MOUNTAIN VIEW, Calif.--Supercomputer maker Cray Inc. has signed a definitive agreement to sell its interconnect hardware development program and related intellectual property to Intel Corp. for $140 million in cash.
Under the terms of the agreement, Cray said it would transfer 74 Cray employees to Intel, but would retain certain rights to use the transferred assets and intellectual property in its upcoming products.
Cray will also continue the development, sales and support of its current product lines, as well as the company’s next-generation supercomputer, code-named “Cascade,” which will use Intel's x86 chips.
Meanwhile, the agreement also gives Cray access to “certain future Intel products,” according to a company statement.
Peter Ungaro, president and CEO of Cray said the agreement represented “an exciting win” for the firm’s customers, the company and its shareholders. Ungaro added that by broadening Cray’s relationship with Intel, the firm was better placed to push further into the HPC market and expand on other technologies related to its “Adaptive Supercomputing vision.”
Ungaro said Cray’s product roadmap remained “intact” and that the agreement “dramatically strengthens our balance sheet and increases our options for further growth, profitability and creating shareholder value.”
Prior to the deal, Cray's market capitalization stood at less than $250 million. The $140 million cash injection represents a significant boost. The reduced headcount will also save Cray money in the coming year, as the transaction is expected to close relatively quickly, even before the end of the current quarter.
Intel has been beefing up its high-performance computing portfolio with quicker interconnects over the past year, first with the acquisition of networking vendor Fulcrum Systems back in July of 2011 and then with the purchase of InfiniBand standard product lines and assets from Qlogic Corp. in January 2012 for $125 million in cash.
A communications link often used in data centers for HPC clusters, Infiniband allows for more scalability, higher throughput and lower latency.
Intel has said it is already building chip-to-chip as well as server interconnect using Qlogic's assets.
“This is a good story for Cray and Intel,” said Barry Bolding, Cray’s vice president of storage and data management. Bolding said the deal was motivated largely by the realization that as process technology continues to scale, chip makers had more space and were planning to integrate interconnects on-chip eventually.
“Intel, as a leader in the space would be able to turn that technology very quickly. And if they start putting those network technologies on the processor it would be more and more difficult for a small company like Cray to develop and keep up with our own proprietary interconnect,” Bolding said.
Cray has been making its own interconnects for over a decade, said Bolding, but did not see much value in continuing to invest in a technology that, as a standalone, “might be going away over time.”
Bolding said Intel had approached Cray to ask if the firm was selling any of its technologies in the interconnect area and that the deal was “win-win” for both parties, with Cray retaining the rights to use all the technology it’s selling in its roadmap for the next five years or so.