Mellanox Moves on Titan, Waits for Nvidia

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By: Mary Jander

While Mellanox Technologies Ltd. (Nasdaq: MLNX) waits for government approval to be acquired by Nvidia, today it announced plans to acquire Titan IC, a privately held maker of processors that speed up search and analytics functions in data centers and cloud networks.

The deal could significantly strengthen Mellanox’s offerings in several areas of digital transformation, including web-scale security, high-performance computing, and edge networking.

There's another question that lingers: What does it mean for the pending acquisition of Mellanox by Nvidia (Nasdaq: NVDA), which was announced this time last year? It's possible that the deal makes Mellanox more of an International player to help finalize the purchase, but it also shows that Mellanox is not waiting for Nvidia to move forward.

A Potential Power Trio

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If Mellanox acquires Titan IC, and Nvidia buys Mellanox, the results could be stunning, given the technologies offered by each. Here’s a rundown:

Mellanox offers ConnectX smart network interface cards (Smart NICs) with a range of functions for high performance computing (HPC), including support for Non-Volatile Memory Express (NVMe) over fabrics (NVMe-oF) via both TCP/IP and RDMA over Converged Ethernet (RoCE) running at speeds up to 200 Gbit/s.

Mellanox’s BlueField I/O Processing Units (IPUs) furnish chip-level acceleration of network, storage, and security functions in virtual and data center networks. For security, the cards take over tasks such as cryptography acceleration, key management, and hardware root-of-trust.

Nvidia has a strong edge story, having unveiled its EGX Edge Supercomputing Platform last October. It has a partnership with Ericsson that includes working together on 5G cloud-native radio-access networks (RAN). The vendor also has collaborated with Red Hat and with Microsoft on Azure.

Titan IC says its RXP processors offload network, security, and storage tasks from CPUs running in multiple configurations. They use artificial intelligence (AI) to nab malware and can tackle up to 1 million search-engine rules in parallel, Titan claims. RXP processors are used in Mellanox BlueField IPUs.

Titan IC is a relatively old startup, having been founded in 2007, and its funding isn’t publicized. But its management features heavyweights from a range of successful firms, including Xilinx, which is also a partner. The company also has relationships with Cisco and with semiconductor giant Arm Holdings PLC (Nasdaq: ARMH).

If all these capabilities can be combined, the results could be a powerhouse that advances cloud networks, particularly in the area of security.

Mellanox in the Middle

In some ways, Mellanox is key to the potential power trio described above. Its strength in HPC is needed to leverage the solutions of the other two. But Mellanox is also the wild card in the equation. Its own merger with Nvidia is overdue, with the first of two possible three-month extensions set to expire on March 10.

The holdup, according to Mellanox and Nvidia SEC filings, is with the Chinese regulatory agency, the PRC’s State Administration for Market Regulation (SAMR). While other regulatory bodies worldwide, including the European Commission, approved the deal last year, SAMR held out.

Strained trade relations between the U.S. and China have probably weighed on the Mellanox/Nvidia approval, but it’s not helping that SAMR itself seems to be in a state of flux, pondering its role and its next steps as a regulatory body.

All of which add up to more delays that could derail the deal. If that happens, depending on who’s legally left holding the bag, Nvidia could be liable to pay Mellanox $350 million; or Mellanox could find itself with a $225 million penalty.

Scaling the Wall of China

It’s even possible that Titan IC could help clear the way to the Mellanox/Nvidia deal. The company is based not in California, as are Mellanox and Nvidia, but in Belfast, U.K. This puts it closer to Arm, which is also based in the U.K., and with which Titan IC and Nvidia have relationships. (Note: Mellanox also has a strong presence in Israel, where its technology orginated.)

Recall that Arm’s Japanese parent SoftBank sold 51% of its China operation to a consortium of Chinese investors in 2018 in an effort to circumvent problems with Western government restrictions. And though Arm in the U.K. holds just 49% of China’s Arm operation, it is closer than other Western chip suppliers to China’s powerful tech players — such as Huawei.

Is it possible that having Titan under its arm (so to speak) would put Mellanox in a better position with SAMR relative to the Nvidia merger? That's anyone's guess.

But one thing is certain: If these particular deals materialize, the resulting company will be equipped with all it needs to move aggressively forward.