Nvidia To Acquire Israel’s Mellanox Technologies For $6.9 Billion

Nvidia announced on Monday that it was acquiring Israel’s Mellanox Technologies, a leading supplier of end-to-end Ethernet and InfiniBand smart interconnect solutions for data servers and storage systems, for a value of approximately $6.9 billion.

According to the agreement, Nvidia will acquire all of the issued and outstanding common shares of Mellanox for $125 per share in cash. This is Nvidia’s largest acquisition to date.

Nvidia said it intends to continue investing in local Israeli “excellence and talent,” calling Israel “one of the world’s most important technology centers. Customer sales and support for Mellanox will not change after the transaction, it added.

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Nvidia invented the graphics processing unit (GPU) in 1999, redefining modern computer graphics and sparking the growth of the PC gaming market. In recent years, it’s become a leader in artificial intelligence computing with an eye toward autonomous vehicles and robotics.

Mellanox’s solutions include adapters, switches, software and silicon that accelerate application runtime and maximize business results for a wide range of markets including high-performance computing, enterprise data centers, Web 2.0, cloud, storage, and financial services. Many of the world’s top cloud service providers also use Mellanox interconnects as well as NVIDIA GPUs.

An Nvidia building in Santa Clara, CA. Deposit Photos

“The acquisition will unite two of the world’s leading companies in high performance computing (HPC),” Nvidia said in a statement. “Together, NVIDIA’s computing platform and Mellanox’s interconnects power over 250 of the world’s TOP500 supercomputers and have as customers every major cloud service provider and computer maker.

Jensen Huang, founder and CEO of Nvidia, said the company was “excited to unite Nvidia’s accelerated computing platform with Mellanox’s world-renowned accelerated networking platform under one roof to create next-generation datacenter-scale computing solutions.”

Photo by NVIDIA Corporation on Flickr, CC BY-NC-ND 2.0 ” width=”1024″ height=”683″> Jensen Huang at NVIDIA’s CES 2018 press conference. Photo by NVIDIA Corporation on Flickr, CC BY-NC-ND 2.0

Huang said he was “particularly thrilled to work closely with the visionary leaders of Mellanox and their amazing people to invent the computers of tomorrow.”

“The emergence of AI and data science, as well as billions of simultaneous computer users, is fueling skyrocketing demand on the world’s data centers,” said Huang. “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.

Eyal Waldman, founder and CEO of Mellanox, said the company shares “the same vision for accelerated computing.”

“Combining our two companies comes as a natural extension of our longstanding partnership and is a great fit given our common performance-driven cultures. This combination will foster the creation of powerful technology and fantastic opportunities for our people,” he went on.

This is Waldman’s second exit in two decades. He sold chip company Galileo, which he co-founded, to Marvell in 2000 for $2.7 billion.

Gamers at CES 2019. Photo by NVIDIA Corporation on Flickr, CC BY-NC-ND 2.0

Nvidia said the companies have a long history of collaboration and joint innovation, reflected in their recent contributions in building the world’s two fastest supercomputers, Sierra and Summit, operated by the US Department of Energy.

The deal marks another boon for Israel’s tech industry, and is so far in 2019 the biggest exit for an Israeli company.

It’s also a nod toward co-existence as Mellanox is one of several companies with Palestinian employees in the West Bank and Gaza, a source of pride for the firm.

“I think a lot of employees became millionaires overnight, and I’m very proud of that. In Israel and in the [Palestinian] territories, we have employees in Gaza, Rawabi, Nablus, Hebron who also have Mellanox shares, and I think we will all benefit from this sale,” Waldman told Israel’s Channel 12 on Monday night.

Waldman said Mellanox will continue manufacturing in Israel and will actually grow its manpower to scale its offerings.

In a press conference announcing the sale Monday, Waldman said the idea was to keep Mellanox as an “entity” operating out of Israel.

Waldman said he had “mixed feelings about this day. I’m happy and I’m sad.”

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Dov Moran, a long-time high-tech leader best known as the inventor of the USB memory stick, said last year that “most of Israel’s tech success stories are in hardware,” citing high-value buyouts including Mobileye ($15.3 billion sale to Intel in 2017), Orbotech ($3.4 billion sale to KLA-Tencor in 2018), Galileo ($2.7 billion sale to Marvell in 2000) and the company he founded, M-Systems ($1.5 billion sale to SanDisk in 2006) as examples.