Patrick T. Fallon | Bloomberg | Getty Images
Jen-Hsun Huang, CEO of Nvidia Corp.
Nvidia has pushed more into networking and connectivity with its own tailor-made solutions, and Mellanox will bring additional expertise in this way, said Bernstein analyst Stacy Rasgon.
The deal is announced for a competitive bidding process where other chip makers like Intel and Xilinx also offer it, according to sources familiar with the case. Reuters reported on the deal on Sunday.
Intel refused to comment on the business for Mellanox.
The acquisition is a gain for the beginner-based activist Investor Starboard Value, which owns a 5.8 percent stake and had reached an agreement with Mellanox last year on the composition of the board.
Data center revenues accounted for almost one third of Nvidia's sales. The chipmaker has grown rapidly over the past few years under CEO Jensen Huang, but a decline in China and a staggering cryptocurrency rate has begun to weigh on its sales in recent quarters.