Mellanox, an Israeli provider of networking components for data centers, had reportedly been on the market for several months following a fight with an activist investor, and multiple buyers had lined up before Nvidia sealed the offer Monday.
Data centre revenue accounts for almost a third of Nvidia's sales. Nvidia and Mellanox, meanwhile, have worked together in the past but the acquisition creates new opportunities for the company in terms of datacenter-caliber computing tech.
"The deal will give Nvidia an even bigger market share in the data-center market", he said.
The two companies are also long-time partners.
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Nvidia and Intel, as is usual for the companies, have refused to speculate on the sources' claims, but an announcement from the successful bidder is expected early this week. Nvidia and Mellanox aren't strangers; they have previously worked together on several products including the likes of the Nvidia DGX-2, as well as the #1 and #2 U.S. supercomputers - Summit and Sierra. The combined company will power more than half of the world's 500 largest computers, the company said.
Mellanox, managed by founder Eyal Waldman, produces interconnect solutions using InfiniBand and Ethernet technologies.
Nvidia says that going forward, with Mellanox onboard, it'll be able to "optimise data center-scale workloads across the entire computing, networking and storage stack to achieve higher performance, greater utilization and lower operating cost for customers". Mellanox will pay a $350 million termination fee to Nvidia if it accepts a rival offer. The transaction has been approved by both companies' boards of directors and is expected to close by the end of CY 2019.
Chinese regulators may require Nvidia to promise that Mellanox's technology will continue to work with chips from other makers, said Aaron Glick, a strategist with Cowen Inc.