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.”
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.”