[ChipTalk] Nvidia Grows Bigger Through 'Acquisitions' Amid GPU Focus

NVIDIA's Active Acquisition Attempts Since 2000
Securing Business Capabilities in 3D Graphics and Processors
2020 Mellanox Acquisition... Data Center Revenue Increase

American semiconductor company Nvidia surpassed a market capitalization of $1 trillion. Following an intraday breakthrough last month, it recorded a closing market cap of $1.013 trillion on the 14th. It joined the $1 trillion club alongside renowned big tech giants such as Apple and Microsoft (MS). Cementing its position as a leader in graphics processing units (GPUs), Nvidia has emerged as one of the hottest topics in the semiconductor industry alongside artificial intelligence (AI).

Since its founding in 1993, Nvidia has focused on developing GPU technology and expanding its supply, steadily growing its achievements. With the goal of launching next-generation products every six months, 70% of its total workforce consists of developers. Of course, the company did not solely concentrate on building internal capabilities during its expansion. Since 2000, it has pursued mergers and acquisitions (M&A) with various companies, aiming for rapid growth through external infusion.

Nvidia’s first acquisition was '3Dfx.' 3Dfx was a company that made a name for itself in the late 1990s by introducing 3D graphic chips and graphic cards before Nvidia. However, as Nvidia quickly surged ahead, 3Dfx gradually fell behind and was eventually acquired by Nvidia in 2000. Through the various brands and technological assets held by its competitor, Nvidia strengthened its 3D graphics technology and related businesses.

The year 2000 was also when Nvidia became the world’s first to introduce a mobile GPU, the GeForce2 Go. This marked the beginning of its expansion from PCs to mobile business areas. Subsequently, in 2003, Nvidia accelerated its technology development by acquiring MediaQ, a company that produced mobile graphic processors, for $70 million.

In 2008, Nvidia acquired AGEIA, a physics engine company (a program that processes objects in games to move according to real-world physical laws such as gravity or inertia). AGEIA was known for its widely used physics engine 'PhysX' at the time, and Nvidia subsequently increased the application of physics engines in its graphic products, significantly enhancing its technological capabilities.

Of course, not all of Nvidia’s ventures were successful. During this period, Nvidia introduced the 'Tegra' product line, a mobile application processor (AP). Mobile APs are system-on-chips (SoCs) that combine central processing units (CPUs) and GPUs, serving as the brain of mobile devices. This product reflected Nvidia’s ambition to enter the CPU business as well.

In this process, Nvidia invested heavily in the mobile business, including acquiring telecommunications chip manufacturer ICERA in 2011. However, due to weaker product competitiveness compared to major market players like Qualcomm, Nvidia had to exit the related business from the mid-2010s onward. Instead, Nvidia turned its attention to automobiles, adapting the Tegra processors for automotive use and targeting the autonomous vehicle market.

In 2020, Nvidia acquired Israeli company Mellanox to expand its data center business. Mellanox was known for introducing data processing units (DPUs) that facilitate smooth data handling between CPUs, GPUs, and memory within data centers. Jensen Huang, Nvidia’s CEO, predicted that DPUs would become a core pillar of next-generation computing alongside CPUs and GPUs, signaling plans to expand this business. Since 2020, the data center business has accounted for the largest revenue share among Nvidia’s detailed business sectors.