"We're 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". 'Addressing this demand will require holistic architectures that connect vast numbers of fast computing nodes over intelligent networking fabrics to form a giant data centre-scale compute engine.
Post close, the transaction - for which Goldman Sachs served as financial advisor to Nvidia - is expected to be immediately accretive to Nvidia's non-GAAP gross margin, non-GAAP earnings per share and free cash flow, according to Nvidia. Nvidia's acquisition of Mellanox would also represent a win for activist hedge fund Starboard Value LP, which is a shareholder of the company and reached a deal with it past year over the composition of its board. The rate at which chips direct that traffic has become increasingly important as corporate computer networks and cloud service providers try to make sense of the growing flood of data being generated.
This is being seen as a cunning plan to reduce Nvidia's dependence on the video game industry. Such chips excel at executing multiple small calculations in parallel at high speed. The Nvidia unit that serves that market has tripled sales in the past three years.
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Mellanox reported better-than-expected results for 2018, achieving a record $1.1 billion in revenue, an increase of 26% from 2017.
Nvidia gets more revenue diversification and data center sales. "We're going to keep it interoperable", Nvidia's CEO told Reuters in response to questions about regulatory approvals. That process has become more complicated due to the U.S. trade stand-off with China.
Credit Suisse and JP Morgan advised Mellanox, while Goldman Sachs advised Nvidia.