    or test capacity and achieve acceptable yields on a timely basis;
    increased exposure to potential misappropriation of our
    intellectual property;
    shortages of materials used to manufacture products;
    capacity shortages;
    labor shortages or labor strikes;
    political instability in the regions where these subcontractors
    are located; and
    natural disasters impacting these subcontractors. 21




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If we
    fail to carefully manage the use of open source
    software in our products, we may be required to license key
    portions of our products on a royalty-free basis or expose key
    parts of source code.
  and/or and/or and/or
  Our
    sales cycle can be lengthy, which could result in uncertainty
    and delays in generating revenues.
    The
    average selling prices of our products have decreased in the
    past and may do so in the future, which could harm our financial
    results.
    We
    expect gross margin to vary over time, and our recent level of
    product gross margin may not be sustainable.
    Fluctuations
    in our revenues and operating results on a quarterly and annual
    basis could cause the market price of our ordinary shares to
    decline.
    
    unpredictable volume and timing of customer orders, which are
    not fixed by contract but vary on a purchase order basis; 22




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
    the loss of one or more of our customers, or a significant
    reduction or postponement of orders from our customers;
    our customers sales outlooks, purchasing patterns and
    inventory levels based on end-user demands and general economic
    conditions;
    seasonal buying trends;
    the timing of new product announcements or introductions by us
    or by our competitors;
    our ability to successfully develop, introduce and sell new or
    enhanced products in a timely manner;
    product obsolescence and our ability to manage product
    transitions;
    changes in the relative sales mix of our products;
    decreases in the overall average selling prices of our products;
    changes in our cost of finished goods; and
    the availability, pricing and timeliness of delivery of other
    components used in our customers products.    We
    rely on our ecosystem partners to enhance our product offerings
    and our inability to continue to develop or maintain such
    relationships in the future would harm our ability to remain
    competitive.
    We
    rely primarily upon trade secret, patent and copyright laws and
    contractual restrictions to protect our proprietary rights, and,
    if these rights are not sufficiently protected, our ability to
    compete and generate revenues could suffer.
    
    people may not be deterred from misappropriating our
    technologies despite the existence of laws or contracts
    prohibiting it;
    policing unauthorized use of our intellectual property may be
    difficult, expensive and time-consuming, and we may be unable to
    determine the extent of any unauthorized use; and
    the laws of other countries in which we market our products,
    such as some countries in the Asia/Pacific region, may offer
    little or no protection for our proprietary technologies.   23




---



##### Table of Contents



We may
    not obtain sufficient patent protection on the technology
    embodied in our products, which could harm our competitive
    position and increase our expenses.
    Intellectual
    property litigation, which is common in our industry, could be
    costly, harm our reputation, limit our ability to sell our
    products and divert the attention of management and technical
    personnel.
      We
    depend on key and highly skilled personnel to operate our
    business, and if we are unable to retain our current personnel
    and hire additional personnel, our ability to develop and
    successfully market our products could be harmed.
   24




---



##### Table of Contents



and/or and/or
  We may
    not be able to manage our future growth effectively, and we may
    need to incur significant expenditures to address the additional
    operational and control requirements of our
    growth.
    
    continue to enhance our customer relationship and supply chain
    management and supporting systems;
    implement additional and improve existing administrative,
    financial and operations systems, procedures and controls;
    expand and upgrade our technological capabilities;
    manage multiple relationships with our customers, distributors,
    suppliers, end users and other third parties;
    manage the mix of our U.S., Israeli and other foreign
    operations; and
    hire, train, integrate and manage additional qualified engineers
    for research and development activities, sales and marketing
    personnel and financial and IT personnel.    We may
    experience defects in our products, unforeseen delays, higher
    than expected expenses or lower than expected manufacturing
    yields of our products, which could result in increased customer
    warranty claims, delay our product shipments and prevent us from
    recognizing the benefits of new technologies we
    develop.
     25




---



##### Table of Contents



If we
    fail to maintain an effective system of internal controls, we
    may not be able to report accurately our financial results or
    prevent fraud. As a result, current and potential shareholders
    could lose confidence in our financial reporting, which could
    harm our business and the trading price of our ordinary
    shares.
    We may
    pursue acquisitions or investments in new or complementary
    products, technologies and businesses, which could harm our
    operating results and may disrupt our business.
    other-than-temporary
  Unanticipated
    changes in our tax provisions or adverse outcomes resulting from
    examination of our income tax returns could adversely affect our
    results of operations.
   26




---



##### Table of Contents



Changes
    to financial accounting standards may affect our results of
    operations and cause us to change our business
    practices.
      Our
    business is subject to the risks of earthquakes, fires, floods
    and other natural catastrophic events, and to interruption by
    manmade problems such as computer viruses or
    terrorism.
    Risks
    Related to Our Industry
  Due to
    the cyclical nature of the semiconductor industry, our operating
    results may fluctuate significantly, which could adversely
    affect the market price of our ordinary shares.
   27




---



##### Table of Contents



The
    demand for semiconductors is affected by general economic
    conditions, which could impact our business.
    The
    semiconductor industry is highly competitive, and we cannot
    assure you that we will be able to compete successfully against
    our competitors.
    Risks
    Related to Operations in Israel and Other Foreign
    Countries
  Regional
    instability in Israel may adversely affect business conditions
    and may disrupt our operations and negatively affect our
    revenues and profitability.
     28




---



##### Table of Contents



Our
    operations may be negatively affected by the obligations of our
    personnel to perform military service.
  call-ups call-ups
  Our
    operations may be affected by negative economic conditions or
    labor unrest in Israel.
    We are
    susceptible to additional risks from our international
    operations.
    
    reduced protection of intellectual property rights in some
    countries;
    difficulties in staffing and managing foreign operations;
    longer sales and payment cycles;
    greater difficulties in collecting accounts receivable;
    adverse economic conditions;
    seasonal reductions in business activity;
    potentially adverse tax consequences;
    laws and business practices favoring local competition;
    costs and difficulties of customizing products for foreign
    countries;
    compliance with a wide variety of complex foreign laws and
    treaties;
    licenses, tariffs, other trade barriers, transit restrictions
    and other regulatory or contractual limitations on our ability
    to sell or develop our products in certain foreign markets; 29




---



##### Table of Contents




    foreign currency exchange risks;
    fluctuations in freight rates and transportation disruptions;
    political and economic instability;
    variance and unexpected changes in local laws and regulations;
    natural disasters and public health emergencies; and
    trade and travel restrictions.    It may
    be difficult to enforce a U.S. judgment against us, our officers
    and directors or to assert U.S. securities law claims in
    Israel.
      Provisions
    of Israeli law may delay, prevent or make difficult an
    acquisition of us, which could prevent a change of control and
    therefore depress the price of our shares.
     30




---



##### Table of Contents



Exchange
    rate fluctuations between the U.S. dollar and the NIS may
    negatively affect our earnings.
    The
    government tax benefits that we currently receive require us to
    meet several conditions and may be terminated or reduced in the
    future, which would increase our costs.
    The
    Israeli government grants that we received require us to meet
    several conditions and may be reduced or eliminated due to
    government budget cuts, and these grants restrict our ability to
    manufacture and engineer products and transfer know-how outside
    of Israel and require us to satisfy specified
    conditions.
   31




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##### Table of Contents



Your
    rights and responsibilities as a shareholder will be governed by
    Israeli law and differ in some respects from the rights and
    responsibilities of shareholders under U.S. law.
    Risks
    Related to Our Ordinary Shares
  The
    price of our ordinary shares may continue to be volatile, and
    the value of an investment in our ordinary shares may
    decline.
    
    quarterly variations in our results of operations or those of
    our competitors;
    announcements by us, our customers or rumors from sources other
    than the Company related to acquisitions, new products,
    significant contracts, commercial relationships or capital
    commitments;
    our ability to develop and market new and enhanced products on a
    timely basis;
    disruption to our operations;
    geopolitical instability;
    the emergence of new sales channels in which we are unable to
    compete effectively;
    any major change in our board of directors or management;
    changes in financial estimates, including our ability to meet
    our future revenue and operating profit or loss projections;
    changes in governmental regulations or in the status of our
    regulatory approvals;
    general economic conditions and slow or negative growth of
    related markets;
    commencement of, or our involvement in, litigation;
    changes in earnings estimates or recommendations by securities
    analysts;
    continuing international conflicts and acts of
    terrorism; and
    changes in accounting rules.   32




