Previous unconfirmed reports claimed that Intel had offered $6 billion for Mellanox, but Nvidia has reportedly outbid the company by more than 10 percent. These offers come after Mellanox essentially offered itself for sale in October 2018, which reportedly also garnered attention from Microsoft and Xilinx.
Mellanox specializes in Ethernet and InfiniBand networking products for the data center. The company currently has a market cap of $5.93 billion and a commanding market presence, but Intel's purported acquisition attempt could run afoul of regulators. Intel already has a heavy presence in the InfiniBand market through its line of products that come as the fruit of its $125 million acquisition of QLogic's IP back in 2012, while Mellanox is the only large-scale InfiniBand competitor.
Nvidia's play at Mellanox would help the company diversify into networking, thus reducing its heavy reliance upon graphics cards sales that has seen the company suffer at the whims of the cryptocurrency market. The Mellanox IP could also tie in well with Nvidia's strategy to increase its penetration into the data center, and Reuters predicts the company wouldn't face the same regulatory concerns as Intel.
Mellanox would also fold into Intel's portfolio nicely. Intel has spent several years transitioning away from being a PC-centric business to other profitable climes, such as data storage, memory, IoT, and 5G. Intel's overall goal is to leverage its commanding presence in the data center, estimated at ~95% of the worlds server sockets, to expand into these new adjacencies quickly. Networking is the glue that ties many of these critical components together, making the Mellanox portfolio a natural fit. InfiniBand networking is a critical component in the high performance computing (HPC) space that could afford Intel an advantage with tightly-integrated systems-level products as it fends off the rising popularity of AMD's Zen-based data center processors.
Only time will tell if Intel will dig into its significantly deeper pockets to push Nvidia out of the running, or if another large player, like Microsoft, can steal the networking show.
As expected, Nvidia, Intel, and Mellanox have not commented on the bids.