Nvidia outbids Intel to buy Israel's Mellanox in data center push

Irving Hamilton
March 12, 2019

Nvidia's computing platform and Mellanox's interconnects power more than half the world's Top 500 supercomputers.

Both Bloomberg and Reuters write that Nvidia will hand over the huge sum-the most it's ever paid for a purchase-later today.

Reports surfaced yesterday on the Israeli technology news site CTec, that Nvidia had entered the Mellanox bidding, which reportedly has included Xilinx, Broadcom, Microsoft, among rumored other companies, along with Intel. Mellanox itself is renowned for being one of the world leaders in the field as well, supplying networking products using InfiniBand and Ethernet technology. The company's founder built a multi-billion-dollar business in under three years by persuading owners of data centers that his graphics chips are the right solution for processing the increasingly large amounts of information needed for artificial intelligence work, such as image recognition.

Intel and Mellanox have said absolutely nothing about the deal but then that is to be expected.

The sale of Mellanox, which has a market value of about US$5.9 billion (S$8 billion), could be announced soon, the sources said, asking not to be identified. The rate at which chips direct that traffic has become increasingly important as corporate computer networks and cloud service providers try to make sense of the growing flood of data being generated. "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".

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Huang said Nvidia studied carefully how the deal would be reviewed by regulators and believed it wouldn't face significant hurdles because the two companies are complementary.

It will reportedly help NVIDIA better compete in the server market, which accounts for about a third of its sales.

The all-cash deal is expected to close later this year subject to regulatory and shareholder approval.

Credit Suisse and JP Morgan advised Mellanox, while Goldman Sachs advised Nvidia.

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