If the rumors are true, Nvidia outbid Intel, Xilinx, Microsoft and perhaps some others looking to add Mellanox to their technology base.
Nvidia announced today it is buying high speed networking company Mellanox at a premium ($6.9 billion) over its current valuation. If the rumors are true, Nvidia outbid Intel, Xilinx, Microsoft and perhaps some others looking to add Mellanox to their technology base. Known mostly as a fast Ethernet and InfiniBand technology supplier, Mellanox has focused more on the high performance data center and cloud marketplace than on traditional enterprise servers and PCs where Nvidia has a significant presence with its GPUs. So why is this acquisition important to Nvidia, and is it a good combination?
Nvidia’s long term growth requires that it not only focus on its traditional GPUs – a market that has seen a good deal of flux and a slowing down of sales in recent quarters (and I expect the difficult conditions to continue, particularly in the PC graphics space). Nvidia really needs to focus on its growing data center business, where it can provide high end products at good margins. There are two key growth areas for Nvidia in these markets – attached graphics engines to servers in big cloud farms like AWS, Google, Microsoft, etc., where these engines are used to process very complex vector computations like geographic and visual information. And in the rapidly growing and hugely important future technology of AI, where Nvidia has made a major investment and where it sees the future of the company.
Mellanox has been in business for about 20 years, with significant revenues and good growth prospects. Its customers include Alibaba, Dell, and HPE among many others.
