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China blesses Nvidia-Mellanox marriage

GPU powerhouse Nvidia has announced that China's antitrust authority greenlighted its proposed $6.9 billion acquisition of Israeli chip designer Mellanox, which has a play in AI, machine learning, data analytics and interconnect tech within data centers.

According to Nvidia, which made its name as a supplier of high-end graphics processing units for the video industry, China's thumbs-up means all regulatory roadblocks standing in the way of the deal – with the exception of "remaining customary closing conditions" – have now been cleared.

The European Commission and antitrust authorities from Mexico each signed off on Nvidia's hookup with Mellanox prior to approval from China's State Administration for Market Regulation.

Closing of the transaction is expected to occur on or about April 27, more than a year after Nvidia reportedly fended off an array of suitors – including Broadcom, Intel, Marvel and Xilinx – to land its $125-per-share cash deal with the Israeli firm.

China's approval, which possibly hints at more easing of Sino-US trade war tensions, will be a welcome relief for Nvidia as it seeks to diversify and better compete with Intel. When news broke, Nvidia shares rose about 4% in value and Mellanox stock was up nearly 2%.

Chinese caveats
China's State Administration for Market Regulation does apply some restrictions to the new entity's operations in the country, however.

In a statement (Chinese language) the antitrust authority was at pains to stress that the potential market for GPU accelerators, dedicated network interconnection equipment and high-speed Ethernet adapters was "huge," and that there was a risk that the Nvidia-Mellanox combo would enjoy too much concentration of power.

The competition watchdog ruefully pointed out that Nvidia had a 95-100% market share in the GPU accelerator market, both in China and around the world. In the realm of dedicated network interconnection equipment, Mellanox share in China is apparently 80-85% (and 55-60% globally). Similarly, in the high-speed Ethernet adapter market, Mellanox is judged to have a 65-70% slice of the cake on the mainland and a 60-65% share globally.

After sifting through the market-share figures, China's State Administration for Market Regulation ruled that Nvidia GPU accelerators and Mellanox high-speed network interconnection equipment may not be bundled together in the Chinese market, and that "other unreasonable trading conditions" may not be attached.

Customers who purchase these products alone, it said, "must not be discriminated against in terms of service level, price, and software functions."

— Ken Wieland, contributing editor, special to Light Reading

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