Published: Mon, March 11, 2019
Markets | By Otis Pena

Nvidia beats Microsoft, Intel for chip maker Mellanox in $7B deal

Nvidia beats Microsoft, Intel for chip maker Mellanox in $7B deal

"Intel losses market shares to Nvidia in the computing side", said Jeremie Capron, head of research at ROBO Global, which runs a robotics and AI- focused exchange-traded fund under the ticker "ROBO".

"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 NVIDIA CEO Jensen Huang.

Nvidia has invested heavily in its datacentre and AI technologies over the years and acquiring Mellanox will be an extension of that.

Nvidia has been looking at boosting its data centre revenue for some time.

What follows are eight important things to know about the $6.8 billion Nvidia-Mellanox acquisition, including the market for Mellanox's products, what they're used for and the history of Mellanox's journey from activist investor spat to acquisition by Nvidia.

As artificial intelligence workloads become the norm, Nvidia with Mellanox be more an architecture play. Xilinx is also a fabless semiconductor company that is apparently interested in snatching up its fellow chipmaker. 'Addressing this demand will require holistic architectures that connect vast numbers of fast computing nodes over intelligent networking fabrics to form a giant data centre-scale compute engine.

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With the acquisition, the of Nvidia and Mellanox will have "every major cloud service provider and computer maker" as a customer. Combined, Nvidia and Mellanox power more than half of the world's top 500 supercomputers.

Post close, the transaction - for which Goldman Sachs served as financial advisor to Nvidia - is expected to be immediately accretive to Nvidia's non-GAAP gross margin, non-GAAP earnings per share and free cash flow, according to Nvidia.

"The deal will give Nvidia an even bigger market share in the data-center market", he said.

Add it up and Nvidia with Mellanox can better optimize systems.

This deal only increases the competitive rivalry between NVDA and INTC to go beyond GPUs to include Infiniband and Ethernet.

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