Nvidia to acquire Mellanox Technologies for about $7 billion in cash

Patrick T. Fallon | Bloomberg | Getty Images

Jen-Hsun Huang, chief executive officer of Nvidia Corp.

Mellanox’s chips power high-speed networks connecting servers. The company, which is based in Israel and the United States, had a market capitalization at the end of trading on Friday of about $5.9 billion.

Data center revenue accounts for nearly a third of Nvidia’s sales. Nvidia, based in Santa Clara, California, has grown at a rapid pace in the past few years, under CEO Jensen Huang, but a slowdown in China and a fading cryptocurrency craze have started to weigh on its sales in recent quarters.

In January, Nvidia, which has market capitalization of $91 billion, cut its fourth-quarter revenue estimate by half a billion dollars because of weak demand for its gaming chips in China and lower-than-expected data center sales. Nvidia’s acquisition of Mellanox would also represent a win for activist hedge fund Starboard Value, which is a shareholder of the company and reached a deal with it last year over the composition of its board.

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