Nvidia Acquires Chipmaker Mellanox For $6.9 billion


Nvidia on Monday announced that it has acquired high-performance chipmaker Mellanox for $6.9 billion, its biggest acquisition ever. The deal is expected to boost Nvidia’s chip-making business for data centers, enabling it to minimize its dependence on the video game industry.

Nvidia slashed its fourth-quarter revenue forecast by half a billion dollars, citing weaker-than-expected data center sales and weak demand for gaming chips in China.

“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 datacenter-scale computing solutions,” said Jensen Huang, founder and CEO of NVIDIA.“I am particularly thrilled to work closely with the visionary leaders of Mellanox and their amazing people to invent the computers of tomorrow.”

Nvidia outbid Intel Corp and Microsoft Corp in the auction for Mellanox. Mellanox is based in Israel and the United States. It is known for manufacturing end-to-end solutions and optical transceivers for storage systems and data center servers. It recently launched a new range of InfiniBand cables and optical transceivers suitable for use in artificial intelligence, HPC, and Hyperscale applications.

Eyal Waldman, founder and CEO of the Mellanox had this to say regarding the deal, “We share the same vision for accelerated computing as NVIDIA. Combining our two companies comes as a natural extension of our longstanding partnership and is a great fit given our common performance-driven cultures. This combination will foster the creation of powerful technology and fantastic opportunities for our people.”

Santa Clara, CA-based Nvidia will pay $125 per share in cash, representing a 14% premium to Mellanox’ closing price of $109.38 on Friday. The companies expect to close at the end of this year.

Nvidia shares, which have been hammered in recent months, were up $9.22, or 6.12% to $159.86 as of 12:36 p.m. ET on Monday. Nasdaq-listed shares of Mellanox were trading 8.30% higher, at $118.46 apiece.

NVIDIA Corp Profile

NVIDIA operates as a visual computing company. It operates in two segments: the GPU segment offers processors, GeForce NOW for cloud-based game-streaming service, Quadro for design professionals working in computer-aided design, video editing, special effects, and other creative applications, Tesla for deep learning, accelerated computing, and general purpose computing, and GRID for cloud-based visual computing users.

The Tegra Processor segment provides processors that integrate a computer onto a single chip, DRIVE automotive computers, which offer self-driving capabilities, and tablet and portable devices for mobile gaming and TV streaming. The Company’s products are used in gaming, professional visualization, datacenter, and automotive markets. – Craft

Mellanox Technologies Ltd Profile

Mellanox Technologies is a fabless semiconductor company which designs, manufactures, and sells interconnect products and solutions. The Company offers InfiniBand solutions and Ethernet solutions, as well as fast interconnect products, including adapters, switches, and related software. – CNN Money