Analysis: Nvidia's Ageia Purchase - A Brilliant Move?


Santa Clara (CA) - In December, we caught AMD representatives with various surprising statements dismissing a possible imminent buyout of Ageia. Common sense suggested that something was going on and that the company was trying to devalue Ageia. It didn't take much to find that Ageia in fact was serious about selling the company and since yesterday we know that the buyer is Nvidia. The question is: Does this purchase make sense for Nvidia?

After a briefing with key members of Ageia at this year's CES show in Las Vegas, it was apparent that Ageia may be just about to switch owners. The company had its next-generation parts all in place, most noteworthy a PCI Express x4 card that was already running in chipset labs of several vendors. Even Intel was advertising its X38 and X48 chipsets featuring an Ageia "PhysX Expansion Slot" (PCIe x4). However, at CES, nothing was disclosed or pre-announced.

The acquisition by Nvidia was officially announced yesterday, right after Wall Street closed. Ageia was a company in private hands and, as a result, Nvidia did not have to disclose the purchase price at this time. To find out, we will have to wait a few weeks until Nvidia files its 10-K with the SEC. However, industry rumors suggest that the purchase price was somewhere in the range of $150 million.

You could call Ageia a natural fit for Nvidia, in terms of the firm's staff. Several founding members originally worked for Nvidia and left the company to launch Ageia. It is also worth to mention that Andy Keane, Nvidia's general manager of the firm's GPGPU (Tesla) unit, originally joined the green team from Ageia.

Despite its enthusiasm, the launch of Ageia was not as successful as hoped. While developing the PhysX PCIe card, Ageia found that several popular chipsets from Intel and Nvidia actually do not comply with PCIe v1.1 regulations due to too much noise. As a result, the PhysX PCIe card did not work. Given the fact that the company was new to market, it opted not to go into a war with the giants of the industry. Rather, a more friendly line was adopted and the PhysX card came to life as a PCI part. With today's motherboards not having room for any usable PCI slots, Ageia's future was pretty much sealed.