Nvidia to acquire Mellanox for US$6.9bn - General Business

Ann Santiago
March 12, 2019

"It's hard to not think Nvidia is just buying some revenue to help its case" in the data centre space, said Jason Carolan, chief innovation officer of Flexential, which operates data centres for big businesses and is a Nvidia customer. The offer, said to have beaten out one from rival Intel, is the largest in Nvidia's history and will pay Mellanox shareholders $125 a share - a 14.3% premium to Friday's closing price.

Mellanox gives Nvidia more entries into high performance computing and the data center.

"The emergence of AI and data science, as well as billions of simultaneous computer users, is fueling skyrocketing demand on the world's datacenters", said NVIDIA CEO Jensen Huang.

"This exciting transaction would unite two HPC industry leaders and strengthen the combined company's ability to create data-centric system architectures for the convergence of the HPC and hyperscale markets around AI and other HPDA tasks", said Steve Conway, COO and Research SVP at Hyperion Research.

Nvidia's advantage is that it would have a greater chance of obtaining USA and Chinese regulatory approval as Intel and Mellanox control the market for InfiniBand technology, a networking communications standard commonly used in supercomputers, Calcalist said.

Nvidia and Intel, as is usual for the companies, have refused to speculate on the sources' claims, but an announcement from the successful bidder is expected early this week. Previously both Intel and Microsoft were in the frame for the purchase of Mellanox, a company originally founded in Israel but now based in San Jose, California.

Mellanox, managed by founder Eyal Waldman, produces interconnect solutions using InfiniBand and Ethernet technologies. Intel and Mellanox did not immediately respond to requests for comment.

In January, Nvidia, which has market capitalization of $91 billion, cut its fourth-quarter revenue estimate by half a billion dollars because of weak demand for its gaming chips in China and lower-than-expected data centre sales.

"We're not changing our guidance that we just provided about a month ago for the current fiscal year", Nvidia Chief Financial Officer Colette Kress told the conference call.

Data center revenue accounts for almost a third of Nvidia's sales.

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