March of last year, Nvidia announced their plans to acquire data center chipmaker Mellanox for around $7 billion, outbidding Intel and being Nvidia’s largest individual purchase so far. Datacenter revenue accounts for about a third of Nvidia’s revenue but the decline of popularity in cryptocurrencies along with the decline of graphics card sales in China has dug into their sales despite their attempts to expand into new markets. It is estimated that a half-billion dollars was lost in quarter four of 2018. Mellanox is expected to expand Nvidia’s offerings with their dedicated graphics and other services.
“The expanding use of AI and data science is reshaping computing and data center architectures. With Mellanox, the new NVIDIA has end-to-end technologies from AI computing to networking, full-stack offerings from processors to software, and significant scale to advance next-generation data centers. Our combined expertise, supported by a rich ecosystem of partners, will meet the challenge of surging global demand for consumer internet services, and the application of AI and accelerated data science from cloud to edge to robotics.” Nvidia’s founder and sitting CEO, Jensen Huang commented in a press release after the acquisition. The purchase resulted in a 4% jump in Nvidia’s stock and Mellanox received a 2% boost in theirs.
“This is a powerful, complementary combination of cultures, technology and ambitions. Our people are enormously enthusiastic about the many opportunities ahead. As Mellanox steps into the next exciting phase of its journey, we will continue to offer cutting-edge solutions and innovative products to our customers and partners,” said Eyal Waldman, founder and CEO of Mellanox.
The acquisition of Mellanox has combined two of the largest companies in high-performance computing. The deal is intended to bolster their data center revenue, but Mellanox will most likely trickle their expertise into the dedicated graphics cards, something that Nvidia is best known for. Since Mellanox is an Israel based company, they can also expand Nvidia’s graphics cards into the Middle East and Europe better than the U.S. based Nvidia.