Published: Tue, March 12, 2019
Business | By Pearl Harrison

Nvidia buys Israeli chipmaker Mellanox for US$6.9b

Nvidia buys Israeli chipmaker Mellanox for US$6.9b

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. 'Addressing this demand will require holistic architectures that connect vast numbers of fast computing nodes over intelligent networking fabrics to form a giant data centre-scale compute engine.

Nvidia and Intel are reportedly in a battle for control of Israeli chipmaker Mellanox Technologies, with Nvidia claimed to have the lead bid for ownership of the company.

Nvidia and Mellanox have already collaborated on projects, including the world's two fastest supercomputers, Sierra and Summit, operated by the U.S. Department of Energy.

"Intel losses market shares to Nvidia in the computing side", said Jeremie Capron, head of research at ROBO Global, which runs a robotics and AI- focused exchange-traded fund under the ticker "ROBO". Eyal Waldman, founder and CEO of Mellanox, said: "We share the same vision for accelerated computing as NVIDIA".

Multiple companies have an interest in adding such capabilities to their own array of products as they try to make themselves more attractive to major buyers of computer infrastructure, such as Alphabet's Google, Amazon.com's AWS and Microsoft's Azure.


The logo of Nvidia Corporation is seen during the annual Computex computer exhibition in Taipei, Taiwan May 30, 2017.

Nvidia's DGX system is an artificial intelligence computer in a box, while Mellanox has a growing business selling complete switches, which could be combined with Nvidia's boxes, Wheeler said. Such chips excel at executing multiple small calculations in parallel at high speed.

And Shebly Seyrafi, an analyst at FBN Securities, agrees that the unit will provide broad solution sets to overcome bottlenecks in the data-center market. The latter company made over US$1 billion in revenue in 2018, with US$290 million of that coming in the fourth quarter.

Data centre revenue accounts for almost a third of Nvidia's sales. The transaction will still have to win approval from regulators. Xilinx is also a fabless semiconductor company that is apparently interested in snatching up its fellow chipmaker.

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

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