Chipmaker Company Nvidia has almost reached an agreement with Mellanox Technologies, an Israeli chipmaker firm to acquire it. The transaction to acquire Mellanox is in cash and will be sealed by paying more than 7 billion dollar- a person close with the deal mentioned on Sunday.
The deal might be the biggest ever acquisition of Nvidia. The deal will benefit Nvidia to enhance its business of making chips mainly for data centers further enables it to reduce its reliance on their video game industry.
Nvidia is the leading bidder and has outbid the popular rival company Intel Corp in the auction process. Although, the decision has not been finalized yet and the final result might change, due to such confidential information the person asked not to be named.
However, representative of Mellanox, Nvidia and Intel companies did not comment on the matter, Calcalist-the financial news website had announced on Sunday that Nvidia had outbid Intel Corp.
Chips of Mellanox are powered with high-speed networks for connecting servers. Mellanox Technologies is situated in Israel and the United States and has a market capitalization of around 5.9 billion dollars as on Friday.
Nvidia has it’s headquarter located at Santa Clara in California. Nvidia under the leadership of Jensen Huang, who is the current CEO of the company has witnessed huge and rapid growth in the recent years, however, the slowdown in China and also decline in the craze of cryptocurrency has made Nvidia in recent quarters to worry on its sales.
The news of acquiring Mellanox Technology by Nvidia has made the shares of Mellanox Company to soar high. The Shares of Mellanox are in Israel, Yokneam and Sunnyvale, California. The company has noticed a growth of 66 percent from October. While in 2019, the rise was just 18 percent.
The Israel financial newspaper Calcalist mentioned on Sunday that Nvidia and its rival Intel were auctioning for the data center tech company Mellanox and did not mention the source from where the information was received.
In January, The market capitalization of Nvidia was valued at 91 billion dollars and has reduced its fourth-quarter revenue estimation by half a billion dollar. The company cited the reason that a decline in the demand of its gaming chips in China has been observed. It also has further decreased the data center sales expectation.
Mellanox’s Technology is very much vital in exchanging information from one device to another, both within and between computers. It has become very much important to know the rate at which chip direct traffic as cloud service providers and corporate computer networks try to make sense of the growing amount of data that is being generated.
Numerous companies seek to incorporate such facilities into their list of products so as to make their company more attractive and to impress popular computer infrastructure buyers namely- Google, Microsoft Corporation Azure, Alphabet Inc., and Amazon. Com Inc.
The transaction still needs to be approved by regulators, and the process could be a bit complex because of US and China trade stand-off. The largest manufacturer of chips is the US, and China remains the biggest consumer of the chips.