Things To Know About The $6.9B Nvidia-Mellanox Acquisition

The Nvidia headquarters in Santa Clara California

The Nvidia headquarters in Santa Clara California. Justin Sullivan—Getty Images

Meanwhile, with NVIDIA's own datacenter and HPC revenues growing by leaps and bounds over the last few years - thanks in big part to the machine learning boom - NVIDIA has made a decision to expand their datacenter product portfolio by picking up Mellanox.

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

"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".

Intel has declined to comment on reports that it is seeking to acquire Mellanox.

As artificial intelligence workloads become the norm, Nvidia with Mellanox be more an architecture play.

"But going out and buying an asset right now, immediately after the recent spate of guide downs may raise a few eyebrows", Rasgon added.

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Mellanox is best known for its InfiniBand interconnect technology, which works along with high speed Ethernet products to move data through systems quickly.

Chipmaker Nvidia Corp is nearing a deal to acquire peer Mellanox Technologies Ltd for more than $7 billion in cash, a person familiar with the matter said on Sunday. Mellanox shares are traded on the Nasdaq at a company valuation of $5.9 billion, after the share surged 51% in the past 12 months amid speculation of an acquisition and as the firm reported record revenues in 2018.

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 center sales.

The headlining transaction has already been approved by both companies' boards of directors and is expected to close by the end of calendar year 2019.

Mellanox has been around since 1999 and was founded by former Intel executives.

The agreement is a win for New York-based activist investor Starboard Value LP, which owns 5.8 percent of Mellanox and reached a deal with it previous year over the composition of its board.

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