Nvidia buys Israeli chipmaker Mellanox with an office in Ukraine for $6.9 billion

Key numbers of the deal

Nvidia officially announced its intention to acquire Israeli chip and networking equipment maker Mellanox for $6.9 billion or equivalent to $125 per share. That is approximately $1 billion more than the market value of Mellanox as of the moment of the announcement. The company intends to close the deal by the end of 2019, writes TechCrunch.

What does Mellanox do

Earlier news outlets spread information about fierce competition between Nvidia, Intel, and Microsoft — each company took part in the bidding. The reason for all the fuss surrounding the deal lies in the nature of work of Mellanox Technologies. The company is engaged in the production of integrated circuits used in the nodes of high-performance computing clusters. Considering the growing demand for cloud services, this segment promises a lot of revenue.

Nvidia and Mellanox have previously collaborated in the field of supercomputers. The companies worked together to create two of the most powerful supercomputers of modern times – the American Sierra and Summit, now used by the US Department of Energy.

The most well-known segment of the Mellanox business is the production of InfiniBand and Ethernet switches and network adapters.

What’s in it for Nvidia

Nvidia’s official statement says the new takeover will help the company “optimize datacenter-scale workloads across the entire computing, networking, and storage stack to achieve higher performance, greater utilization and lower operating cost for customers.” As a result of the purchase, Nvidia does not intend to stop the operation of Mellanox in Israel. The company has pledged to invest in the training of local talents, and will not transfer the support and sales department. Mellanox Technologies is headquartered in California.

Mellanox in Ukraine

Interestingly, Mellanox has its R&D office in Ukraine that employs, according to DOU, up to 80 experts. The company opened the office in 2017 in “Leonardo” business center, following the successful cooperation with its Ukrainian partners.