Countering Intel's initial bid to acquire the Israeli chipmaker Mellanox, Nvidia Corp has now submitted a higher offer to completely buy out the firm. Intel reportedly offered Mellanox US$6 billion to acquire it a few months ago. Now, reports have revealed that Nvidia may be willing to pay at least 10 percent or more than what Intel is offering the company.
Mellanox Technologies is currently the leading supplier of InfiniBand and Ethernet components used in data center servers for cloud computing and other high-speed networking applications. The company, which is based both in Israel and the United States, also supplies chips for high-speed network servers used for various applications such as data storage and financial tech services. The publicly traded company has a market capitalization of around US$ 5.9 billion as of last week's trading.
If Nvidia does manage to acquire the company, it will be Nvidia's biggest acquisition to date. The acquisition could help the company expand its data center services, which currently accounts for close to a third of its sales revenue. With the acquisition, Nvidia can also reduce its reliance on the video game market; the industry which was initially its main source of income.
Under the guidance of its CEO Jensen Huang, Nvidia has grown by leaps and bounds over the years. It has however experienced a number of setbacks, which were mostly caused by the end of the cryptocurrency craze and the recent economic slowdown in the east. As of January, the company had a market capitalization of over US$91 billion.
All of the companies involved have so far not commented on the reports of the bidding war. However, industry insiders have revealed that Nvidia may be willing to pay more than US$7 billion to acquire Mellanox. The same reports have also revealed that Nvidia may be close to a deal with Mellanox and the company could make an announcement to the public and its investors as early as this month.
Intel and Mellanox had previously partnered to supply InfiniBand technology to network clusters. Both companies have so far cornered the market. Intel's planned acquisition of Mellanox has been seen by some analysts as a defensive move to keep the company's technology from the hands of its direct competitors. Additionally, having exclusive access to Mellanox' technologies will also give Intel a big advantage in the development of quantum computing tech and internet-of-things systems. These technologies, more often than not, greatly depend on very fast network connections and communications; a feat that is right up Mellanox' alley.
