Intel Corp. (Nasdaq: INTC), which makes chips that run more than 90 percent of the world’s servers, said it’s buying startup Nervana Systems to add software, a cloud service and future hardware in an attempt to better tune its products for artificial intelligence work.
Data center deals have been picking up in the middle market. Equinix Inc. (Nasdaq: EQIX) is adding Bit-isle Inc.; Fusion Telecommunications International Inc. (Nasdaq: FSNN) has agreed to buy call center software company Technology for Business Corp.; and TierPoint LLC has agreed to buy Cosentry.
While Intel’s Xeon processors dominate in data centers, they’re not built for the unique workloads of artificial intelligence calculations, according to Gartner Inc. analyst Martin Reynolds. Adding Nervana’s products and expertise will help it gain a foothold in a small but growing market and fend off would-be rivals such as Nvidia Inc., if it can rapidly turn its acquisition into products. “The market isn’t that big yet,” he said. “But it’s potentially a huge opportunity.”
Intel’s data center unit, its most-profitable and fastest-growing business, needs to find products suited to running emerging services such as voice and picture recognition. Such artificial intelligence work is expected to become a bigger portion of the activity of the servers powered by Intel’s chips.
“We believe that bringing together the Intel engineers who create the Intel Xeon and Intel Xeon Phi processors with the talented Nervana Systems’ team, we will be able to advance the industry faster than would have otherwise been possible,” Intel’s Diane Bryant, executive vice president of its data center business, said in a web posting. “We will continue to invest in leading edge technologies that complement and enhance Intel’s AI portfolio.” San Diego-based Nervana was founded in 2014. Terms of the acquisition weren’t disclosed.
-- Additional reporting by Mergers & Acquisitions' Demitri Diakantonis.