Eyal Waldman, co-founder and CEO of Israel-based Mellanox, who earlier this month sold his company to California-based chipmaker Nvidia for $6.9 billion, got no phone call from Prime Minister Benjamin Netanyahu, an ardent nationalist who is known to congratulate Israeli entrepreneurs who make a financial exit.
“It’s a win-win situation—we need the talent and it helps the Palestinian economy,” said Waldman.
Yet this is the least of Waldman’s worries: the more daunting challenge he faces is integrating the company he founded in 1999 with Nvidia and clearing regulatory hurdles—particularly in China.
But not everyone is comfortable with the risk: New York-based activist investment fund Starboard decided to sell its entire holding in Mellanox in February, ahead of the deal’s announcement.
With 24% of Mellanox’s $1.1 billion in 2018 revenue earned in China, Mellanox faces the idiosyncrasies of Chinese anti-monopoly regulators.
By joining forces, Nvidia and Mellanox are betting that together they are better positioned to win over large corporate data centers, especially those working on AI and mega databases.