Nvidia acquires Mellanox Technologies, integrating a leading high-speed networking provider into its GPU infrastructure stack.

Nvidia CEO Jensen Huang has announced that artificial intelligence is driving a fundamental shift in data center architecture from hyper-converged infrastructures to what he calls "accelerated-disaggregated infrastructure." In a letter to employees following the closing of Nvidia's $7 billion acquisition of Mellanox Technologies, Huang stated: "AI is now driving an architecture change from Hyper-Converged Infrastructures to Accelerated-Disaggregated Infrastructure. Nvidia and Mellanox are at the epicenter of this shift." The new architecture consists of AI accelerators like Nvidia's GPUs, high-speed networking components like Mellanox's interconnects, container orchestration services, and composable system designs.

The acquisition of Mellanox closed on Monday after receiving approval from China antitrust regulators a week earlier. Huang initiated acquisition discussions with Mellanox founder and CEO Eyal Waldman at the Supercomputing conference in Dallas, Texas, in 2018, after Waldman asked if Nvidia wanted to bid for Mellanox. In his letter, Huang recalled telling Waldman: "Nvidia would be the final and highest bidder. The bidding was intense. Nvidia was the highest bidder." Since the deal was announced in March 2019, both companies have demonstrated strong growth, with Nvidia's data center business and Mellanox's overall business each growing around 40 percent.

Huang emphasized that Santa Clara-based Nvidia and Sunnyvale-based Mellanox form a "perfect combination," noting that Mellanox switches and networking fabric connect Nvidia's own research AI supercomputers, while Mellanox data processing chips handle networking, storage, and security for Nvidia's EGX edge AI and 5G platform and AGX self-driving car computer. He stated: "The fastest computing and the fastest networking go hand in hand. That's why Nvidia selected Mellanox for our DGX AI systems."

Industry analysts have praised the strategic alignment. Daniel Newman, principal analyst at Futurum Research, said: "The big thing that I really walked away from this is that the company is going to be the power broker of high-performance compute and data center." Despite Nvidia now owning what one partner called "the only game in town" for high-speed interconnects, Huang made clear that the company intends to keep Mellanox's technologies open to other companies, including competitors. Newman noted: "The intention of Jensen is to leave the technology available and open, so they will collaborate with Intel, they will collaborate with AMD, they will collaborate with the cloud providers."

Marc Fertik, vice president of technology solutions at Nvidia partner Ace Computers, characterized the acquisition as evidence that Nvidia sees GPUs and high-speed interconnect technologies as the primary profit drivers for data centers, rather than CPUs. Fertik stated: "Jensen has correctly identified a three-spoke strategy in the data center, and the key to this acquisition is that it positions the new Nvidia-Mellanox combination to be very strong in two of the three."