Why it matters: Nvidia may be best known for its line of graphics processors, but the company has a broad range of interests, such as AI, data center, and automotive technology. Now, it’s about to expand its portfolio by acquiring Mellanox Technologies Inc. with a bid of nearly $7 billion.
Nvidia confirmed this morning the acquisition of Mellanox in a $6.9 billion deal. “We're excited to unite Nvidia's accelerated computing platform with Mellanox's world-renowned accelerated networking platform under one roof to create next-generation data-center-scale computing solutions," said CEO Jensen Huang.
Both Bloomberg and Reuters reported over the weekend that Nvidia would hand over a huge sum—the most it’s ever paid for a purchase—for the chip maker. Other companies were said to be involved in a bidding war for the firm, including Intel, which reportedly offered $6 billion a few months ago, and Xilinx.
Israeli startup Mellanox, which has a market value of around $5.9 billion, is mostly focused on selling networking hardware based on the Ethernet and InfiniBand communications protocols used for servers and storage within data centers.
Mellanox’s chips are said to increase the speed at which data is transferred from components both within and between computers—an important factor for today’s businesses, where speed can make a big difference to enterprise networks and cloud services.
With data center revenue making up half of Nvidia’s sales, it’s easy to see why the company would like to get its hand on Mellanox’s technology. Not only could its chips be useful in on-site servers, but also in areas such as self-driving cars and supercomputers.
Nvidia could use a win right now. The company’s graphics cards sales were down 7.6 percent during the fourth quarter of last year, a result of excess stock caused by the cryptocurrency crash. In December, the same “crypto hangover” contributed to its shares losing almost half their value.