Nvidia outbids Intel to buy Israel's Mellanox in data centre push

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NVIDIA is reportedly eying off an acquisition of Mellanox for a huge $7 billion, according top sources familiar with the matter reports Reuters. Fending off competition from Microsoft and Intel, NVIDIA's bid of $6.9 billion was enough to secure the deal which is expected to be finalized by the end of the year.

Mellanox, which makes chips and other hardware for data center servers that power cloud computing, said it does not comment on rumors or speculation.

'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 data centre-scale computing solutions.

Mellanox gives Nvidia more entries into high performance computing and the data center.

Data center revenue accounts for almost a third of Nvidia's sales.

Nvidia's advantage is that it would have a greater chance of obtaining USA and Chinese regulatory approval as Intel and Mellanox control the market for InfiniBand technology, a networking communications standard commonly used in supercomputers, Calcalist said. Overall their technology is used in over half of the TOP500-listed supercomputers in the world, as well as countless datacenters. "Addressing this demand will require holistic architectures that connect vast numbers of fast computing nodes over intelligent networking fabrics to form a giant datacenter-scale compute engine".

The tie-up also builds on efforts at Nvidia and Mellanox to get out of the cutthroat business of selling chips and into the more profitable business of selling complete systems, said Bob Wheeler, a principal analyst at chip research firm The Linley Group.

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. Waldman added that the combination of Nvidia and Mellanox was "a natural extension of our longstanding partnership".

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