NVIDIA, the topnotch player in the American gaming industry, designing graphics cards and other game processing units, has finally entered the final stages of its acquisition of Mellanox Technologies. The Israeli corporation Mellanox has recently auctioned its business assets and has attracted top companies in the consumer electronics market for a possible acquisition. Amongst them was NVIDIA. Let’s get into some details of these deal.
Mellanox Technologies is a chipmaker company, that is based in California and originated from Israel. Founded in 1999, the company currently designs adapters, software, and cables for the computer market, and offers cloud computing and data storage facilities and services to the users. The company earned a major investment from Oracle back in 2010, and since then has experienced a profitable market sales and revenue generation, along with acquisitions of minor players in chipmaking and chip-design business.
Intel Corp was the first major corporation to bid an offer to acquire Mellanox, which is the best known for its high computing network services. Mellanox, which is currently positioned at a fair financial value of US$ 5 billion, was however met by a better and more unexpected offer by the graphics card designer and manufacturer NVIDIA. NVIDIA countered Intel’s bid in one single sweep by offering more than US$ 7 billion in cash to Mellanox, making it NVIDIA’s highest acquisition bid, which may also transform into its most successful acquisition once the deal is finalized.
What the deal means for NVIDIA
NVIDIA has been highly dependent on its ventures in the gaming industry, which has now started to face decline given the competition in the market by other players. NVIDIA recently plunged into a major market loss in China, when it lost US$ 500 million in its final quarter of the fiscal year in the Chinese market sales. This deal would mean that NVIDIA would be in control of hefty resources in the computing network business, allowing it to diversify its market sectors and targeted consumer base. NVIDIA, which currently holds a market capitalization value of US$ 91 billion, would be able to end its reliance on its gaming market ventures and products, and therefore, boost its business repute among the data center chip design and network computing players in the market.
Though there haven’t been any final confirmation of the deal and the exact amount of acquisition from any of the inner sources and spokespersons involved, the deal has been said to be nearly complete. How NVIDIA manages these newly bought resources and put them up to good use to earn more profits, only time will tell.