Mellanox Technologies

Mellanox Technologies Ltd.
Company type	Public (until 2020)
Industry	Computer networking
Founded	May 1999; 27 years ago in Yokneam Illit, Israel
Founder	Eyal Waldman and others
Defunct	April 27, 2020
Fate	Acquired by Nvidia and merged into its networking division
Headquarters	Sunnyvale, California, United States
Area served	Worldwide
Key people	Eyal Waldman (founder and former CEO)
Products	Network adapters, switches, software, cables, silicon components
Number of employees	Approximately 2,900 (2018)
Parent	Nvidia (since 2020)

Mellanox Technologies Ltd. () was a multinational company with Israeli-American roots, specializing in computer networking solutions utilizing InfiniBand and Ethernet technologies. Its product lineup included adapters, switches, software, cables, and silicon components serving sectors such as high-performance computing, data center operations, cloud computing, computer data storage, and financial services.

On March 11, 2019, Nvidia declared its plan to acquire Mellanox for $6.9 billion. The transaction was finalized on April 27, 2020, after receiving regulatory clearance from antitrust authorities in the EU, United States, and China.

Following the acquisition, Mellanox was merged into Nvidia’s networking division, leading to the discontinuation of the "Mellanox" brand for future networking products.

1999–2009

Mellanox was established in May 1999 by a group of former executives from Intel Corporation and Galileo Technology (which Marvell Technology Group acquired in 2000 for $2.8 billion): Eyal Waldman, Shai Cohen, Roni Ashuri, Michael Kagan, Evelyn Landman, Eitan Zahavi, Shimon Rottenberg, Udi Katz, and Alon Webman. The company was founded in Yokneam Illit, Israel by Eyal Waldman with financial operations based in Santa Clara, California.

In February 2002, Mellanox raised close to $56 million through venture capital funding, which later increased to approximately $64 million. Key investors included Intel, IBM, Sequoia Capital, and U.S. Venture Partners.

Mellanox launched its initial public offering on NASDAQ in February 2007, securing $102 million and achieving a valuation exceeding $500 million. The company’s shares were traded under the ticker symbol MLNX. By 2009, Mellanox had evolved from manufacturing integrated circuits to delivering comprehensive network system solutions. Its investment fund was publicly introduced in 2014.

2010–2016

Oracle Corporation became a significant shareholder in Mellanox in 2010 by acquiring roughly 10% of its equity. Oracle incorporated Mellanox’s InfiniBand technology into its Exadata and Exalogic platforms. Mellanox maintained a listing on the Tel Aviv Stock Exchange until 2013 before delisting there while continuing its NASDAQ presence.

In February 2011, Mellanox purchased Voltaire Ltd., a provider of data center switches, for approximately $218 million. By November 2012, a marketing firm recognized Mellanox as one of the fastest-growing companies.

During 2013, Mellanox acquired assets from XLoom Communications Ltd., including opto-electric chip-scale packaging technology and essential personnel. In July of the same year, it completed acquisitions of Kotura, Inc., known for silicon photonics optical interconnect technology development, and IPtronics A/S, a company specializing in optical interconnect components design.

In July 2014, Mellanox expanded through acquiring Integrity Project to enhance its capabilities in software connectivity, low-level development tools, real-time applications, and security technologies. Further growth occurred in February 2016 with the acquisition of publicly traded EZchip Semiconductor, a supplier of network processors and multi-core processors originating from EZchip’s earlier purchase of Tilera, for $811 million.

By 2016, Mellanox employed software developers located in the Gaza Strip, alongside teams operating within Israel and other Palestinian territories. That year marked revenues totaling $857 million. In December 2017, the company revealed plans to initiate a startup accelerator program. Shares experienced a 55% increase throughout 2017, partly fueled by the strategic acquisition of EZchip.