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##### Table of Contents



The
    ownership of our ordinary shares may continue to be highly
    concentrated, and your interests may conflict with the interests
    of our significant shareholders.
    If we
    sell our ordinary shares in future financings, ordinary
    shareholders could experience immediate dilution and, as a
    result, our share price may go down.
    Provisions
    of Israeli law could delay or prevent an acquisition of our
    company, even if the acquisition would be beneficial to our
    shareholders, and could make it more difficult for shareholders
    to change management.
    
    no cumulative voting; and
    an advance notice requirement for shareholder proposals and
    nominations.  share-for-share
  We
    have never paid cash dividends on our share capital, and we do
    not anticipate paying any cash dividends in the foreseeable
    future.
   33




---



##### Table of Contents



We may
    incur increased costs as a result of changes in laws and
    regulations relating to corporate governance
    matters.
    ITEM 1B 
    UNRESOLVED
    STAFF COMMENTS    ITEM 2 
    PROPERTIES      ITEM 3 
    LEGAL
    PROCEEDINGS    ITEM 4 
    SUBMISSION
    OF MATTERS TO A VOTE OF SECURITY HOLDERS   PART II  ITEM 5 
    MARKET
    FOR REGISTRANTS ORDINARY SHARES, RELATED SHAREHOLDER
    MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES  Market
    Information
   34




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##### Table of Contents



2009

High

LowFirst quarter

$
9.66


$
6.90Second quarter

$
12.60


$
8.25Third quarter

$
16.71


$
11.88Fourth quarter

$
19.79


$
15.76   2008

High

LowFirst quarter

$
19.95


$
10.85Second quarter

$
17.47


$
12.00Third quarter

$
14.88


$
9.00Fourth quarter

$
10.29


$
6.02     Share
    Performance Graph
    
  2/7/2007


6/30/2007


12/31/2007


6/30/2008


12/31/2008


6/30/2009


12/31/2009Mellanox Technologies



100.00




121.88




107.18




79.65




46.24




70.76




111.12NASDAQ Composite Index



100.00




104.53




106.50




92.07




63.32




73.68




91.11Philadelphia Semiconductor Sector Index



100.00




106.38




86.61




78.15




45.04




55.86




76.39   *
    
    $100 invested on 2/07/2007 in shares or index-including
    reinvestment of dividends. 35




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##### Table of Contents



Dividends
    Securities
    Authorized for Issuance under Equity Compensation
    Plans
    Recent
    Sales of Unregistered Securities
    Use of
    Proceeds from Registered Securities
  Form S-1 No. 333-137659)
 36




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##### Table of Contents



ITEM 6 
    SELECTED
    FINANCIAL DATA    December 31,2009


2008


2007


2006


2005(In thousands, except per share data)Consolidated Statement of Operations Data:Total revenues

$
116,044


$
107,701


$
84,078


$
48,539


$
42,068Cost of revenues(1)


(28,669
)


(23,406
)


(21,390
)


(13,533
)


(15,203
)Gross profits


87,375



84,295



62,688



35,006



26,865Operating expenses:Research and development(1)


42,241



39,519



24,638



15,256



13,081Sales and marketing(1)


17,034



15,058



12,739



8,935



7,395General and administrative(1)


9,353



8,370



6,229



3,704



3,094Total operating expenses


68,628



62,947



43,606



27,895



23,570Income from operations


18,747



21,348



19,082



7,111



3,295Other income, net


518



3,823



5,976



438



326Income before taxes on income


19,265



25,171



25,058



7,549



3,621Benefit from (provision for) taxes on income


(6,379
)


(2,800
)


10,530



(301
)


(462
)Net income

$
12,886


$
22,371


$
35,588


$
7,248


$
3,159Net income per share attributable to ordinary
    shareholders  basic(2)(3)

$
0.40


$
0.71


$
1.28


$
0.04


$
0.00Net income per share attributable to ordinary
    shareholders  diluted(2)(3)

$
0.39


$
0.68


$
1.18


$
0.03


$
0.00Shares used to compute net income per share(2)(3)


32,099



31,436



27,827



7,709



7,520Shares used to compute diluted net income per share(2)(3)


33,400



32,843



30,201



9,683



9,091   37




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##### Table of Contents



December 31,2009


2008


2007


2006


2005(In thousands)Consolidated Balance Sheet Data:Cash and cash equivalents

$
43,640


$
110,153


$
100,650


$
20,570


$
12,350Short-term investments


166,357



70,855



52,231







Working capital


231,226



198,932



170,615



25,446



17,240Total assets


275,386



244,771



202,400



43,101



31,154Long-term liabilities


8,396



7,606



5,738



3,577



4,389Total liabilities


32,503



30,691



25,283



16,069



13,270Mandatorily redeemable convertible preferred shares














55,759



55,583Convertible preferred shares














36,338



36,338Total shareholders equity (deficit)

$
242,883


$
214,080


$
177,117


$
(65,065
)

$
(74,037
)     (1)
    
    The amounts included in 2009, 2008, 2007 and 2006 reflect the
    adoption of fair value recognition provisions related to
    share-based compensation.(2)
    
    Net income in 2006 and 2005 is allocated between the ordinary
    shareholders and other security holders based on their
    respective rights to receive dividends.(3)
    
    On February 1, 2007, we effected a 1.75-to-1 reverse split
    of our ordinary shares, mandatorily redeemable convertible
    preferred shares and convertible preferred shares (the
    Share Split) pursuant to the filing of our amended
    and restated articles of association. The number of shares and
    per share amounts have been adjusted to reflect the Share Split
    for all periods presented.  ITEM 7 
    MANAGEMENTS
    DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
    OPERATIONS  You should read the following discussion of our financial
    condition and results of operations in conjunction with the
    financial statements and the notes thereto included elsewhere in
    this report. The following discussion contains forward-looking
    statements that reflect our plans, estimates and beliefs. Our
    actual results could differ materially from those discussed in
    the forward-looking statements. Factors that could cause or
    contribute to these differences include those discussed below
    and elsewhere in this report, particularly in the Risk
    Factors.
  Overview
  General
     38




---



##### Table of Contents



Revenues.
  Cost of revenues and gross profit.
 39




---



##### Table of Contents



Operational
    expenses
  Research and development expenses.
        Sales and marketing expenses.
  General and administrative expenses.
 40




---



##### Table of Contents



Taxes on
    Income
    Critical
    Accounting Policies and Estimates
      Revenue
    recognition
  freight-on-board customer-by-customer
   41




---



##### Table of Contents



Allowance
    for doubtful accounts
  customer-by-customer
 42




---



##### Table of Contents



Fair
    value of financial instruments
    Short-term
    investments
  available-for-sale available-for-sale-portfolio Available-for-sale other-than-temporary. other-than-temporary.
  Inventory
    valuation
  first-in, first-in,
  Impairment
    of long-lived assets
        Warranty
    provision
  36-month
 43




---



##### Table of Contents



Share-based
    compensation
          Income
    taxes
       44




---



##### Table of Contents



Results
    of Operations
    Years Ended December 31,2009

2008

2007Total revenues


100
%


100
%


100
%Cost of revenues


(25
)


(22
)


(25
)Gross profit


75



78



75Operating expenses:Research and development


36



36



29Sales and marketing


15



14



15General and administrative


8



8



8Total operating expenses


59



58



52Income from operations


16



20



23Other income, net






4



7Benefit from (provision for) taxes on income


(5
)


(3
)


12Net income


11



21



42   Comparison
    of Year Ended December 31, 2009 to the Year Ended
    December 31, 2008
  Revenues.
    Year Ended December 31,2009


2008


% Change(In thousands)IC/Semiconductors

$
38,972


$
47,801



(19
)Adapter Cards


61,556



56,540



9Switch systems


9,996



1,111



800Accessories and other


5,520



2,249



145Total revenue

$
116,044


$
107,701



8   Year Ended December 31,2009


2008


% Change(In thousands)Quad data rate (QDR)

$
61,409


$
13,131



368Double data rate (DDR)


