The US chip designer NVIDIA is massively pushing forward the expansion of its network business and is thereby creating a second supporting pillar alongside the well-known AI chips.
• NVIDIA is building a second pillar
• The US group wants to become more independent of the classic semiconductor segment
• Customers can purchase full stack solution
It is becoming increasingly clear in the AI industry that powerful chips alone are no longer enough. What is more important is how efficiently thousands of processors can be connected to one another. According to TechCrunch, it is precisely this networking technology that is essential for large AI systems to be able to scale.
NVIDIA CEO Jensen Huang recognized early on the benefits of owning a networking business alongside the GPU business. Without much fanfare, NVIDIA’s networking business has become the company’s second-largest revenue driver behind computing in just a few years.
Mellanox takeover as a starting point
According to TechCrunch, the US group laid the foundation for today’s network business in 2020 with the acquisition of Mellanox for around $7 billion. This acquisition gave the company access to critical technology and expertise.
An essential factor for success is vertical integration: NVIDIA not only supplies the computing chips, but also the appropriate network infrastructure. This creates a closely interlinked overall system for AI data centers. This combination of computing power and data transmission gives the company a strategic advantage as customers can obtain complete infrastructure solutions from a single source, the report continues.
Analyst is impressed
Kevin Cook, senior equity strategist at Zacks Investment Research, believes NVIDIA’s networking business is one of the company’s most impressive new segments, according to TechCrunch. “[Es] recorded for that [letzte] quarterly revenue of $11 billion; “This number exceeds Cisco’s networking business and is almost in line with estimates for the entire year,” Cook explained, adding that it generates in a quarter what Cisco’s business generates in a year. “When Jensen bought Mellanox in 2020, he realized that this was the missing piece of the puzzle to make GPUs a complete package,” Cook is further quoted by TechCrunch.
Strategic importance for the future
The growing importance of the network segment indicates a fundamental shift in the business model. NVIDIA is increasingly positioning itself as a provider of complete AI infrastructure rather than solely as a chip developer. In the long term, this development could make the company more independent of the classic semiconductor business and open up new sources of revenue. At the same time, it shows that in the age of AI, not only computing power, but also its networking is becoming a decisive competitive factor.
Thomas Zoller, editorial team at finanzen.net
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