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

The logo of technology company Nvidia is seen at its headquarters in Santa Clara California

Financial news website Calcalist had reported earlier on Sunday that Nvidia had outbid Intel for Mellanox.

Nvidia and Mellanox have already collaborated on projects, including the world's two fastest supercomputers, Sierra and Summit, operated by the U.S. Department of Energy.

Nvidia management comments on a conference call that discussions to buy Mellanox were relatively recent suggested that they may have calculated that Mellanox as part of Intel would have hindered Nvidia's long-term growth, Rosenblatt Securities analyst Hans Mosesmann said.

The move could bolster Nvidia against its chief rival in the data centre business, Intel.

Huang said Nvidia studied carefully how the deal would be reviewed by regulators and believed it wouldn't face significant hurdles because the two companies are complementary.

Connectivity and bandwidth are increasingly becoming a bottleneck in datacenter and artificial-intelligence applications as the size of workloads and datasets increases, according to Stacy Rasgon at Bernstein. Nvidia's computing platform and Mellanox's interconnects power more than half the world's Top 500 supercomputers.

The US computer giant Nvidia has made its biggest-ever acquisition with a $6.9bn (£5.3bn) takeover of Israel's Mellanox.

NVIDIA says it will use the acquisition to cement its leadership in high-performance computing (HPC). Imagine the possibility of combining NVLink - Nvidia's high-speed protocol for intra-GPU communication - with Mellanox's networking and server products.

"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". Chips that direct that traffic have become increasingly pivotal as corporate networks and internet-based cloud service providers try to make sense of the plethora of data.

Credit Suisse and JP Morgan advised Mellanox, while Goldman Sachs advised Nvidia. It's a market where Nvidia will own a bit more of high performance systems, which are likely to also include Intel too.

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