41,022



81,693



(50
)Single data rate (SDR) and other


13,613



12,877



6Total revenue

$
116,044


$
107,701



8    45




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##### Table of Contents



Gross Profit and Margin.
  Research and Development. true-up
  Sales and Marketing. true-up
  General and Administrative. true-up
  Share-based compensation expense.
  Year Ended December 31,2009


2008(In thousands)Cost of goods sold

$
305


$
228Research and development


6,562



4,936Sales and marketing


2,125



1,597General and administrative


1,744



1,175$
10,736


$
7,936    46




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##### Table of Contents



Other Income, net.
  other-than-temporary
  Benefit from (Provision for) Taxes on
    Income.
      Comparison
    of Year Ended December 31, 2008 to the Year Ended
    December 31, 2007
    Year Ended December 31,2008


2007


% Change(In thousands)IC/Semiconductors

$
47,801


$
36,050



33Adapter Cards


56,540



46,762



21Switch systems


1,111



5



22,120Accessories and other


2,249



1,261



78Total revenue

$
107,701


$
84,078



28   47




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##### Table of Contents



Year Ended December 31,2008


2007


% Change(In thousands)Quad data rate (QDR)

$
13,131


$
55



23,774Double data rate (DDR)


81,693



55,161



48Single data rate (SDR) and other


12,877



28,862



(55
)Total revenue

$
107,701


$
84,078



28   Revenues.
  Gross Profit and Margin.
  Research and Development.
  Sales and Marketing.
  General and Administrative.
 48




---



##### Table of Contents



Share-based compensation expense.
  Year Ended December 31,2008


2007(In thousands)Cost of goods sold

$
228


$
87Research and development


4,936



2,069Sales and marketing


1,597



864General and administrative


1,175



544$
7,936


$
3,564   Other Income, net.
  Benefit from (Provision for) Taxes on
    Income.
    Liquidity
    and Capital Resources
    Operating
    Activities
   49




---



##### Table of Contents



Investing
    Activities
        Financing
    Activities
     50




---



##### Table of Contents



Contractual
    Obligations
    Payments Due by PeriodLess ThanContractual Obligations:

Total


1 Year


1-3 Years


3-5 Years(In thousands)Commitments under capital lease

$
1,009


$
535


$
474


$
Non-cancelable operating lease commitments


11,597



4,529



6,755



313Service commitments


1,186



1,021



165



Purchase commitments


17,342



17,342







Total

$
31,134


$
23,427


$
7,394


$
313         Recent
    accounting pronouncements
    Off-Balance
    Sheet Arrangements
   51




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##### Table of Contents



Impact of
    Currency Exchange Rates
    ITEM 7A 
    QUANTITATIVE
    AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK  Interest
    rate fluctuation risk
    Foreign
    currency exchange risk
     52




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##### Table of Contents



Inflation
    related risk
    ITEM 8 
    FINANCIAL
    STATEMENTS AND SUPPLEMENTARY DATA    Summary
    Quarterly Data  Unaudited
  Q4


Q3


Q2


Q1


Q4


Q3


Q2


Q12009


2009


2009


2009


2008


2008


2008


2008(In thousands, except per share data)Total revenues

$
35,529


$
32,671


$
25,286


$
22,558


$
25,207


$
29,138


$
28,201


$
25,155Cost of revenues


(8,673
)


(8,092
)


(6,552
)


(5,352
)


(5,662
)


(6,103
)


(5,706
)


(5,935
)Gross profit


26,856



24,579



18,734



17,206



19,545



23,035



22,495



19,220Operating expenses:Research and development


12,555



10,944



10,120



8,622



11,180



10,067



10,015



8,257Sales and marketing


5,023



4,273



4,036



3,702



3,732



3,964



4,009



3,353General and administrative


2,553



2,633



1,965



2,202



2,067



2,408



2,064



1,831Total operating expenses


20,131



17,850



16,121



14,526



16,979



16,439



16,088



13,441Income from operations


6,725



6,729



2,613



2,680



2,566



6,596



6,407



5,779Other income (loss), net


(346
)


126



197



541



687



1,152



941



1,043Income before taxes on income


6,379



6,855



2,810



3,221



3,253



7,748



7,348



6,822Benefit from (provision for) taxes on income(1)


(2,126
)


(2,082
)


(1,066
)


(1,105
)


4,733



(2,590
)


(2,758
)


(2,185
)Net income

$
4,253


$
4,773


$
1,744


$
2,116


$
7,986


$
5,158


$
4,590


$
4,637Net income per share  basic


0.13



0.15



0.05



0.07



0.25



0.16



0.15



0.15Net income per share  diluted

$
0.12


$
0.14


$
0.05


$
0.06


$
0.24


$
0.16


$
0.14


$
0.14     (1)
    
    See Notes 1 and 11, The Company and Summary of
    Significant Accounting Policies and Income
    Taxes, respectively, of the Notes to Consolidated
    Financial Statements, included in Part IV, Item 15 of
    this report, for an explanation of the calculation of benefit
    from (provision for) taxes on income.  ITEM 9 
    CHANGES
    IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
    FINANCIAL DISCLOSURE    ITEM 9A 
    CONTROLS
    AND PROCEDURES  Disclosure
    Controls and Procedures
   53




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##### Table of Contents



Rule 13a-15(b),
  Changes
    in Internal Control Over Financial Reporting
    Managements
    Annual Report on Internal Control Over Financial
    Reporting
  Rule 13a-15(f)
      ITEM 9B 
    OTHER
    INFORMATION   PART III  ITEM 10 
    DIRECTORS,
    EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE    http://www.mellanox.com.
 54




---



##### Table of Contents



ITEM 11 
    EXECUTIVE
    COMPENSATION    ITEM 12 
    SECURITY
    OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
    RELATED SHAREHOLDER MATTERS    ITEM 13 
    CERTAIN
    RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR
    INDEPENDENCE    ITEM 14 
    PRINCIPAL
    ACCOUNTANT FEES AND SERVICES   PART IV  ITEM 15 
    EXHIBITS AND
    FINANCIAL STATEMENT SCHEDULES  Documents filed as part of this report.
  Financial Statements.
  PageReport of Independent Registered Public
    Accounting Firm


58Consolidated Balance Sheets


59Consolidated Statements of Operations


60Consolidated Statements of Convertible Preferred
    Shares and Shareholders Equity (Deficit)


61Consolidated Statements of Cash Flows


62Notes to Consolidated Financial Statements


632. Financial Statement Schedules. The following financial
    statement schedules of the Company are filed as part of this
    report:Schedule II  Consolidated
    Valuation and Qualifying Accounts


88     Exhibits.
  Exhibits.
 55




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##### Table of Contents



INDEX TO
    EXHIBITS
  Exhibit No.

Description of Exhibit3
.1(1)

Amended and Restated Articles of Association of Mellanox
    Technologies, Ltd. (as amended on May 18, 2008).4
.1(2)

Amended and Restated Investor Rights Agreement dated as of
    October 9, 2001, by and among Mellanox Technologies, Ltd.,
    purchasers of Series A Preferred Shares, Series B
    Preferred Shares and Series D Redeemable Preferred Shares
    who are signatories to such agreement and certain holders of
    Ordinary Shares who are signatories to such agreement, and for
    purposes of certain sections thereof, the holder of
    Series C Preferred Shares issued or issuable pursuant to
    the Series C Preferred Share Purchase Agreement dated
    November 5, 2000.4
.2(3)

Amendment to the Amended and Restated Investor Rights Agreement
    dated as of February 2, 2007, by and among Mellanox
    Technologies, Ltd., purchasers of Series A Preferred
    Shares, Series B Preferred Shares and Series D
    Redeemable Preferred Shares who are signatories to such
    agreement and certain holders of Ordinary Shares who are
    signatories to such agreement, and for purposes of certain
    sections thereof, the holder of Series C Preferred Shares
    issued or issuable pursuant to the Series C Preferred Share
    Purchase Agreement dated November 5, 2000.10
.1(4)*

Mellanox Technologies, Ltd. 1999 United States Equity Incentive
    Plan and forms of agreements relating thereto.10
.2(5)*

Mellanox Technologies, Ltd. 1999 Israeli Share Option Plan and
    forms of agreements relating thereto.10
.3(6)*

Mellanox Technologies, Ltd. 2003 Israeli Share Option Plan and
    forms of agreements relating thereto.10
.4(7)*

