Mellanox's chips power high-speed networks connecting servers. So it has to be distributed on multiple computers and the high performance connectivity to allow these computers to work together is becoming more and more important. Jensen Huang, CEO of Nvidia, said the acquisition of Mellanox is aimed at addressing "holistic architectures that connect vast numbers of fast computing nodes over intelligent networking fabrics to form a giant datacenter-scale compute engine".
Nvidia will acquire all issued and outstanding common shares of Mellanox for $125 per share in cash.
Seyrafi estimates the deal will increase Nvidia's annual revenue by about 11%. Intel declined to comment on whether the company had bid for Mellanox, while Xilinx did not immediately respond to a request for comment.
A chip expert says the deal will give Nvidia an even bigger market share in the data-center market, which Reportlinker says will reach revenues of around $174 billion by 2023.
Meanwhile, with NVIDIA's own datacenter and HPC revenues growing by leaps and bounds over the last few years - thanks in big part to the machine learning boom - NVIDIA has chose to expand their datacenter product portfolio by picking up Mellanox.
Analysts believe Intel would have faced even greater challenges as it and Mellanox were dominant suppliers of InfiniBand technology, a networking standard commonly used in supercomputers.
"The data and compute intensity of modern workloads in AI, scientific computing and data analytics is growing exponentially and has put enormous performance demands on hyperscale and enterprise datacenters", Nvidia said in a statement.
Nvidia and Intel, as is usual for the companies, have refused to speculate on the sources' claims, but an announcement from the successful bidder is expected early this week. Waldman added that the combination of Nvidia and Mellanox was "a natural extension of our longstanding partnership".