Nvidia to buy Mellanox Technologies, which makes chips and other hardware for data center servers, for $6.9B
a rich multiple the result of a bidding war with Intel and Xilinx. But once again, what are they really buying? Jeremy Eder / @jeremyeder : This makes a ton of sense to me. We've been working extensively with both @nvidia and @mellanoxtech over the last few years in the Kubernetes space (and before that, KVM and OpenStack). Amazing partners, always. Looking fwd to continued success for all. http://twitter.com/... Ken Yeung / @thekenyeung : Nvidia beating Microsoft and Intel for Mellanox...is that good or bad? Was Nvidia an underdog? @technology : Chipmaker Nvidia will buy Mellanox for $6.9 billion to accelerate its push into the data center http://www.bloomberg.com/... @etherealmind : This will create some change in the second tier of NIC and switch makers. Link: NVIDIA to Acquire Mellanox for $6.9 Billion Nasdaq:NVDA - http://www.globenewswire.com/ ...
Context & Ripple Effects
Mellanox spent early 2019 as the most contested asset in data-center silicon: within days of Intel expanding its Israel footprint, sources had it bidding $5.5B, then reportedly raising to $6B before Nvidia submitted a competing bid. The $6.9B price Nvidia ultimately paid is the auction clearing itself — Bloomberg notes it as a rich multiple won over Intel and Xilinx, with Microsoft also in the mix per the chatter around the deal.
The strategic logic was visible immediately to practitioners like Red Hat's Jeremy Eder, who pointed to years of joint Nvidia-Mellanox work across Kubernetes, KVM, and OpenStack: this was never about buying a chip company, it was about fusing GPUs with the interconnect layer that moves their data.
First-order effects
- Nvidia adds Mellanox's server networking hardware to its data-center portfolio, while Intel walks away empty-handed after two successive bids and Xilinx and Microsoft are outbid entirely.
Second-order effects
- AMD answers three years later by acquiring networking chip maker Pensando for $1.9B explicitly to compete with Nvidia and Intel's data-center technology, confirming that GPU vendors now need in-house networking to sell complete systems.
- Hyperscale buyers gain a single vendor selling compute plus fabric, shifting procurement conversations from component pricing toward bundled platform deals.
Third-order effects
- The acquisition becomes product rather than paper: by late 2020 Nvidia ships its BlueField data processing units built on Mellanox technology, and its later $2B investment in Marvell for silicon photonics work extends the same networking bet — evidence that owning the interconnect became a durable pillar of Nvidia's data-center strategy, not a one-off purchase.
The trend: Data-center chipmakers are absorbing the networking layer into their own stacks, turning GPU vendors into full-system suppliers and forcing rivals like AMD and Intel to buy or build equivalent fabric assets.