Amended Form of Indemnification Undertaking made by and between
    Mellanox Technologies, Ltd. and each of its directors and
    executive officers.10
.5(8)

Lease Contract, dated May 9, 2001, by and between the
    Company, as tenant, and Shaar Yokneam, Registered Limited
    Partnership, as landlord, as amended August 23, 2001 (as
    translated from Hebrew).10
.6(9)*

Mellanox Technologies, Ltd. Global Share Incentive Plan
    (2006) and forms of agreements and appendices relating
    thereto.10
.7(10)*

Mellanox Technologies, Ltd. Non-Employee Director Option Grant
    Policy.10
.8(11)*

Form of Mellanox Technologies, Ltd. Executive Severance Benefits
    Agreement for U.S. Executives.10
.9(12)*

Form of Mellanox Technologies, Ltd. Executive Severance Benefits
    Agreement for Israel Executives.10
.10(13)*

Mellanox Technologies, Ltd. Employee Share Purchase Plan.10
.11(14)

Lease Contract, dated May 9, 2001, by and between the
    Company, as tenant, and Shaar Yokneam, Registered Limited
    Partnership, as landlord, as amended May 15, 2007 (as
    translated from Hebrew).10
.14(15)

Lease Contract, dated May 9, 2001, by and between the
    Company, as tenant, and Shaar Yokneam, Registered Limited
    Partnership, as landlord, as amended September 4, 2007 (as
    translated from Hebrew).10
.15(16)

Office Space Lease dated September 30, 2008 by and between
    Oakmead Parkway Properties Partnership, a California general
    partnership, as landlord, and Mellanox Technologies, Inc., as
    tenant, as commenced on December 19, 2008.21
.1(17)

List of subsidiaries.23
.1

Consent of PricewaterhouseCoopers LLP, independent registered
    public accounting firm.24
.1

Power of Attorney (included on signature page to this annual
    report on
    Form 10-K).31
.1

Certification of Chief Executive Officer pursuant to
    Section 302 of the Sarbanes-Oxley Act of 2002.31
.2

Certification of Chief Financial Officer pursuant to
    Section 302 of the Sarbanes-Oxley Act of 2002.32
.1

Certification of Chief Executive Officer pursuant to
    Section 906 of the Sarbanes-Oxley Act of 2002.32
.2

Certification of Chief Financial Officer pursuant to
    Section 906 of the Sarbanes-Oxley Act of 2002.     (1)
    
    Incorporated by reference to Exhibit 3.1 to the
    Companys Annual Report on
    Form 10-K
    (SEC File
    No. 001-33299)
    filed on March 12, 2009. 56




---



##### Table of Contents



(2)
    
    Incorporated by reference to Exhibit 4.4 to the
    Companys Registration Statement on
    Form S-1
    (SEC File
    No. 333-137659)
    filed on September 28, 2006.(3)
    
    Incorporated by reference to Exhibit 4.3 to the
    Companys Annual Report on
    Form 10-K
    (SEC File
    No. 001-33299)
    filed on March 26, 2007.(4)
    
    Incorporated by reference to Exhibit 10.1 to the
    Companys Registration Statement on
    Form S-1
    (SEC File
    No. 333-137659)
    filed on September 28, 2006.(5)
    
    Incorporated by reference to Exhibit 10.2 to the
    Companys Registration Statement on
    Form S-1
    (SEC File
    No. 333-137659)
    filed on September 28, 2006.(6)
    
    Incorporated by reference to Exhibit 10.3 to the
    Companys Registration Statement on
    Form S-1
    (SEC File
    No. 333-137659)
    filed on September 28, 2006.(7)
    
    Incorporated by reference to Exhibit 10.1 to the
    Companys Quarterly Report on
    Form 10-Q
    (SEC File
    No. 001-33299)
    filed on August 6, 2009.(8)
    
    Incorporated by reference to Exhibit 10.9 to Amendment
    No. 1 to the Companys Registration Statement on
    Form S-1
    (SEC File
    No. 333-137659)
    filed on November 14, 2006.(9)
    
    Incorporated by reference to Exhibit 10.10 to Amendment
    No. 1 to the Companys Registration Statement on
    Form S-1
    (SEC File
    No. 333-137659)
    filed on November 14, 2006.(10)
    
    Incorporated by reference to Exhibit 10.11 to Amendment
    No. 1 to the Companys Registration Statement on
    Form S-1
    (SEC File
    No. 333-137659)
    filed on November 14, 2006.(11)
    
    Incorporated by reference to Exhibit 10.12 to Amendment
    No. 1 to the Companys Registration Statement on
    Form S-1
    (SEC File
    No. 333-137659)
    filed on November 14, 2006.(12)
    
    Incorporated by reference to Exhibit 10.13 to Amendment
    No. 1 to the Companys Registration Statement on
    Form S-1
    (SEC File
    No. 333-137659)
    filed on November 14, 2006.(13)
    
    Incorporated by reference to Exhibit 10.14 to Amendment
    No. 2 to the Companys Registration Statement on
    Form S-1
    (SEC File
    No. 333-137659)
    filed on December 7, 2006.(14)
    
    Incorporated by reference to Exhibit 10.13 to the
    Companys Annual Report on
    Form 10-K
    (SEC File
    No. 001-33299)
    filed on March 24, 2008.(15)
    
    Incorporated by reference to Exhibit 10.14 to the
    Companys Annual Report on
    Form 10-K
    (SEC File
    No. 001-33299)
    filed on March 24, 2008.(16)
    
    Incorporated by reference to Exhibit 10.1 to the
    Companys Quarterly Report on
    Form 10-Q
    (SEC File
    No. 001-33299)
    filed on November 7, 2008.(17)
    
    Incorporated by reference to Exhibit 21.1 to the
    Companys Registration Statement on
    Form S-1
    (SEC File
    No. 333-137659)
    filed on September 28, 2006.*
    
    Indicates management contract or compensatory plan, contract or
    arrangement. 57




---



##### Table of Contents



REPORT OF
    INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM          
  
 58




---



##### Table of Contents



MELLANOX
    TECHNOLOGIES, LTD.
    CONSOLIDATED BALANCE SHEETS  December 31,2009


2008(In thousands, except per share data)ASSETSCurrent assets:Cash and cash equivalents

$
43,640


$
110,153Short-term investments


166,357



70,855Restricted cash


3,160



2,149Accounts receivable, net


20,418



23,399Inventories


9,328



6,740Deferred taxes


8,605



5,753Prepaid expenses and other


3,825



2,968Total current assets


255,333



222,017Property and equipment, net


9,734



10,386Severance assets


4,629



3,407Intangible assets, net


428



465Deferred taxes


812



7,302Other long-term assets


4,450



1,194Total assets

$
275,386


$
244,771LIABILITIES SHAREHOLDERS EQUITYCurrent liabilities:Accounts payable


8,775



8,265Other accrued liabilities


14,804



14,103Capital lease obligations, current


528



717Total current liabilities


24,107



23,085Accrued severance


5,778



5,042Capital lease obligations


474



874Other long-term obligations


2,144



1,690Total liabilities


32,503



30,691Commitments and contingencies (Note 7)Shareholders equityOrdinary shares: NIS 0.0175 par value, 137,143 shares
    authorized, 32,682 and 31,775 shares issued and outstanding
    at December 31, 2009 and 2008, respectively


135



131Additional paid-in capital


240,807



225,180Accumulated other comprehensive income


367



81Retained earnings (accumulated deficit)


1,574



(11,312
)Total shareholders equity


242,883



214,080Total liabilities and shareholders equity

$
275,386


$
244,771    59




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##### Table of Contents



MELLANOX
    TECHNOLOGIES, LTD.



CONSOLIDATED
    STATEMENTS OF OPERATIONS  Year Ended December 31,2009


2008


2007(In thousands, except per share data)Total revenues

$
116,044


$
107,701


$
84,078Cost of revenues


(28,669
)


(23,406
)


(21,390
)Gross profit


87,375



84,295



62,688Operating expenses:Research and development


42,241



39,519



24,638Sales and marketing


17,034



15,058



12,739General and administrative


9,353



8,370



6,229Total operating expenses


68,628



62,947



43,606Income from operations


18,747



21,348



19,082Other income, net


518



3,823



5,976Income before taxes on income


19,265



25,171



25,058Benefit from (provision for) taxes on income


(6,379
)


(2,800
)


10,530Net income

$
12,886


$
22,371


$
35,588Net income per share  basic

$
0.40


$
0.71


$
1.28Net income per share  diluted

$
0.39


$
0.68


$
1.18Shares used in computing income per share:Basic


32,099



31,436



27,827Diluted


33,400



32,843



30,201    60




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##### Table of Contents





MELLANOX
    TECHNOLOGIES, LTD.



