Nvidia has introduced a new technology that connects data centers in different locations, allowing them to function as a single system.

The development comes from Nvidia’s R&D center in Israel, which focuses on communication solutions for AI chips after the company’s acquisition of Mellanox.

The new platform, called Spectrum-XGS, aims to reduce latency between distant facilities, enabling them to operate like one large computing cluster.

Nvidia said this addresses current limits on energy and chip density that restrict the size of a single data center.

The company claims Spectrum-XGS can nearly double the performance of its Collective Communications Library, supporting faster communication across geographically distributed AI clusters.

Nvidia is also planning a large campus in northern Israel, projected to be completed within five to six years.

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🔗 Source: Calcalist

🧠 Food for thought

1️⃣ Data centers are reaching fundamental physical limits that demand architectural breakthroughs

The challenge Nvidia’s new technology addresses reflects a broader infrastructure crisis that has been building for decades.

Modern data centers trace their origins to centralized computing facilities from the late 1950s, like American Airlines’ SABRE reservation system developed with IBM1. These evolved into enterprise-scale facilities by the 1960s2, but today’s AI workloads create unprecedented demands.

The AI chip market’s explosive growth, projected to expand from $123.16 billion in 2024 to $311.58 billion by 2029 at a 24.4% annual rate, is driving data centers to their breaking point3. Single facilities now consume as much power as mid-sized cities and face constraints in energy supply, cooling capacity, and physical space1.

This explains why Nvidia’s Spectrum-XGS breakthrough is significant. It offers a path beyond the walls of individual facilities when scaling up and out within single locations is no longer viable.

2️⃣ Nvidia’s Israeli operation has become central to maintaining chip market dominance

The strategic importance of Nvidia’s Israeli R&D center, established through the Mellanox acquisition, extends far beyond this single breakthrough.

With Nvidia controlling an estimated 85-90% of the AI chip market4, the Israeli team’s responsibility for three out of four major product lines in Nvidia’s roadmap represents a concentration of critical development capabilities in one location.

This centralization becomes more significant given the intense competition emerging across the AI hardware stack, with venture capital pouring approximately $8 billion into AI chip startups in 2021-2022 alone5.

Nvidia’s planned multi-billion dollar campus investment in northern Israel, which will make it the country’s largest private employer, signals the company’s commitment to defending its market position through continued R&D leadership rather than just current product superiority.

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