Microsoft has confirmed that it has acquired data processing unit (DPU) company Fungible.

The company this week announced the acquisition of Fungible, a provider of composable infrastructure aimed at accelerating networking and storage performance in data centers with high-efficiency, low-power DPUs.

fungible DPU.jpg
– Fungible

“Fungible’s technologies help enable high-performance, scalable, disaggregated, scaled-out data center infrastructure with reliability and security,” Microsoft said. “The Fungible team will join Microsoft’s data center infrastructure engineering teams and will focus on delivering multiple DPU solutions, network innovation, and hardware systems advancements.”

Terms of the deal weren’t shared, but early reports of the deal, last month, put the price at around $190 million.

Data processing units (DPUs) are a relatively new class of programmable processor, evolved from intelligent network cards (smart NICs). They manage data moving through a data center, offloading networking tasks and helping optimize application performance.

Santa Clara-based Fungible was founded in 2015 as the first company to pitch such a product to the cloud, and managed to raise over $370 million.

But the company, co-founded by the founder of Juniper Networks, struggled as larger players entered the market, including Nvidia, Intel, and AMD. The likes of Lightbits, Liqid, and GigaIO also took market share.

Last August the company laid off staff as its sales slowed and its cash piles dwindled. SemiAnalysis reports that the company initially tried to sell itself to Meta, but failed. It was reportedly in talks with Microsoft for a custom silicon deal, but as its options narrowed, it sold to the company for a fire sale price.

“We are proud to be part of a company that shares Fungible’s vision and will leverage the Fungible DPU and software to enhance its storage and networking offerings,” Fungible said in an announcement on its website. “We would like to thank our loyal employees for their dedication and hard work over these last seven years and our customers, partners, and investors for their belief and support in our technology.”

Microsoft said the deal signaled the company's “commitment to long-term differentiated investments” in its data center infrastructure. The deal follows the company’s acquisition of hollow core fiber firm Lumenisity last month.

"A Data Processing Unit (DPU) was proposed to resolve the top three problems in data centers," said Fungible founder Pradeep Sindhu in an article for DCD in 2021. "Data-centric computations are ubiquitous but are performed poorly by general-purpose CPUs; network utilization is low (typically less than 30 percent); the configuration, control, and telemetry interfaces to servers are inconsistent and ad-hoc."

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