2018–Acquisition

In November 2017, the activist investment firm Starboard Value LP took a 10.7% ownership position in Mellanox. By January 2018, Starboard publicly challenged the company’s approach to research and development expenditures, urging a shift towards prioritizing immediate financial returns. Subsequently, Mellanox discontinued its efforts on 1550 nm silicon photonics technology and announced the termination of 100 employees in the United States, from a total workforce of approximately 2,900 predominantly located in Israel.

Starboard initiated a proxy contest demanding a full overhaul of the board of directors and proposed nine new nominees, including Starboard’s Jeffrey Smith. At that point, Mellanox had a market capitalization near $3.3 billion. Shareholders endorsed governance reforms connected to the disputed board elections by May 2018. By June, three existing directors resigned and were replaced by two candidates appointed by Starboard along with one mutually agreed-upon individual.

In 2019, Nvidia Corporation completed the acquisition of Mellanox for $6.9 billion, representing one of that year’s most significant mergers and acquisitions. Other companies considered potential buyers, including Intel, Xilinx, and Microsoft. Founder and long-serving CEO Eyal Waldman exited in November 2020, reportedly receiving close to $240 million from the transaction.

Products and Market

Mellanox operated as a fabless semiconductor company, marketing products built on proprietary integrated circuit designs. Since at least 2011, its semiconductor fabrication was outsourced to Taiwan Semiconductor Manufacturing Corp (TSMC).

The firm offered network adapters, switches, and cables compatible with Ethernet and InfiniBand protocols for servers and storage systems deployed in cloud and enterprise data centers. Major clients included Hewlett-Packard and Dell EMC, each contributing over 10% of revenue between 2017 and 2019.

Specializing in switched fabric architectures tailored for enterprise data centers and high performance computing environments, Mellanox targeted use cases demanding high throughput and minimal latency such as extensive computer cluster configurations and database management platforms. Its networking solutions supported technologies like remote direct memory access (RDMA) and RDMA over Converged Ethernet.

Prominent product lines encompassed:

ConnectX: Multi-protocol ASICs and network adapters capable of handling virtual protocol interconnect (VPI) for both Ethernet and InfiniBand traffic at speeds reaching 200 Gbit/s. The ConnectX-6 and ConnectX-6 Dx variants deliver increased bandwidth, OVS acceleration, Multi-Host capabilities, as well as inline cryptographic acceleration. This architecture is recognized for its strong efficiency on contemporary multi-core processors.
Quantum: InfiniBand switches featuring up to 40 ports operating at HDR 200 Gbit/s, designed to provide low latency, superior packet forwarding rates, and advanced high-performance computing offloads such as SHARP (collective operation acceleration) and SHIELD (self-healing mechanisms).
Spectrum: Ethernet switches engineered for high-performance networking environments.
LinkX: A range of cables and transceivers supporting both Ethernet and InfiniBand standards across multiple form factors.

High-performance computing

By 2011, Mellanox's InfiniBand solutions had achieved extensive adoption within the TOP500 list of leading high-performance computing systems, solidifying the company's influential role in the HPC sector.

Storage

While initially centered on InfiniBand technology, Mellanox broadened its scope into storage area network (SAN) markets by applying its innovations to replace traditional Fibre Channel with more widely used Ethernet protocols starting in 2011, thereby strengthening its footprint in storage infrastructure.

Operations

Mellanox operated on a global scale, maintaining offices in locations including the United States, Israel, Denmark, China, Russia, Singapore, Taiwan, Japan, and the United Kingdom.

Support of the Palestinian Tech Economy

Mellanox adopted a strategic approach by outsourcing engineering roles to the West Bank, employing Palestinian professionals from Ramallah through a local outsourcing company rather than conventional offshore hubs. By 2018, the workforce included over 100 Palestinians contributing to various Mellanox initiatives. CEO Eyal Waldman emphasized intentions to establish an R&D facility in Ramallah despite higher operational expenses compared to Eastern Europe, demonstrating dedication to fostering technological growth in the region.

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