In order to expand its artificial intelligence and data center business, HPE has acquired networking company Zhibo Networks in hopes of achieving higher performance levels. HPE recently announced that it will acquire networking hardware company Zhibo Networks for $14 billion, making it the largest recent acquisition in the field of artificial intelligence.

The Financial Times reported that one of the reasons for the acquisition is that HPE hopes to return to large-scale transactions, following a sharp decline in merger and acquisition activities in 2023. This is another high-profile move following Cisco's acquisition of Splunk and other IT market acquisitions in September 2023.

Such large-scale initiatives indicate that digital businesses hope to continue expanding their artificial intelligence and data center products.

Providing more AI-driven capabilities

Companies around the world are eager to invest in artificial intelligence and lead in the "digital AI competition" when they can. In this sense, HPE and Zhibo Networks will be able to combine their capabilities to advance efforts in artificial intelligence and digital transformation.

HPE specifically hopes to advance its portfolio of artificial intelligence products through acquisitions. Such acquisitions will ultimately seek to expand HPE's market into new areas, such as data center networks.

The company has been supporting the development of computational capabilities required by generative artificial intelligence (Gen AI) developers, including partnerships with organizations such as Taiga Cloud to provide higher levels of service to meet the needs of Gen AI.

The transaction also aims to propel HPE's product portfolio into high-growth solutions, particularly in the networking division, with the goal of doubling HPE's networking business. Last year, HPE announced the launch of cloud computing services aimed at powering artificial intelligence systems similar to ChatGPT.

Zhibo Networks will bring high-performance networks and a range of service products, including routing, switching, Wi-Fi, network security, AI-enabled enterprise network operations (AIOps), and software-defined networking (SDN) technologies.

The company has already provided solutions for AI data center networks to optimize AI and machine learning work in data centers. Its solutions address increased data demands through high-capacity network fabrics, aiming to deliver the highest artificial intelligence performance.

AI-native networks to drive edge and cloud innovation

The acquisition aims to strengthen HPE's edge-to-cloud strategy and lead in AI-native environments based on foundational cloud-native architectures. The two companies will be able to provide the ability to manage and simplify the ever-expanding and increasingly complex connectivity needs of enterprises of various scales.

In addition, they hope to create better experiences for users and operators with the power of artificial intelligence, thereby benefiting customers' high-performance networks and cloud data centers.

Through services such as Mist AI and the Cloud platform, Zhibo Networks has already helped enterprises securely and efficiently access critical cloud infrastructure that constitutes their AI strategic foundation.

Now acquired by HPE, the two companies will be able to combine the management and control of cloud-native and AI-native to accelerate innovation. Their goal is to provide further modernized networks optimized for hybrid cloud and artificial intelligence.

Speaking about the acquisition, HPE President and CEO Antonio Neri stated on LinkedIn, "Today, Hewlett Packard Enterprise announced that we have agreed to acquire Zhibo Networks, which will accelerate our AI-driven innovation and enhance our edge-to-cloud strategy.

"This acquisition represents a significant inflection point and will positively change the dynamics of the networking market while creating significant value for our shareholders."

The acquisition is expected to be completed in early 2025.