Microsoft to acquire Fungible for augmenting Azure networking, storage

Microsoft on Monday said it is acquiring composable infrastructure services provider Fungible for an undisclosed amount in an effort to augment its Azure networking and storage services.

Microsoft’s Fungible acquisition is aimed at accelerating networking and storage performance in datacenters with high-efficiency, low-power data processing units (DPUs), Girish Bablani, corporate vice president, Azure Core, wrote in a blog post.  

Data processing units or DPUs are an evolved format of smartNIC that are used to offload server CPU duties onto a separate device to free up server cycles, akin to hardware accelerators such as graphics processing units (GPUs) and field-programmable gate arrays (FPGA).

Hyperscalers such as Microsoft, AWS and Google claim that the use of DPUs or smartNIC can improve performance and bring down costs in the long run.

“Fungible’s technologies help enable high-performance, scalable, disaggregated, scaled-out data center infrastructure with reliability and security,” Bablani wrote. He said the acquisition will further Microsoft’s cause to improve latency, increase data center capacity, optimize energy and other costs across its data center infrastructure.

Under the terms of the acquisition, the Fungible team will join Microsoft’s data center infrastructure engineering teams, the blog post read.

The team will focus on delivering multiple DPU solutions, network innovation and hardware systems advancements, Bablani wrote.

Santa Clara-headquartered Fungible competes with much larger chipmakers such as Nvidia, Intel, Broadcom and AMD in the highly competitive DPU or smartNIC category.

AWS and Alibaba have already developed and use their own DPUs. Microsoft’s acquisition of Fungible could intensify the battle in the category as the likes of Nvidia and AMD might find it even more challenging to sell their hardware. 

Fungible, which was founded in 2016 by Pradeep Sindhu and Bertrand Serlet, has close to 250 employees and has raised about $300 million to date from investors including SoftBank Vision Fund, Battery Ventures, and Mayfield Fund.