This morning Hewlett Packard Enterprise and Cray are announcing that HPE will be buying out the supercomputer maker for roughly 1.3 billion dollars. Intending to use Cray’s knowledge and technology to bolster their own supercomputing and high-performance computing technologies, when the deal closes, HPE will become the world leader for supercomputing technology.

Cray of course needs no introduction. The current leader in the supercomputing field and founder of supercomputing as we know it, Cray has been a part of the supercomputing landscape since the 1970s. Starting at the time with fully custom systems, in more recent years Cray has morphed into an integrator and scale-out specialist, combining processors from the likes of Intel, AMD, and NVIDIA into supercomputers, and applying their own software, I/O, and interconnect technologies.

The timing of the acquisition announcement closely follows other major news from Cray: the company just landed a $600 million US Department of Energy contract to supply the Frontier supercomputer to Oak Ridge National Laboratory in 2021. Frontier is one of two exascale supercomputers Cray is involved in – the other being a subcontractor for the 2021 Aurora system – and in fact Cray is involved in the only two exascale systems ordered by the US Government thus far. So in both a historical and modern context, Cray was and is one of the biggest players in the supercomputing market.

HPE for its part has some supercomputing exposure as well, however it’s nothing on the scale of what Cray has done. So for HPE, the deal represents an opportunity for the firm to acquire the know-how and technology needed to augment and evolve their own supercomputer and HPC technologies. Among other things, this deal means HPE will be picking up Cray’s Shasta system architecture as well as their new Slingshot interconnect, both of which will be core parts of Frontier.

The company sounds especially interested in incorporating these technologies into their current HPC plans. While supercomputers attract a lot of attention for obvious reasons, somewhat smaller systems are sold in much higher numbers due to costs and computing needs. Like many other hardware vendors, HPE is riding the wave of big data, including AI-driven analytics, and the company intends to grow their capabilities here using Cray’s technology. Interestingly, Cray is actually the second supercomputer manufacturer picked up by HPE over its lifetime; the company also picked up the remaining assets of Silicon Graphics back in 2016.

Broadly speaking, major acquisitions and mergers in the supercomputing space are rare events. Due to their ever-increasing price tag, only a small number of world-class supercomputers are sold each year. And due to these prices the buyers are often governments, which inevitably gives supercomputer construction a nationalistic element to it. None the less, because costs are increasing – Frontier is the US’s most expensive system yet at over $500M for the system alone – there is some pressure for consolidation as fewer systems get sold and overall performance efficiency increases have been slowing down as well. It’s not too surprising then that HPE’s plans include using Cray’s technologies to improve HPE GreenLake, the company’s HPC-as-a-Service offering.

Under the terms of the deal, HPE will be paying Cray shareholders $35 in cash for each Cray share, which is a notable price premium over Cray’s average stock price over the last year. This puts the total value of the deal at nearly $1.3 billion, with HPE expecting the deal to close in the first quarter of FY2020.