“Intel is trying to strengthen data center position with acquisition Mellanox

“Intel is trying to strengthen data center position with acquisition Mellanox

Intel wants to incorporate the Israeli network specialist Mellanox for $6 billion. In this way, the Americans are making their portfolios future-proof, and in particular are preventing competitors from taking advantage of Mellanox.

Intel has $6 billion over for Israeli network specialist Mellanox. That’s what the local press reports. The company manufactures InfiniBand and Ethernet solutions for data centers, including Dell, HPE and Alibaba. High-performance Ethernet solutions and fast interconnects via InfiniBand, for example, will become more important than ever in the near future. They’re the glue that holds together tomorrow’s powerful data centres.

Complementary knowledge

The ever-increasing focus on AI and Big Data workloads, together with the move to a memory-centric computing architecture, makes fast connections between data center components indispensable. The market is vital for Intel, which has a quasi-monopoly when it comes to cpus, but feels competitive on all sides because of the shift. Intel itself is committed to the new reality with the Optane products, among others, and has its own Omni-Path as an alternative to InfiniBand.

With the acquisition of Mellanox, Intel has acquired the necessary products and knowledge to bring its existing portfolio together. Moreover, InfiniBand and Omni-Path are not completely different creatures: they use the same Open Fabrics Enterprise Distribution Drivers. In addition, Intel is investing quite heavily in Israel, which can create a synergy between the two organizations that is good for both of them.

Strategic motivation

Functionally, the acquisition is therefore easy to understand, but the main motivation is probably strategic. Mellanox got it at the end of last year when it refused a takeover by Marvell, and Microsoft and Xilinx also showed interest. The latter two are rumoured to be willing to put $5 billion on the table. For Intel, Mellanox is certainly a valuable addition to the family, but under a different flag, the company is mainly a dangerous competitor. Intel would be dead to see the network specialist fall into the hands of a direct competitor.

That explains why the blues suddenly conjure up 6 billion out of their hats at a time when things are not going too well for the company, to put it mildly. A fulltime CEO is missing, the fabs can’t handle the demand, and 10 nm is still a dirty word.

The takeover bid does not mean that the acquisition will actually take place, although this is not unrealistic in view of the bid. In addition, Mellanox employs a large number of ex-Intel staff, which in theory can make integration in the mother ship easier. Mellanox today has 2,700 employees, Intel has 12,700 people walking around in Israel.

Related: Declining sales, no CEO and late 10 nm: Intel faces difficult year

This news article was automatically translated from Dutch to give Techzine.eu a head start. All news articles after September 1, 2019 are written in native English and NOT translated. All our background stories are written in native English as well. For more information read our launch article.