CONSOLIDATED
    STATEMENTS OF CONVERTIBLE PREFERRED

SHARES AND
    SHAREHOLDERS EQUITY (DEFICIT)  MandatorilyRedeemable

















Accumulated


Retained


TotalConvertible


Convertible








Additional


Other


Earnings


ShareholdersPreferred Shares


Preferred Shares


Ordinary Shares


Paid-in


Comprehensive


(Accumulated


EquityShares


Amount


Shares


Amount


Shares


Amount


Capital


Income (Loss)


Deficit)


(Deficit)(In thousands, except share data)Balance at December 31, 2006


4,838,482


$
55,759



6,799,192


$
36,338



7,861,742


$
32


$
4,174


$



$
(69,271
)

$
(65,065
)Net income


































35,588



35,588Unrealized gains on
    available-for-sale
    securities






























54







54Comprehensive net income






































35,642Conversion of preferred shares into ordinary shares


(4,838,482
)


(55,759
)


(6,799,192
)


(36,338
)


15,035,712



62



92,035











92,097Issuance of ordinary shares in connection with initial public
    offering, net


















6,900,000



29



105,924











105,953Share-based compensation


























3,564











3,564Exercise of share options


















1,180,522



5



2,594











2,599Issuance of shares pursuant to employee share purchase plan


















62,133







851











851Income tax benefit from share options exercised


























1,471











1,471Vesting of ordinary shares subject to repurchase


























5











5Balance at December 31, 2007





$







$




31,040,109


$
128


$
210,618


$
54


$
(33,683
)

$
177,117Net income


































22,371



22,371Unrealized gains on
    available-for-sale
    securities






























287







287Unrealized losses on derivative contracts






























(260
)






(260
)Comprehensive net income






































22,398Share-based compensation


























7,936











7,936Exercise of share options


















574,159



2



1,899











1,901Issuance of shares pursuant to employee share purchase plan


















160,352



1



1,832











1,833Income tax benefit from share options exercised


























1,021











1,021Income tax benefit from initial public offering expense


























1,874











1,874Balance at December 31, 2008





$







$




31,774,620


$
131


$
225,180


$
81


$
(11,312
)

$
214,080Net income


































12,886



12,886Unrealized losses on
    available-for-sale
    securities






























(157
)






(157
)Unrealized gains on derivative contracts






























443







443Comprehensive net income






































13,172Share-based compensation


























10,736











10,736Exercise of share options


















700,624



3



2,223











2,227Issuance of shares pursuant to employee share purchase plan


















206,529



1



1,437











1,437Income tax benefit from share options exercised


























1,231











1,231Balance at December 31, 2009





$







$




32,681,773


$
135


$
240,807


$
367


$
1,574


$
242,883    61




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##### Table of Contents





MELLANOX
    TECHNOLOGIES, LTD.



CONSOLIDATED
    STATEMENTS OF CASH FLOWS  Year Ended December 31,2009


2008


2007(In thousands)Cash flows from operating activities:Net income

$
12,886


$
22,371


$
35,588Adjustments to reconcile net income to net cash provided by
    operating activities:Depreciation and amortization


4,071



3,619



2,132Deferred income taxes


3,638



1,259



(12,143
)Share-based compensation expense


10,736



7,936



3,564Gain on sale of investments


(827
)


(2,303
)


(2,328
)Impairment of investments


500



500



Changes in assets and liabilities:Accounts receivable, net


2,981



(6,046
)


(7,212
)Inventories


(3,014
)


(1,344
)


(1,317
)Prepaid expenses and other assets


(982
)


(1,263
)


644Accounts payable


510



1,562



2,213Accrued liabilities and other liabilities


2,289



4,721



4,798Net cash provided by operating activities


32,788



31,012



25,939Cash flows from investing activities:Purchase of severance-related insurance policies


(857
)


(727
)


(868
)Purchase of short-term investment


(236,680
)


(204,252
)


(151,465
)Proceeds from sales of short-term investments


121,768



143,168



60,066Proceeds from maturities of short-term investments


20,080



45,050



41,550Purchase of property and equipment


(3,662
)


(4,495
)


(3,960
)Return of (increase in) restricted cash deposit


(880
)


(1,435
)


(3
)Purchase of equity investment in a private company


(3,500
)


(1,500
)


Net cash used in investing activities


(103,731
)


(24,191
)


(54,680
)Cash flows from financing activities:Proceeds from initial public offering, net










105,953Principal payments on capital lease obligations


(465
)


(2,073
)


(2,053
)Proceeds from exercise of share awards and warrants


3,664



3,734



3,450Excess tax benefit from share-based compensation


1,231



1,021



1,471Net cash provided by financing activities


4,430



2,682



108,821Net increase (decrease) in cash and cash equivalents


(66,513
)


9,503



80,080Cash and cash equivalents at beginning of period


110,153



100,650



20,570Cash and cash equivalents at end of period

$
43,640


$
110,153


$
100,650Supplemental disclosures of cash flow informationInterest paid

$
4


$
1


$
92Income taxes paid

$
876


$
94


$
275Supplemental disclosure of noncash investing and financing
    activitiesSoftware acquired under capital leases

$



$
(259
)

$
(3,966
)Leasehold improvements acquired under operating lease

$



$
(637
)

$
Acquisition of intangible assets under capital leases

$



$
(235
)

$
(295
)Inventory capitalization

$
426


$



$
Preferred shares converted into ordinary shares

$



$



$
92,097    62




---



##### Table of Contents



MELLANOX
    TECHNOLOGIES, LTD.
 NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS  NOTE 1 
    THE
    COMPANY AND SUMMARY OF SIGNIFICANT ACCOUNTING
    POLICIES:  Company
    Principles
    of presentation
    Risks
    and uncertainties
      Use of
    estimates
    Cash
    and cash equivalents
   63




---



##### Table of Contents



Restricted
    cash and deposits
      Fair
    value of financial instruments
    Derivatives
    Short-term
    investments
  available-for-sale available-for-sale
  Concentration
    of credit risk
   64




---



##### Table of Contents



Year Ended December 31,2009

2008

2007Hewlett-Packard


15
%


19
%


19
%IBM


11
%



*



*Supermicro Computer Inc


10
%



*



*Sun Microsystems



*


17
%



*QLogic



*


11
%


11
%Voltaire



*



*


15
%Cisco



*



*


11
%     *
    
    Less than 10%    Inventory
  work-in-process first-in,
  Property
    and equipment
    Intangible
    assets
    Investments
    Impairment
    of long-lived assets
   65




---



##### Table of Contents



Revenue
    recognition
  freight-on-board customer-by-customer
           66




---



##### Table of Contents



Product
    warranty
  and/or
  December 31,2009


2008(In thousands)Balance, beginning of the period

$
997


$
704New warranties issued during the period


687



1,013Reversal of warranty reserves


(426
)


(597
)Settlements during the period


(356
)


(123
)Balance, end of the period

$
902


$
997   Research
    and development
    Advertising
    Share-based
    compensation
   67




---



##### Table of Contents



Comprehensive
    income
  available-for-sale
  December 31,2009


2008Accumulated net unrealized gain (loss) on:Available-for-sale
    securities

$
184


$
341Derivative instruments


183



(260
)Total accumulated other comprehensive income

$
367


$
81   available-for-sale
  Foreign
    currency translation
  end-of-period
  Net
    income per share
   68




---



##### Table of Contents



December 31,2009


2008


2007(In thousands, except per share data)Net income

$
12,886


$
22,371


$
35,588Basic and diluted shares:Weighted average ordinary shares outstanding used to compute
    basic net income per share


