Worth $7 Billion? This Israeli Chip Maker Is Now at the Heart of Nvidia's New Strategy

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A server room at the Mellanox building in Yokneam, March 4, 2019.
A server room at the Mellanox building in Yokneam, March 4, 2019.Credit: AMIR COHEN/ REUTERS

American semiconductor giant Nvidia made a number of important announcements on Monday – and the one that stood out the most was an update on its plans for its BlueField-2 family of data processing units (DPU) – developed by Mellanox Technologies in northern Israel.

Nvidia completed its acquisition of Mellanox in April for $6.9 billion. Mellanox, which has offices in Yokeneam, and the United States, makes chips and other hardware for data center servers used to provide cloud computing services. Its customers includes major manufacturers such as Dell and HP, which are building server farms for giants like Google, Microsoft, Facebook and Amazon.

BlueField-2 looks to be the main component in Nvidia’s strategy in the data center market, and one of the company’s most important products in general. BlueField-2 is a data processor chip intended for server farms. It is optimized to offload critical networking, storage and even security tasks from the main processor – the CPU  – thus freeing it and the servers, to work faster and more efficiently. 

Mellanox's BlueField-2 is posed to be one of Nvidia’s most important products Credit: Nvidia

In Nvidia’s vision, every server will have three types of processors: the regular, main CPUs; along with graphics processing units (GPU), which are responsible for the advanced artificial intelligence (AI) computations; and the third will be the DPU. Jensen Huang, the co-founder and CEO of Nvidia, has said in the past that these will be the three fundamental pillars of the computing world from now on.

Mellanox announced the BlueField DPUs in the past, but now Nvidia has revealed its roadmap for the processors for the next few years – and has placed them at the center of its strategy. Nvidia announced on Monday that the BlueField-2 is now ready for sampling and will ship in 2021. It will be used in systems from manufacturers such as Dell, Asus, Fujitsu and other companies. Future generations of the chips will follow, and BlueField-3 shipments may start as soon as 2022.  

Why are these chips so important to Nvidia? The semiconductor maker marked the data center market as a major sector for growth years ago. According to the company’s financial reports for the second quarter of 2020, its revenues from the data center sector grew by 167% compared to the same quarter of the previous year, and reached $1.75 billion – mostly thanks to its purchase of Mellanox. This is the highest growth rate of any of its businesses, and for the first time its server farm products overtook the sales of its gaming products.

Mellanox CEO Eyal Waldman.Credit: Ofer Vaknin

Nvidia does not develop CPUs for data centers, this is a business where Intel is the leader. But it is one of the leading GPU suppliers in the world, including for artificial intelligence tasks, and the BlueField DPUs are another product that Nvidia can now offer to customers in the data center market. This means Nvidia can sell two of the three central chips that make up the future server. 

“The data center has become the new unit of computing,” said Huang. “DPUs are an essential element of modern and secure accelerated data centers in which CPUs, GPUs and DPUs are able to combine into a single computing unit that’s fully programmable, AI-enabled and can deliver levels of security and compute power not previously possible.”

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