HPE snaps up supercomputing firm Cray for $1.3B

HPE is buying Cray for $1.3 billion to gain access to the company's high-performance computing platforms. (Pixabay)

HPE announced on Friday it is buying supercomputing company Cray for $1.3 billion in a move that could boost its quantum-computing capabilities in the future.

HPE is paying $35 per share for Cray, which is a $5.19 premium over Thursday's closing price of $29.81 per share. The deal is subject to usual regulatory approvals, but is expected to close in HPE's fiscal first quarter of next year.

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Cray became well known in the 1970s as one of the preeminent super computing companies in the United States. Cray's supercomputing systems, which include its current generation XC and CS platforms, and next-generation Shasta series platform, have the ability to handle massive data sets, converged modeling, simulation, artificial intelligence (AI), and analytics workloads.

"Answers to some of society's most pressing challenges are buried in massive amounts of data," said HPE President and CEO Antonio Neri, in a prepared statement. "Only by processing and analyzing this data will we be able to unlock the answers to critical challenges across medicine, climate change, space and more. Cray is a global technology leader in super computing, and shares our deep commitment to innovation. By combining our world-class teams and technology, we will have the opportunity to drive the next generation of high performance computing and play an important part in advancing the way people live and work."

High-performance computing (HPC) is becoming a more important element with the explosion of data from AI, machine learning, and big data analytics. Evolving customer needs for data-intensive workloads is also driving the expansion of HPC. Over the next three years the HPC segment of the market and associated storage and services is expected to grow from about $28 billion in 2018 to about $35 billion in 2021, a compound annual growth rate of approximately 9%, according to HPE's press release.

The deal would be San Jose-based HPE's largest since it split from Hewlett Packard in 2015.

Cray's product line will benefit from HPE's size, global reach and sales teams as it builds out its “exascale” systems. Exascale is a growing segment of overall HPC opportunities, and more than $4 billion of exascale opportunities are expected to be awarded over the next five years, according to HPE.

Seattle-based Cray has a workforce of about 1,300 employees. Cray was founded in 1972 by Seymour Cray in his hometown of Chippewa Falls, Wisconsin, where Cray still makes computers today. The company delivered revenue of $456 million in its most recent fiscal year, up 16% year over year.