General Business: Nvidia to acquire Mellanox for US$6.9bn

Dwayne Harmon
March 12, 2019

In January, Nvidia, which has market capitalization of $91 billion, cut its fourth-quarter revenue estimate by half a billion dollars because of weak demand for its gaming chips in China and lower-than-expected data centre sales.

Mellanox had 2,330 full-time employees and 116 part-time employees as of the end of a year ago, according to a filing with the U.S. Securities and Exchange Commission.

GRAPHICS OUTFIT Nvidia has confirmed that it's buying Israeli chipmaker Mellanox for $6.9bn (£5.3bn). But traders may not be sold on the idea that the deal will go through, with Mellanox trading up 8.6 percent to $118.62, still short of the bid from Santa Clara, California-based Nvidia.

Founded in 1999, Mellanox Technology is one of the world's leading producers of high-speed networking components - including silicon - using Ethernet and InfiniBand standards.

Mellanox will be accretive to Nvidia's non-GAAP earnings and cash flow. Our vision is that datacenters are the most important computers in the world today...

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

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This is being seen as a cunning plan to reduce Nvidia's dependence on the video game industry.

"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".

A chip expert says the deal will give Nvidia an even bigger market share in the data-center market, which Reportlinker says will reach revenues of around $174 billion by 2023.

Xilinx Inc was also part of the process, sources said.

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

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