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NVIDIA buys chipmaker Mellanox for US$6.9 billion

By Koh Wanzi - on 12 Mar 2019, 10:46am

NVIDIA buys chipmaker Mellanox for US$6.9 billion

Image Source: Bloomberg.

NVIDIA has bought Israeli chipmaker Mellanox for US$6.9 billion in cash, part of its bid to push more aggressively into the data center market. The acquisition is NVIDIA's largest to date, and it trumped a US$6 billion offer by Intel several months ago. 

The purchase makes a lot of sense, especially since the server market accounts for about a third of NVIDIA's sales. The data center market has been a huge success story for NVIDIA, and CEO Jensen Huang built a multi-billion dollar business in less than three years by selling the company's graphics chips to data centers and pitching its GPUs as the ideal solution for the parallel processing needed to handle increasingly heavy AI workloads. 

The growing volumes of data being generated means that work on AI and databases needs to be handled by multiple computers. In the future, Huang said data centers will need to be built as single, giant computers with tens of thousands of compute nodes that run in parallel, all connected by high-speed interconnections. 

So it makes sense that Mellanox's main business is in making chips that power the high-speed Ethernet and InfiniBand networks that connect servers, hardware that is vital in today's data centers and cloud infrastructures. "The emergence of AI and data science, as well as billions of simultaneous computer users, is fueling skyrocketing demand on the world's datacenters," said Huang. “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."

NVIDIA's revenue fell 22 per cent in the last quarter as a result of lackluster sales of its Turing GPUs, the US' trade war with China, and the decline of Bitcoin mining. However, AI and cloud computing remained strong, and NVIDIA's products continue to enjoy strong demand when it comes to things like neural networks and autonomous vehicles. 

The Mellanox acquisition will help NVIDIA grow in these areas. Furthermore, NVIDIA says that when combined, the two companies power more than 250 of the world's top 500 supercomputers and count every major cloud service provider as a customer. NVIDIA also pointed out that because of slow downs in CPU performance as a result of the limits of Moore's Law, workloads in these areas are growing exponentially, which increases demand for both NVIDIA's and Mellanox's products. 

Source: NVIDIA

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