32,099



31,436



27,827Dilutive effect on employee stock option plan


1,301



1,407



2,374Shares used to compute diluted net income per share


33,400



32,843



30,201Net income per share  basic

$
0.40


$
0.71


$
1.28Net income per share  diluted

$
0.39


$
0.68


$
1.18     December 31,2009

2008

2007(In thousands)Ordinary share options


2,882



2,723



5972,882



2,723



597   Segment
    reporting
    Income
    taxes
       69




---



##### Table of Contents



Recent
    accounting pronouncements
   70




---



##### Table of Contents



NOTE 2 
    BALANCE
    SHEET COMPONENTS:  December 31,2009


2008(In thousands)Cash and cash equivalents:Cash

$
14,359


$
33,357Money market funds


29,281



71,497U.S. Treasury and agency securities






5,299$
43,640


$
110,153Short-term investments:Commercial paper

$



$
5,030U.S. Treasury and agency securities


166,357



62,951Corporate notes






8,173Total investments in marketable securities


166,357



76,154Less amounts classified as cash equivalents






5,299$
166,357


$
70,855Accounts receivable, net:Accounts receivable

$
20,708


$
23,676Less: allowance for doubtful accounts


(290
)


(277
)$
20,418


$
23,399Inventories:Raw materials

$
941


$
940Work-in-process


1,497



1,189Finished goods


6,890



4,611$
9,328


$
6,740Prepaid expense and other:Prepaid expenses

$
1,648


$
1,433Federal taxes recoverable


949



1,390Other receivable


949



Forward contracts


183



Other


96



145$
3,825


$
2,968Property and equipment, net:Computer equipment and software

$
28,175


$
27,321Furniture and fixtures


1,809



1,689Leasehold improvements


2,184



2,00532,168



31,015Less: Accumulated depreciation and amortization


(22,434
)


(20,629
)$
9,734


$
10,386     71




---



##### Table of Contents



December 31,2009


2008(In thousands)Other long-term assets:Equity investments in private companies

$
4,000


$
1,000Prepaid expenses


387



88Long term deposits


63



106$
4,450


$
1,194Other accrued liabilities:Payroll and related expenses

$
8,170


$
6,568Professional services


3,169



2,407Warranty


902



997Income tax payable


683



398Sales commissions


548



517Advance payment from a customer






1,925Forward contracts






260Other


1,332



1,031$
14,804


$
14,103Other long-term obligations:Federal income tax payable

$
1,510


$
1,143Other


634



547$
2,144


$
1,690   NOTE 3 
    INVESTMENTS
    AND FAIR VALUE MEASUREMENTS:  Fair
    value hierarchy:
         72




---



##### Table of Contents



Level 1


Level 2


Level 3


Total(In thousands)Money market funds

$
29,281


$



$



$
29,281U.S. Treasury and agency securities






166,357







166,357Forward contracts






183







183Total financial assets

$
29,281


$
166,540


$



$
195,821     Level 1


Level 2


Level 3


Total(In thousands)Money market funds

$
71,497


$



$



$
71,497Commercial papers






5,030







5,030Corporate notes






8,173







8,173U.S. Treasury and agency securities






62,951







62,951Total financial assets

$
71,497


$
76,154


$



$
147,651Derivative liabilities

$



$
260


$



$
260Total financial liabilities

$



$
260


$



$
260   Short-term
    investments:
  available-for-sale
  December 31, 2009GrossAmortized


Unrealized


EstimatedCost


Gains


Fair Value(In thousands)Money market funds

$
29,281


$



$
29,281U.S. Treasury and agency securities


166,173



184



166,357Total investments in marketable securities


195,454



184



195,638Less amounts classified as cash equivalents


(29,281
)






(29,281
)$
166,173


$
184


$
166,357   December 31, 2008GrossAmortized


Unrealized


EstimatedCost


Gains (Losses)


Fair Value(In thousands)Money market funds

$
71,497


$



$
71,497Commercial paper


5,014



16



5,030U.S. Treasury and agency securities


62,597



354



62,951Corporate bonds


8,202



(29
)


8,173Total investments in marketable securities


147,310



341



147,651Less amounts classified as cash equivalents


(76,796
)






(76,796
)$
70,514


$
341


$
70,855  73




---



##### Table of Contents



Investments
    in privately-held companies:
      NOTE 4 
    INTANGIBLE
    ASSETS:  December 31,2009


2008(In thousands)Licensed technology

$
866


$
724Less: Accumulated amortization


(438
)


(259
)$
428


$
465     NOTE 5 
    DERIVATIVES
    AND HEDGING ACTIVITIES:     74




---



##### Table of Contents



Fair
    value of Derivative Contracts
    Derivative Assets Reported in


Derivative Liabilities Reported inOther Current Assets


Other Current LiabilitiesDecember 31,


December 31,2009


2008


2009


2008(In thousands)Foreign exchange contracts designated as cash flow hedges

$
183


$



$



$
260Total derivatives designated as hedging instruments

$
183


$



$



$
260   Effect
    of Designated Derivative Contracts on Accumulated Other
    Comprehensive Income
    December 31, 2008

$
(260
)Amount of gain recognized in OCI (effective portion)


623Amount of loss reclassified from OCI to income (effective
    portion)


(546
)December 31, 2009

$
183     Effect
    of Derivative Contracts on the Condensed Consolidated Statement
    of Operations.
    Year Ended December 31,2009

2008

2007(In thousands)Loss on foreign exchange contracts designated as cash flow hedges

$
546


$
215


$
   NOTE 6 
    EMPLOYEE
    BENEFIT PLANS:   75




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##### Table of Contents



December 31,2009


2008(In thousands)Accrued severance liability

$
5,778


$
5,042Severance assets


4,629



3,407Unfunded portion

$
1,149


$
1,635   NOTE 7 
    COMMITMENTS
    AND CONTINGENCIES:  Leases
      Capital


OperatingYear Ended December 31,

Leases


Leases(In thousands)2010

$
535


$
4,5292011


316



3,7722012


158



2,2382013






7452014






313Total minimum lease payments and sublease income


1,009


$
11,597Less: Amount representing interest


(7
)Present value of capital lease obligations


1,002Less: Current portion


(528
)Long-term portion of capital lease obligations

$
474  76




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##### Table of Contents



Service
    commitments
    Purchase
    commitments
    Royalty
    obligations
            Contingencies
   77




---



##### Table of Contents



NOTE 8 
    MANDATORILY
    REDEEMABLE CONVERTIBLE PREFERRED SHARES AND CONVERTIBLE
    PREFERRED SHARES:      ProceedsNet ofShares


Liquidation


IssuanceAuthorized


Outstanding


Amount


CostsSeries A-1
    Convertible Preferred Shares


2,857,142



2,742,846


$
4,800,000


$
4,800,000Series A-2
    Convertible Preferred Shares


1,714,285



1,600,000



2,800,000



2,800,000Series B-1
    Convertible Preferred Shares


1,714,285



1,710,674



19,788,344



19,788,344Series B-2
    Convertible Preferred Shares


571,428



514,257



5,948,683



5,948,683Series C Convertible Preferred Shares(1)


231,428



231,415



3,000,894



3,000,894Series D Mandatorily Redeemable Convertible Preferred Shares


6,483,714



4,838,482



83,954,112



54,983,00013,572,282



11,637,674


$
120,292,033


$
91,320,921     (1)
    
    The Series C convertible preferred shares were issued in
    exchange for software.    Voting
  Series A-1 (Series A-1), Series B-1 (Series B-1), Series A-1, Series B-1, Series A-2 (Series A-2 Series A-1, Series B-2 (Series B-2 Series B-1, Series A-1, Series B-1, Series A-1, Series B-1
 78




---



##### Table of Contents



Dividends
    Liquidation
    Conversion
  Series A-2 Series B-2 shares Series A-1 Series B-1 shares
  Anti-dilution
    adjustments
   79




---



##### Table of Contents



Redemption
  Series A-1, Series A-2, Series B-1, Series B-2 Series A-1, Series A-2, Series B-1, Series B-2 Classification and Measurement of
    Redeemable Securities. Series A-1, Series A-2, Series B-1, Series B-2
    NOTE 9 
    ORDINARY
    SHARES:    NOTE 10 
    SHARE
    OPTION PLANS:     80




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##### Table of Contents



Options OutstandingWeightedShares


Number


AverageAvailable


of


Exercisefor Grant


Shares


PriceOutstanding at December 31, 2006


125,473



5,166,815


$
4.19Options increased to plan


3,428,571







Options granted


(2,253,878
)


