Hewlett Packard Enterprise to Acquire Supercomputer Pioneer Cray

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SAN FRANCISCO — Hewlett Packard Enterprise said Friday that it would buy the supercomputer pioneer Cray, a relatively tiny financial transaction that could loom large in a quickening race between the United States and China at the highest reaches of computing.

The big Silicon Valley company will pay about $1.4 billion to absorb a much smaller rival that has designed some of the most powerful systems in use and on the drawing board at national laboratories in the United States.

Supercomputers have long been a mainstay of military and intelligence agencies, used for chores ranging from cracking codes to designing nuclear weapons. They have many civilian uses as well, like predicting weather, creating new drugs and simulating the effect of crashes on auto designs.

Cray, based in Seattle, traces its lineage to a company founded in 1972 in Minnesota by the computer designer Seymour Cray. That company was bought in 1996 by Silicon Graphics; it was sold in 2000 to Tera Computer, which adopted the Cray name. Mr. Cray died after a car crash in 1996, having left his original company several years earlier.

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HPE, one of two companies created in the 2015 breakup of Hewlett-Packard, is a major supercomputer supplier in addition to selling general-purpose server systems. In the latest ranking of supercomputer installations, Cray was fourth with 49 systems and HPE fifth with 46.

What worries some officials in the United States is the rapid rise of suppliers based in China. One of them, Lenovo, which bought former IBM hardware operations, led the rankings with 140 supercomputers installed. Two others, Inspur and Sugon, were second with 84 and third with 54, respectively.

The United States managed to claim back bragging rights for having the world’s most powerful system last June, with an IBM machine at Oak Ridge National Laboratory in Tennessee that ended a five-year reign of Chinese machines. And Cray hardware has been selected for two massive machines expected to set a new performance standard in 2021 — a $500 million system at Argonne National Laboratory in Illinois and a $600 million system chosen by Oak Ridge.

Cray, partly because of its focus on landing government contracts with big price tags, has tended to experience sharp swings in sales and profits. In the quarter that ended in March, for example, the company reported a net loss and a 10 percent revenue decline.

“While these recent wins validate our belief in our next-generation products as well as the wide range of opportunities they will open for us, we continue to face the challenge of scale,” Peter Ungaro, Cray’s chief executive, said in a blog post accompanying the deal announcement.

Officials in the United States have long worried about the financial stability of key technology suppliers. “That was a challenge” for Cray, said Horst Simon, deputy director of research at Lawrence Berkeley National Laboratory in California, a major user of the company’s technology. Aided by HPE, Cray should be better able to compete in international markets where Chinese manufacturers have been placing many systems, he said.

Antonio Neri, HPE’s chief executive, said his company’s sales force was five times larger than Cray’s. By using it to push both Cray’s products and HPE’s existing hardware, he added, the combined company should be able to reach many more customers.

“Now we can bring it all together and scale it to significant levels,” Mr. Neri said in an interview.

Cray has 1,300 employees and conducts most of its manufacturing in Chippewa Falls, Wis. Building sensitive hardware domestically is an important factor for federal government customers, who have expressed worries about possible security threats involving systems or components produced offshore.

That has been underscored by United States actions against China’s Huawei, which sells telecommunications gear and has already been effectively blacklisted from selling in the United States. The latest Trump administration actions include prohibiting American chip makers from selling their components to Huawei.



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