Technology 3 min read

Nvidia Confirms Mellanox Acquisition for $6.9-billion

Mellanox might sound like new-age prescription drug version of melatonin, but it's actually a supercomputer chip developer. Nvidia just beat out Microsoft and Intel for purchase of the company to the tune of more than $5-billion USD. What does this mean for Nvidia moving forward?

This multi-billion dollar acquisition could mean great things for both parties involved. ¦ Image via Mellanox

This multi-billion dollar acquisition could mean great things for both parties involved. ¦ Image via Mellanox

You may be reminded of the intense bidding war between Disney and Comcast over Fox properties recently. Or maybe you flashed back to when AT&T acquired Time Warner in 2018 instead.

These mergers, for better or worse, meant big things for the companies involved.

Similarly, Nvidia acquiring Mellanox over Microsoft or Intel could have huge implications for the traditionally GPU-focused manufacturer moving forward.

Eyal Waldman, right, facilitated a merger between Mellanox and EZchip (whose CEO is on the left) in 2015. | Globes

Foundations in Innovative Tech Hub Prove Fruitful

What made the San Jose, CA startup so appealing to big names like Intel involves several factors. Not only does it focus on scalability, but it also promises more reliability and reducing packet loss.

Mellanox originally started in Israel and also supplies products which use Ethernet and InfiniBand technology. The adapters, software, switches, silicon, and cables the company provides all deliver high-performance computing. But the company also services cloud computing needs, data centers, computer data storage needs, and financial services.

Oracle became a major investor in the company in 2010, after Mellanox’s IPO in 2007. That was less than ten years after the founders (former executives at Galileo Technology and Intel) started the company.

Though Intel initially offered $6-billion USD for the company, Nvidia swooped in with an all-cash offer nearing $7-billion USD. Curiously, both offers exceeded Mellanox’s closing value last week of around $5.9-billion USD.

Though Nvidia’s concrete plans remain a bit amorphous, this means that Intel won’t get its hands on the Mellanox technology. As a central manufacturer of supercomputer chips, this is a huge blow.

This isn’t an outright acquisition; Mellanox and Nvidia have worked together for quite some time. | Nvidia

A New Era of Supercomputer Chips to Come

The press release, published March 11, 2019, detailed information about the acquisition. But it also highlighted Nvidia’s plan to adapt and innovate datacenter infrastructure.

Both companies work in the data center sector, and Nvidia wants to focus specifically on scalability.

Paying $125 per stock share, Nvidia acquiring Mellanox represents further consolidation of chip makers. You may recall AMD’s critically successful Ryzen line with integrated graphics that compete with GPU performance.

But Jensen Huang, CEO and founder of Nvidia, sees big innovations regarding AI thanks to the acquisition.

“The emergence of AI and data science, as well as billions of simultaneous computer users, is fueling skyrocketing demand on the world’s datacenters. Addressing this demand will require holistic architectures that connect vast numbers of fast computing nodes over intelligent networking fabrics to form a giant datacenter-scale compute engine.”

Eyal Waldman, the CEO and founder of Mellanox, echoed this sentiment. He described the pairing as a “natural extension of our longstanding partnership“. Due to the companies’ similar focus on performance, Waldman called it a “great fit”, too.

The plan won’t fully go through until the latter part of 2019. But both companies worked together to develop Summit and Sierra — two of the world’s fastest supercomputers.

The acquisition will also include further investment in the Israeli tech infrastructure.

Read More: New NVIDIA AI System Creates Video Game Using Dash Cam Vids

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Juliet Childers

Content Specialist and EDGY OG with a (mostly) healthy obsession with video games. She covers Industry buzz including VR/AR, content marketing, cybersecurity, AI, and many more.

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