Nvidia is close to closing a deal to buy Mellanox Technologies Ltd for more than $7 billion in cash, a person familiar with the matter said on Sunday.
The deal would be Nvidias largest MA deal ever,It will boost its data center chip production business, making it less dependent on the video game industry.Nvidia is a major technology supplier in the gaming industry, and the gaming and data center sectors are Nvidias main source of revenue.
Santa Clara, Calif.-based Nvidia has grown rapidly over the past few years under Chief Executive Jensen Huang.As of 2018, Nvidias gaming field has an average annual growth rate of 40% in the past 3 years, while the same data in the data center field is 133%, followed by professional visualization and autonomous driving fields.
The frantic demand for digital currency mining has also brought revenue to Nvidia. In early 2018, Nvidia acknowledged the benefits of mining for the first time, and its benefits caused the companys financial report to exceed expectations.
In January of this year, Nvidias market value soared to $91 billion, but on January 28, Nvidia updated the companys financial report forecast, suggesting that revenue from games and data centers will be lower than expected. Nvidia warned that due to the shift in macroeconomic winds, many customers are more cautious in making purchasing decisions. Many contracts were not finalized within the expected time, which also affected the performance of the fourth quarter.
February 14,Nvidia Releases Fourth Quarter Financial ReportIt shows that in the fourth quarter, Nvidia’s gaming business revenue was US$954 million, which was lower than the expected US$1.2 billion; data center business revenue was US$679 million, which was also lower than the expected US$839 million.
Nvidia’s current difficulties are mainly due to: global macroeconomic weakness, lower demand in the Chinese game market; lower-than-expected sales of new products and shocks caused by the bursting of the cryptocurrency market bubble. Therefore, the company has to seek new performance growth points to promote the companys revenue.
Mellanox, which was acquired by Nvidia at a high price this time, is a provider of end-to-end connection solutions for servers and storage. The chips they develop can support high-speed networks connected to servers. According to Crehan Research, the company has more than 70 percent of Ethernet ports with speeds greater than 10 GB/sec. The company, based in Israel and the United States, had a market capitalization of about $5.9 billion at the close of trading on Friday.
to reportto report, at Ethernet performance levels of 10 Gb/s and beyond, the processing overhead required to service network interfaces begins to become an issue—modern data center networks are increasingly complex, and may include the need for performance acceleration techniques, virtualization, and overlays Network support, which exacerbates the problem. And one area where Mellanox has done a lot of development in recent years: offloading some of the processing to network interface controllers (NICs) is one solution.
Nvidia outbid Intel in the bidding and could announce a deal as early as Monday (March 11), sources said. The sources requested anonymity because the talks are confidential.
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