2,253,878


$
18.32Options exercised






(1,180,522
)

$
2.20Options canceled


210,645



(210,645
)

$
9.24Outstanding at December 31, 2007


1,510,811



6,029,526


$
9.68Options increased to plan


680,513







Options granted


(1,926,438
)


1,926,438


$
10.30Options exercised






(574,159
)

$
3.31Options canceled


453,186



(453,186
)

$
12.90Outstanding at December 31, 2008


718,072



6,928,619


$
10.20Options increased to plan


685,714







Options granted


(2,778,031
)


2,778,031


$
10.72Options exercised






(700,624
)

$
3.18Options canceled


2,602,347



(2,602,347
)

$
17.05Outstanding at December 31, 2009


1,228,102



6,403,679


$
8.38     Options Outstanding atDecember 31, 2009


Options Exercisable atWeighted





December 31, 2009Average


Weighted





WeightedRemaining


Average





AverageNumber


Contractual


Exercise


Number


ExerciseRange of Exercise Price

Outstanding


Life (Years)


Price


Outstanding


Price$0.18 - $1.47


724,471



1.58


$
1.33



724,471


$
1.33$2.63 - $6.65


862,921



5.16


$
4.83



862,358


$
4.83$7.27 - $7.44


70,269



8.14


$
7.31



30,613


$
7.37$8.23 - $8.23


927,384



8.97


$
8.23



232,165


$
8.23$8.45 - $9.10


456,338



8.73


$
8.89



92,172


$
8.90$9.19 - $9.19


766,292



6.80


$
9.19



637,371


$
9.19$10.23 - $10.23


1,899,437



9.28


$
10.23







$10.50 - $18.22


638,446



9.30


$
13.68



72,601


$
15.37$18.43 - $18.43


45,712



7.36


$
18.43



39,364


$
18.43$20.02 - $20.02


12,389



6.53


$
20.02



7,844


$
20.02$0.18 - $20.02


6,403,679



7.44


$
8.38



2,698,959


$
5.91    81




---



##### Table of Contents



Share
    option exchange program
    Shares Subject toShares Subject to Option

Replacement OptionExercise Price Range

Surrendered

Granted$13.66 to $16.99


1.10



1$17.00 and above


1.21



1        82




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##### Table of Contents



Share-based
    compensation
            Employee Stock Options

Employee Stock Purchase PlanYear Ended December 31,

Year Ended December 31,2009

2008

2007

2009

2008

2007Dividend yield, %






















Expected volatility, %


62.9



62.6



62.1



56.1



54.9



58.3Risk free interest rate, %


2.61



2.42



4.12



0.10



1.76



4.71Expected life, years


6.20



6.25



6.25



0.53



0.50



0.53Estimated forfeiture rate, %


8.66



8.40



9.25











     Year Ended December 31,2009


2008


2007(In thousands)Share-based compensation expense by caption:Cost of goods sold

$
305


$
228


$
87Research and development


6,562



4,936



2,069Sales and marketing


2,125



1,597



864General and administrative


1,744



1,175



544Total share-based compensation expense

$
10,736


$
7,936


$
3,564Share-based compensation expense by type of award:Share options

$
10,233


$
7,242


$
3,000ESPP


503



694



564Total share-based compensation expense

$
10,736


$
7,936


$
3,564  83




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##### Table of Contents



NOTE 11 
    INCOME
    TAXES:    Year Ended December 31,2009


2008


2007(In thousands)United States

$
976


$
1,194


$
1,416Foreign


18,289



23,977



23,642Income before income taxes

$
19,265


$
25,171


$
25,058     Year Ended December 31,2009


2008


2007(In thousands)Current:U.S. federal

$
1,241


$
1,448


$
662State and local


214



289



232Foreign


152



(196
)


7191,607



1,541



1,613Deferred:U.S. federal

$
(279
)

$
(497
)

$
(54
)State and local


15



(128
)


2Foreign


5,036



1,884



(12,091
)4,772



1,259



(12,143
)Provision for (benefit from) taxes on income

$
6,379


$
2,800


$
(10,530
)     December 31,2009


2008(In thousands)Deferred tax assets:Net operating loss and credit carryforwards

$
8,819


$
8,481Research and development costs


2,548



6,569Reserves and accruals


1,283



1,221Depreciation and amortization


(47
)


20Gross deferred tax assets


12,603



16,291Valuation allowance


(3,186
)


(3,236
)Deferred tax assets, net


9,417



13,055Deferred tax liabilities






Net deferred tax assets

$
9,417


$
13,055    84




---



##### Table of Contents



Year Ended December 31,2009

2008

2007Tax at statutory rate


34.0
%


34.0
%


34.0
%State, net of federal benefit


1.2



0.5



0.8Meals and entertainment


0.1



0.1



0.4Tax at rates other than the statutory rate


(5.3
)


(33.2
)


(30.1
)Share-based compensation


2.8



2.0



0.8Changes in valuation allowance






5.0



(49.6
)Other, net


0.3



2.7



1.4Provision for (benefit from) taxes


33.1
%


11.1
%


(42.3
)%   employee-by-employee grant-by-grant
  10-25%,
  and/or
   85




---



##### Table of Contents



Year Ended December 31,2009


2008(In thousands)Gross unrecognized tax benefits, beginning of the period

$
1,714


$
1,139Increases in tax positions for prior years






Decreases in tax positions for prior years


(665
)


(284
)Increases in tax positions for current year


393



859Decreases in tax positions for current year






Gross unrecognized tax benefits, end of the period

$
1,442


$
1,714         NOTE 12 
    SEGMENT
    INFORMATION:      Year Ended December 31,2009


2008


2007(In thousands)North America

$
41,843


$
56,432


$
44,779Israel


8,158



11,994



15,751Europe


20,457



15,689



11,339Asia


45,586



23,586



12,209Total revenue

$
116,044


$
107,701


$
84,078    86




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##### Table of Contents



Year Ended December 31,2009


2008


2007(In thousands)IC/Semiconductors

$
38,972


$
47,801


$
36,050Adapter Cards


61,556



56,540



46,762Switch systems


9,996



1,111



5Accessories and other


5,520



2,249



1,261Total revenue

$
116,044


$
107,701


$
84,078     Year Ended December 31,2009


2008(In thousands)Israel

$
8,291


$
8,774United States


1,443



1,612Total property and equipment, net

$
9,734


$
10,386     NOTE 13 
    OTHER
    INCOME, NET:    Year Ended December 31,2009


2008


2007(In thousands)Interest income

$
1,289


$
4,187


$
6,452Foreign exchange gains (losses)


(36
)


84



(283
)Loss on equity investment in a private company


(500
)


(500
)


Other


(235
)


52



(193
)Total other income, net

$
518


$
3,823


$
5,976  87




---



##### Table of Contents



SCHEDULE II 
    CONSOLIDATED VALUATION AND QUALIFYING ACCOUNTS  MELLANOX
    TECHNOLOGIES, LTD.
  ChargedBalance at


(Credited)Beginning of


to Costs





Balance atDescription:

Year


and Expenses


Deductions(1)


End of Year(In thousands)Year ended December 31, 2009:Deducted from asset accounts:Allowance for doubtful accounts

$
277


$
59


$
(46
)

$
290Allowance for sales returns and adjustments


15











15Total

$
292


$
59


$
(46
)

$
305Year ended December 31, 2008:Deducted from asset accounts:Allowance for doubtful accounts

$
186


$
125


$
(34
)

$
277Allowance for sales returns and adjustments


109



(94
)






15Total

$
295


$
31


$
(34
)

$
292Year ended December 31, 2007:Deducted from asset accounts:Allowance for doubtful accounts

$
107


$
79


$



$
186Allowance for sales returns and adjustments


9



100







109Total

$
116


$
179


$



$
295     (1)
    
    Deductions for Allowance for doubtful accounts are for accounts
    receivable written-off. 88




---



##### Table of Contents



SIGNATURES    MELLANOX TECHNOLOGIES, LTD.
  By:
    /s/  Eyal
    Waldman   President and Chief Executive Officer
  Form 10-K,
    Signature

Title

Date/s/  Eyal
    WaldmanEyal
    Waldman

Chief Executive Officer and Director (principal executive
    officer)

March 4, 2010/s/  Michael
    GrayMichael
    Gray

Chief Financial Officer
    (principal financial and accounting officer) 
    and Authorized Representative in the United States

March 4, 2010/s/  Glenda
    DorchakGlenda
    Dorchak

Director

March 4, 2010/s/  Irwin
    FedermanIrwin
    Federman

Director

March 4, 2010/s/  Amal
    JohnsonAmal
    Johnson

Director

March 4, 2010/s/  Thomas
    J. RiordanThomas
    J. Riordan

Director

March 4, 2010/s/  C.
    Thomas WeatherfordC.
    Thomas Weatherford

Director

March 4, 2010  89




---



##### Table of Contents



INDEX TO
    EXHIBITS
  Exhibit No.

