Nvidia has reached an agreement to acquire Israeli chipmaker Mellanox Technologies in a deal worth $6.9 billion. This makes it the largest purchase Nvidia has ever made as it seeks to gain a foothold in the data centre market.

The deal itself is expected to go through by the end of 2019, with Nvidia outright purchasing Mellanox for the price of $125 per share.

It marks a significant move for Nvidia as it looks to diversify away from its focus on its gaming division. Gaming graphics card sales have proven extremely volatile lately, with revenue dropping 45% year on year for the previous quarter. The bottom of the market fell out on the cryptocurrency mining craze, leaving Nvidia caught with its pants down and saddled with a heap of excess inventory. Diversifying should help Nvidia offset these downfalls if any future surprises arise.

Both Nvidia and Intel were allegedly caught in a bidding war over Mellanox, with team green coming out triumphant. Mellanox’s business is concerned with supercomputers and high-performance computing (HPC). It is the leading producer of ethernet and Infiniband products for data centre usage and used in more than half of the world’s faster supercomputers. It sounds as if this was as much a case of Nvidia warding off Intel as it was to its own direct benefit.

“We’re excited to unite Nvidia’s accelerated computing platform with Mellanox’s world-renowned accelerated networking platform under one roof to create next-generation datacenter-scale computing solutions. I am particularly thrilled to work closely with the visionary leaders of Mellanox and their amazing people to invent the computers of tomorrow,” said Jensen Huang, Nvidia CEO.

"Combining our two companies comes as a natural extension of our longstanding partnership and is a great fit given our common performance-driven cultures," said Mellanox CEO Eyal Waldman.

All that remains now is to dot the i’s and cross the t’s for the deal to go through, subject to various regulatory approvals.