$ 6.9 billion deal: why does a GPU developer buy a network equipment manufacturer

    Most recently, a deal between Nvidia and Mellanox took place. We talk about the prerequisites and consequences. Photos - Cecetay - CC BY-SA 4.0

    What a deal

    Mellanox has been active since 1999. Today it is represented by offices in the USA and Israel, but operates according to the fabless model - it does not have its own production and places orders at third-party enterprises, for example TSMC . Mellanox manufactures adapters and switches for high-speed networks based on Ethernet and high-speed InfiniBand .

    One of the prerequisites for the transaction is the general interest of companies in the direction of high performance computing (High Performance Computing or HPC). So the two most powerful supercomputers in the world - Sierra and Summit - use the solutions of Mellanox and Nvidia.

    The companies also collaborate in other developments - for example, Mellanox adapters are installed in the DGX-2 server for deep learning tasks.

    Photos - Carlos Jones - CC BY 2.0 The

    second significant argument in favor of the deal is Nvidia’s desire to get ahead of potential rival Intel. The California IT giant is similarly involved in work on supercomputers and other HPC solutions, which in one way or another contrasts it with Nvidia. It so happened that it was at Nvidia that they decided to take the initiative in the struggle for leadership in this segment of the market and were the first to enter into a deal with Mellanox.

    What will she affect

    New solutions . High-performance computing in such fields as biology, physics, meteorology, etc. every year become more demanding and operate with more and more significant amounts of data. It can be assumed that the collaboration of the Nvidia and Mellanox teams will primarily give the market new solutions that will be relevant not only to hardware, but also to the segment of specialized software for HPC systems.

    Product Integration. Such transactions often allow optimizing the operating expenses of companies by reducing the number of employees and increasing the overall efficiency of business processes. In this case, we can only assume that it will be so, but what is very likely is the integration of Nvidia and Mellanox solutions in “boxed” formats. On the one hand, it is an opportunity for customers to get fast results and ready-made technologies for solving problems here and now. On the other hand, there is a potential movement towards limiting the customization of a number of components, which may not appeal to everyone.

    Optimization of "east-west" traffic . Due to the general trend towards an increase in the volume of processed data, the problem of the so-called east-west is becoming ever more acute»Traffic. This is actually the “bottleneck” of the data center, which slows down the work of the entire infrastructure, including the solution of deep learning tasks. Together, the companies have every chance for new developments in this area. By the way, Nvidia had previously paid attention to optimizing data transfer between GPUs and at one time introduced specialized NVLink technology .

    What else is going on in the market

    Some time after the announcement of the deal, Nvidia and Mellanox announced similar plans for other manufacturers of equipment for data centers - Xilinx and Solarflare. One of the main goals of the first is to expand the range of use of FPGAs in solving HPC problems. The second one is engaged in optimizing the latencies of server network solutions and just uses FPGA chips in its SmartNICS cards. As in the case of Nvidia and Mellanox, this transaction was preceded by collaboration between teams and work on joint products.

    Photos - Raimond Spekking - CC BY-SA 4.0
    Another high-profile deal is the purchase of HPE startup BlueData. The latter was founded by former VMware employees and developed a software platform for the “containerized” deployment of neural networks in the data center. HPE plans to integrate startup technologies into its platforms and increase the availability of solutions for working with AI and MO systems.

    It is to be expected that thanks to such transactions we will see new products for the data center, which in one way or another should affect the efficiency of solving customer problems.

    UPD: According to a number of publications, one of the shareholders of Mellanox filed a lawsuit for misinformation during the presentation of financial statements before the transaction.

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