NVIDIA to Acquire Arm for $40 Billion

Above: Jensen Huang, founder and CEO of NVIDIA

A major development in the semiconductor’s industry: NVIDIA announced a definitive agreement with SoftBank under which NVIDIA will acquire Arm Limited from SBG fo a total amount of approximately $40 billion. NVIDIA will pay $21.5 billion in common stock and $12 billion in cash. Additionally, SoftBank may receive up to $5 billion in cash or common stock, subject to satisfaction of specific financial performance targets by Arm.

NVIDIA will also issue $1.5 billion in equity to Arm employees. The transaction is subject to regulatory approvals, including in U.K., China, the European Union and the United States. Completion of the transaction is expected to take place in approximately 18 months. NVIDIA said it is committed to the UK: Today 3,000 employees out of ARM’s global 6,500 strong workforce are located in the UK.

Jensen Huang, founder and CEO of NVIDIA expressed a commitment to Britain: “Arm will remain headquartered in Cambridge. We will build a world-class AI research facility and a state-of-the-art AI supercomputer, powered by Arm CPUs. Arm Cambridge will be a world-class technology center. AI is the most powerful technology force of our time and has launched a new wave of computing. Our combination will create a company fabulously positioned for the age of AI.”

NVIDIA plans to bring its intellectual property to Arm’s ecosystem, to offer data center customers an alternative to legacy CPU. As part of NVIDIA, Arm will continue to operate its open-licensing model while maintaining the global customer neutrality that has been foundational to its success.

Mellanox drives NVIDIA into the Data Center

Above: Eyal Waldman, CEO and President of Mellanox (left) and Jensen Huang, founder and CEO of NVIDIA

The $6.9 billion merger between Mellanox and NVIDIA which was completed in April 2020, proved to be a successful move: Mellanox is an expert in high-speed Ethernet and InfiniBand networking solutions for Data Centers and High Performance Computers. NVIDIA invented the GPU back in 1999, and transformed itself from a provider of graphical boards into a powerhouse in High Performance computing and Artificial Intelligence, based on its expertise in GPUs.

This newly wedded couple produced an excellent financial quarter in Q2 2020: Record revenue of $3.87 billion, up 50% from a year earlier, and record Data Center revenue of $1.75 billion, up 167% compared to Q2 2019. Mellanox contributed approximately 14% of company revenue and just over 30% of data center revenue. In fact, Mellanox’ own sales grew 26% under the umbrella of NVIDIA to a record of $541 million.

“That’s why we bought Mellanox”

Mellanox also played an important role in NVIDIA’s strategy to break into the data centers market. “Mellanox grew sharply, driven by the need for high-speed networking in cloud data centers to scale-out AI services,” said Jensen Huang, President and Chief Executive Officer of NVIDIA. “We recognize the importance of high-speed networking and low-latency networking, and that’s why we bought Mellanox.”

Colette Kress, Chief Financial Officer of NVIDIA said during a conference call earlier this week, that NVIDIA and Mellanox powers two-thirds of the top 500 Super Computer systems in the world,  compared with just less than a half in total two years ago. “And just this morning, Microsoft Azure announced the availability of massively scalable AI clusters, which are based on the A100 and interconnected with 200-gigabyte-per-second Mellanox InfiniBand networking.”

Mellanox' ConnectX-6 Dx Dual 100GbE / Single 200GbE SmartNIC for Advanced Cloud
Mellanox’ ConnectX-6 Dx Dual 100GbE / Single 200GbE SmartNIC for Advanced Cloud

The overall strategy is well defined: “The combination of NVIDIA accelerated computing, Mellanox networking, and Cumulus software (Acquired in May 2020) – enables data centers that are accelerated, disaggregated, and software-defined – to meet the exponential growth in AI, cloud, and high-performance computing.”

Growth to continue in Q3 2020

Jensen sees more sales in the near future. “Despite the pandemic’s impact on our professional visualization and automotive platforms, we are well positioned to grow, as gaming, AI, cloud computing and autonomous machines drive the next industrial revolution,” he said, and expects Q3 2020 revenue to be $4.40 billion, plus or minus 2%.

Why? Because “Two components, two types of technologies are really important to the future of cloud. One of them is acceleration, and our GPU is ideal for it. And then the other one is high-speed networking. That transition is called east-west traffic. And the most important thing you could possibly do for yourself is to buy really high-speed, low-latency networking. And that’s what Mellanox is fantastic at.”

Nvidia and Mellanox built a Supercomputer in just a Month

Photo above: Mellanox’ AI platform protects supercomputers from from hacking and inappropriate use

In a first joint announcement by Nvidia and Mellanox, the two companies announced a reference design for the rapid building of supercomputers, and a new cyber protection platform for supercomputers. Mellanox has expanded its offering of Unified Fabric Manager (UFM) products, adding to it a new appliance called UFM Cyber-AI Platform.

It provides cyber protection to supercomputers and big data centers, using an artificial intelligence software that studies the behavior characteristics of the computing systems, to identify malfunctions and detects abnormal activity that implies on hacking and unauthorized activity.

Originally, UFM technology was developed a decade ago by Mellanox in order to manage InfiniBand-based communications systems by providing network telemetry data, monitoring the activity of all the related devices, and managing the software updates across the network’s components.

The new solution comes both as a software package or as a complete appliance based on Nvidia’s dedicated server. It is focused on characterizing computer operation and identifying unusual activity. According to Nvidia and Mellanox, the system significantly reduces the data center’s downtime, whose damages are estimated to reach $300,000 per hour.

Supercomputers are open and unprotected platforms

According to Mellanox’s VP of Marketing, Gil Shainer, the integration of Mellanox’s InfiniBand with Nvidia’s GPU changes the rules of the game in the supercomputer market, bringing to it unprecedented cyber security and preventative maintenance capabilities. Shainer: “Supercomputers are managed differently from organizational computer centers. Usually it is an open platform that need to provide easy access to many researchers around the world.”

To illustrate the dilemma he recalled an event that took place several years ago at an American university. “The administrator of the computers center told me how they caught a student using a computer for crypto mining. The suspicion emerged when they found out that the computer’s power consumption was not declining during the annual vacation, a period of time in which the computer usually is not active. Our solution allows you to detect such a situation right away – and not have to wait for your computer’s power bill.”

Reference Design for the Rapid Construction of Supercomputer

Alongside the joint announcement, Nvidia unveiled a new supercomputer called Selene (photo above), which is considered the strongest industrial supercomputer in the United States, with peak performance of 27.5 petaflops. The computer is based on the new A100-model GPU processors announced this week, and was built for internal research conducted in Nvidia. During a press briefing last week, Shainer revealed that the new computer was built in just one month, a record-breaking time for the construction of a supercomputer.

Shainer: “The ability to build a supercomputer in a month is based on expertise in communication and expertise in processors. We have developed a reference design that allows anyone to build a supercomputer, based on ready made blocks of Nvidia’s processors and Mellanox’s communication. Because the processors are fully compatible with the communications cards, the computer can be set up in no time. In fact, we have jointly developed a reference design that allows for the construction of computers of any size – not just supercomputers.”