Nvidia Likely to Acquire Mellanox Technologies For Over $7 Billion USD

SAN FRANCISCO, CA — Reuters is first reporting that Nvidia is close to finalizing a deal to acquire networking IC vendor Mellanox Technologies for over $7 Billion USD in cash, outbidding Intel, who also made a play for the firm. Representatives from Nvidia, Mellanox and Intel alike are all declining to comment, but Reuters and other outlets have the news on good authority.

Mellanox Technologies is a leading supplier of end-to-end Ethernet and InfiniBand intelligent interconnect solutions and services for servers, storage, and hyper-converged infrastructure. Mellanox intelligent interconnect solutions increase data center efficiency by providing the highest throughput and lowest latency, delivering data faster to applications and unlocking system performance.

Mellanox offers a choice of high performance solutions: network and multicore processors, network adapters, switches, cables, software and silicon, that accelerate application runtime and maximize business results for a wide range of markets including high performance computing, enterprise data centers, Web 2.0, cloud, storage, network security, telecom and financial services.

Mellanox’s technology is crucial in transferring information from one component to another both within and between computers. 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. Naturally, multiple companies would benefit from adding such capabilities to their suite of products, to make themselves more attractive to major buyers of data center infrastructure.

Mellanox’s stock has been rising dramatically since the news, but the acquisition would have to be approved by regulators. However the implications of the merger matter, according to various sources around the web:

  • Bloomberg: “The deal may signal a restart of consolidation in the $470 billion semiconductor industry which has been reshaped over the past five years as companies have increasingly combined to add scale amid rising costs and shrinking customer lists.”
  • CNBC: “The deal would be Nvidia’s biggest-ever acquisition and boost its business of making chips for data centers, allowing it to reduce its reliance on the video game industry, for which it is best known as a major technology vendor.”
  • EEtimes: “A deal to acquire Mellanox would instantly boost Nvidia’s data center business. It would also provide a big boost for the company’s efforts to further diversify sales beyond the PC gaming business, which has historically been the dominant source of Nvidia’s revenue.”