Nvidia has announced an all-cash deal to buy mellanox. Lets hit the bullet points on why and when.
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Mellanox has 4 key product lines.
- Smart network adapters acting as co-processors or accelerators
- Infiniband technology for HPC market, storage arrays and specialist purposes.
- Silicon photonics research and manufacturing arm. In house manufacture of SFP modules.
- Switch silicon for infiniband and Ethernet suited to HPC and scale out market with partnerships with 3rd parties to drive hardware sales.
- Nvidia gets deeper into data centre acceleration and particularly into accelerated networking and interconnects.
- Both GPUs and Smart NICs are co-processor engines that accelerate server performance. Business synergy.
- Infiniband and Ethernet are high performance network fabrics for large scale data centres. Future growth and also possible
- Synergies in supercomputing and HPC where NVIDIA and Mellanox products are often partnered.
- Activist investor looking for quick gains over the last 18months (Prior to sale, Starboard Vendors spent $250 million on buying nearly 11% of the Israeli big-data chip company and having sold shares for $116 million still has a holding worth $318 million. Source)
- Intel was a rumoured bidder but would have anti-trust delays (only Infiniband vendor left)
- Mellanox is a large supplier of Smart NICs to MSDC’s e.g. Microsoft Azure. Overlapping customers means operational synergies and cost reductions in overheads like sales.
What Might Customers Expect ?
- Nvidia states that the transaction will be accretive immediately so most likely little will be changed in the short term to protect that revenue.
- People with big data centres get to work with fewer suppliers.
- Interconnects between servers could see some changes. NVMe over Ethernet might work GPUs acceleration clusters.
- Nvidia gets some scale around silicon design and manufacturing.
- Operating efficiencies around combined sales and marketing activities.
- A slump in GPU sales as cryptocurrency tumbles will be part of Nvidia motivation.
Link: NVIDIA to Acquire Mellanox for $6.9 Billion | NVIDIA Newsroom – https://nvidianews.nvidia.com/news/nvidia-to-acquire-mellanox-for–6–9-billion
Link: High Performance Fabrics by Intel – https://www.intel.com/content/www/us/en/products/network-io/high-performance-fabrics.html