Description of Exhibit3
.1(1)

Amended and Restated Articles of Association of Mellanox
    Technologies, Ltd. (as amended on May 18, 2008).4
.1(2)

Amended and Restated Investor Rights Agreement dated as of
    October 9, 2001, by and among Mellanox Technologies, Ltd.,
    purchasers of Series A Preferred Shares, Series B
    Preferred Shares and Series D Redeemable Preferred Shares
    who are signatories to such agreement and certain holders of
    Ordinary Shares who are signatories to such agreement, and for
    purposes of certain sections thereof, the holder of
    Series C Preferred Shares issued or issuable pursuant to
    the Series C Preferred Share Purchase Agreement dated
    November 5, 2000.4
.2(3)

Amendment to the Amended and Restated Investor Rights Agreement
    dated as of February 2, 2007, by and among Mellanox
    Technologies, Ltd., purchasers of Series A Preferred
    Shares, Series B Preferred Shares and Series D
    Redeemable Preferred Shares who are signatories to such
    agreement and certain holders of Ordinary Shares who are
    signatories to such agreement, and for purposes of certain
    sections thereof, the holder of Series C Preferred Shares
    issued or issuable pursuant to the Series C Preferred Share
    Purchase Agreement dated November 5, 2000.10
.1(4)*

Mellanox Technologies, Ltd. 1999 United States Equity Incentive
    Plan and forms of agreements relating thereto.10
.2(5)*

Mellanox Technologies, Ltd. 1999 Israeli Share Option Plan and
    forms of agreements relating thereto.10
.3(6)*

Mellanox Technologies, Ltd. 2003 Israeli Share Option Plan and
    forms of agreements relating thereto.10
.4(7)*

Amended Form of Indemnification Undertaking made by and between
    Mellanox Technologies, Ltd. and each of its directors and
    executive officers.10
.5(8)

Lease Contract, dated May 9, 2001, by and between the
    Company, as tenant, and Shaar Yokneam, Registered Limited
    Partnership, as landlord, as amended August 23, 2001 (as
    translated from Hebrew).10
.6(9)*

Mellanox Technologies, Ltd. Global Share Incentive Plan
    (2006) and forms of agreements and appendices relating
    thereto.10
.7(10)*

Mellanox Technologies, Ltd. Non-Employee Director Option Grant
    Policy.10
.8(11)*

Form of Mellanox Technologies, Ltd. Executive Severance Benefits
    Agreement for U.S. Executives.10
.9(12)*

Form of Mellanox Technologies, Ltd. Executive Severance Benefits
    Agreement for Israel Executives.10
.10(13)*

Mellanox Technologies, Ltd. Employee Share Purchase Plan.10
.11(14)

Lease Contract, dated May 9, 2001, by and between the
    Company, as tenant, and Shaar Yokneam, Registered Limited
    Partnership, as landlord, as amended May 15, 2007 (as
    translated from Hebrew).10
.14(15)

Lease Contract, dated May 9, 2001, by and between the
    Company, as tenant, and Shaar Yokneam, Registered Limited
    Partnership, as landlord, as amended September 4, 2007 (as
    translated from Hebrew).10
.15(16)

Office Space Lease dated September 30, 2008 by and between
    Oakmead Parkway Properties Partnership, a California general
    partnership, as landlord, and Mellanox Technologies, Inc., as
    tenant, as commenced on December 19, 2008.21
.1(17)

List of subsidiaries.23
.1

Consent of PricewaterhouseCoopers LLP, independent registered
    public accounting firm.24
.1

Power of Attorney (included on signature page to this annual
    report on
    Form 10-K).31
.1

Certification of Chief Executive Officer pursuant to
    Section 302 of the Sarbanes-Oxley Act of 2002.31
.2

Certification of Chief Financial Officer pursuant to
    Section 302 of the Sarbanes-Oxley Act of 2002.32
.1

Certification of Chief Executive Officer pursuant to
    Section 906 of the Sarbanes-Oxley Act of 2002.32
.2

Certification of Chief Financial Officer pursuant to
    Section 906 of the Sarbanes-Oxley Act of 2002.     (1)
    
    Incorporated by reference to Exhibit 3.1 to the
    Companys Annual Report on
    Form 10-K
    (SEC File
    No. 001-33299)
    filed on March 12, 2009. 90




---



##### Table of Contents



(2)
    
    Incorporated by reference to Exhibit 4.4 to the
    Companys Registration Statement on
    Form S-1
    (SEC File
    No. 333-137659)
    filed on September 28, 2006.(3)
    
    Incorporated by reference to Exhibit 4.3 to the
    Companys Annual Report on
    Form 10-K
    (SEC File
    No. 001-33299)
    filed on March 26, 2007.(4)
    
    Incorporated by reference to Exhibit 10.1 to the
    Companys Registration Statement on
    Form S-1
    (SEC File
    No. 333-137659)
    filed on September 28, 2006.(5)
    
    Incorporated by reference to Exhibit 10.2 to the
    Companys Registration Statement on
    Form S-1
    (SEC File
    No. 333-137659)
    filed on September 28, 2006.(6)
    
    Incorporated by reference to Exhibit 10.3 to the
    Companys Registration Statement on
    Form S-1
    (SEC File
    No. 333-137659)
    filed on September 28, 2006.(7)
    
    Incorporated by reference to Exhibit 10.1 to the
    Companys Quarterly Report on
    Form 10-Q
    (SEC File
    No. 001-33299)
    filed on August 6, 2009.(8)
    
    Incorporated by reference to Exhibit 10.9 to Amendment
    No. 1 to the Companys Registration Statement on
    Form S-1
    (SEC File
    No. 333-137659)
    filed on November 14, 2006.(9)
    
    Incorporated by reference to Exhibit 10.10 to Amendment
    No. 1 to the Companys Registration Statement on
    Form S-1
    (SEC File
    No. 333-137659)
    filed on November 14, 2006.(10)
    
    Incorporated by reference to Exhibit 10.11 to Amendment
    No. 1 to the Companys Registration Statement on
    Form S-1
    (SEC File
    No. 333-137659)
    filed on November 14, 2006.(11)
    
    Incorporated by reference to Exhibit 10.12 to Amendment
    No. 1 to the Companys Registration Statement on
    Form S-1
    (SEC File
    No. 333-137659)
    filed on November 14, 2006.(12)
    
    Incorporated by reference to Exhibit 10.13 to Amendment
    No. 1 to the Companys Registration Statement on
    Form S-1
    (SEC File
    No. 333-137659)
    filed on November 14, 2006.(13)
    
    Incorporated by reference to Exhibit 10.14 to Amendment
    No. 2 to the Companys Registration Statement on
    Form S-1
    (SEC File
    No. 333-137659)
    filed on December 7, 2006.(14)
    
    Incorporated by reference to Exhibit 10.13 to the
    Companys Annual Report on
    Form 10-K
    (SEC File
    No. 001-33299)
    filed on March 24, 2008.(15)
    
    Incorporated by reference to Exhibit 10.14 to the
    Companys Annual Report on
    Form 10-K
    (SEC File
    No. 001-33299)
    filed on March 24, 2008.(16)
    
    Incorporated by reference to Exhibit 10.1 to the
    Companys Quarterly Report on
    Form 10-Q
    (SEC File
    No. 001-33299)
    filed on November 7, 2008.(17)
    
    Incorporated by reference to Exhibit 21.1 to the
    Companys Registration Statement on
    Form S-1
    (SEC File
    No. 333-137659)
    filed on September 28, 2006.*
    
    Indicates management contract or compensatory plan, contract or
    arrangement. 91