NVIDIA Snags Mellanox Out From Under Intel

Posted on March 11, 2019 by Paul Thurrott in Cloud, Hardware with 6 Comments

NVIDIA announced this morning that it will acquire Israeli chip designer Mellanox Technologies for $6.8 billion in cash. The firm outbid microprocessor giant Intel, which was looking to use Mellanox to expand its datacenter capabilities.

NVIDIA says it will use the acquisition to cement its leadership in high-performance computing (HPC).

“The emergence of AI and data science, as well as billions of simultaneous computer users, is fueling skyrocketing demand on the world’s datacenters,” NVIDIA founder and CEO Jensen Huang said in a prepared statement. “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.”

NVIDIA has expanded its product portfolio in recent years beyond high-end graphics for gaming and workstations to include data-intensive tasks related to AI, scientific computing, and data analytics. In doing so, the firm has diversified its product portfolio, which is smart. But it has also found a new growth business that finds NVIDIA competing with players like Intel, Qualcomm, and dozens of specialty chipmakers. Today, the firm derives almost one-third of its revenues from datacenter computing.

NVIDIA has benefitted from the cessation of Moore’s Law as traditional CPU performance growth has slowed dramatically. But the performance growth of the GPUs that NVIDIA makes has not slowed in the same way, and they have been found to work particularly well in modern, datacenter-based workloads.

This is a problem for Intel, which has had trouble expanding beyond the traditional PC-based CPU market. Its most recent efforts for highly-mobile computing, on both PCs and mobile devices, have underwhelmed. And it recently expressed the need to expand further into markets like datacenters, automobiles, industrial, retail, and consumer electronics. As I noted in Intel Wants to be the Microsoft of Hardware (Premium), it is only moving slowly towards that future. And getting outbid by NVIDIA here doesn’t help.

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