Nvidia Corporation’s strategy of slashing its dependence on a debilitated gaming industry has seen it acquire Israeli chip-making firm Mellanox Technologies for more than $7 billion in cash.

The acquisition, which is Nvidia’s largest to date, saw it outbid Intel Corporation. Nvidia is expected to formally announce its sealing of this deal Monday.

Based in Sunnyvale, California, Mellanox supplies computer networking products using InfiniBand and Ethernet technology. It markets adapters, switches, software, cables and silicon for high-performance computing, cloud computing, data center, computer data storage and financial services firms.

Nvidia designs graphics processing units (GPUs) for the gaming and professional markets. It also designs system-on-a-chip units (SoCs) for mobile computing and the automotive market. Its primary GPU product line is "GeForce.”

Analysts said Nvidia’s acquisition of Mellanox, which has a market cap of $5.9 billion, will boost its core business of making chips for data centers. The buy-in will also allow Nvidia to slash its reliance on the video game industry, where it made its mark and is now best known as a major technology supplier.

Nvidia is slowly weaning itself from an overreliance on the gaming industry. Data center revenue now accounts for a third of Nvidia’s sales. The snowballing economic slowdown in China, a major Nvidia market, and the extremely volatile cyrptocurrency fad have both deflated Nvidia sales.

This development forced Nvidia to cut its fourth quarter 2018  revenue estimate by over $500 million because of weak demand for its gaming chips in China and lower-than-expected data center sales.

Nvidia Nvidia headquarters in Santa Clara, California. Nvidia will acquire Israeli chipmaker Mellanox Technologies. Photo: Justin Sullivan/Getty Images

Mellanox has been growing steadily over the past two years and posted a reasonable profit in 2018. In the fourth quarter of the same year, Mellanox boosted revenues by 22 percent to $290.1 million. Net income came in at $42.8 million, which was a big turnaround from the $2.7 million loss it posted year-on-year. Net income came in at a morale boosting 14.8 percent of revenue.

Mellanox invested quite heavily in cluster rollouts in the first three quarters of 2018 in anticipation of a slowdown in Ethernet switch and adapter and ASIC sales. Ethernet sales did skid, as Mellanox had predicted.