[throwaway5752]

It's worth adding, too, that the airport and building take much larger capital expenditures to build and are far less reproducible as a result... and will probably have decades or centuries of future revenue. For a given game, that's probably a few years of peak popularity and comparatively easy to replicate by competitors.

To the point of this article, it's kind of surprising to me at least that licensing companies like ARM and Qualcomm have been so much more successful than Mellanox.

[angry_octet]

A facility like an airport has a monopoly position, geographically and due to regulation, and the capital cost of competition, and as you say will likely be earning for many decades. ARM also has a long term monopoly, think of the sheer weight of code for ARM devices. It takes huge capital to produce a new from scratch CPU arch, esp due to patent problems (which makes RISC V all the more amazing), and deep pockets to start producing chips at scale, build a developer ecosystem etc. Games titles can produce a lot of cash for low CAPEX, but I don't think we'll be hearing about Fortnite in 5 years, let alone 50.

In contrast, Mellanox produces a niche product. It is critical to HPC and some deep pocketed finance people, but it is never going to be at the volume of e.g. ethernet.

The long term aspect is that, as Moore's law scaling becomes harder and harder, distributed computation becomes more essential. Right now we are in a dip in peak compute rate requirements, because we have invented battery powered computers and 4G, and hence cloud. But the work done in the cloud isn't very taxing, mainly single threaded. But I'm confident we'll soon be seeing a lot heavier parallel computation in the cloud soon, and stuff that won't fit into one or four GPUs. The tradeoffs between PCIe and IB after 4*16x start to favour IB, especially if the IB silicon is on the NVLink switch complex. So from the perspective of integration bringing much greater IB volume, the acquisition multiples the worth of MLNX by an order of magnitude -- if nVidia can execute.