Nvidia to buy Israel's Mellanox for $6.8 bln in data center push

12 March, 2019, 05:57 | Author: Corey Lynch
  • The Nvidia headquarters in Santa Clara California

Analysts believe Intel would have faced even greater challenges as it and Mellanox were dominant suppliers of InfiniBand technology, a networking standard commonly used in supercomputers. To deal with this, data centers in future will be built as though they are single giant computers "with tens of thousands of compute nodes", requiring inter-connections that let them work in parallel. Nvidia shares gained 4.8 percent at 11:38 a.m. Monday in NY to $157.79.

Nvidia Corp has submitted an offer to buy Israeli chip designer Mellanox, the Calcalist financial news website said on Sunday. Mellanox shares rose 8.4 percent to $118.56 and Nvidia shares gained 2.8 percent in early Nasdaq trading on Monday. Net Net: "while the transaction would be a positive, given the size of the company, we wouldn't view it as a transformation", RBC Capital Markets analyst Mitch Steves wrote in a note to clients.

With the acquisition, the of Nvidia and Mellanox will have "every major cloud service provider and computer maker" as a customer. Such chips excel at executing multiple small calculations in parallel at high speed.

Nvidia is set to make the biggest acquisition in its history.




Mellanox reported better-than-expected results for 2018, achieving a record $1.1 billion in revenue, an increase of 26% from 2017.

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 going to keep it interoperable", Nvidia's CEO told Reuters in response to questions about regulatory approvals.

"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.

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

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