HPE buys supercomputer company Cray for $1.3 billion

At the core of the deal is Cray's high-performance computing (HPC) technology, which HPE wants to offer as a future HPC-as-a-Service platform.

After a short swirl of rumors early Friday morning, Hewlett Packard Enterprise (HPE) confirmed that it plans to acquire US supercomputer maker Cray for approximately $1.3 billion. At the core of the deal is Cray's high-performance computing (HPC) technology, which HPE wants to offer as a future HPC-as-a-Service platform. The companies also plan to combine their existing artificial intelligence and machine learning analytics capabilities. 

"Answers to some of society's most pressing challenges are buried in massive amounts of data," said HPE chief executive Antonio Neri. "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 one of the leading players in supercomputing, with its systems powering three of the world's top 10 supercomputers. The company just recently announced an Exascale supercomputer contract for more than $600 million for the US Department of Energy's Oak Ridge National Laboratory. Cray's architecture and interconnect technology are also part of a $500 million, 1 exaFlop supercomputer called Aurora set to arrive in 2021 at Argonne National Laboratory in Chicago. 

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Once combined with Cray, HPE expects to expand its customer base and footprint in federal business and academia, and ramp up its ability to sell supercomputing products to enterprise customers. HPE said the deal will also bolster its supply chain capabilities through US-based manufacturing. 

In addition to a future HPC-as-a-Service platform, the companies are also focusing on new AI and ML services through HPE GreenLake. 

HPE's last major acquisition was its $1 billion purchase of flash storage maker Nimble Storage in 2017.  As part of the deal, HPE expects to incur one-time integration costs that will be absorbed within its fiscal year 2020 free cash flow outlook of $1.9 billion to $2.1 billion that remains unchanged.