Nvidia Takes an Added Role Amid AI Craze: Data-Center Designer

Nvidia dominates the chips at the center of the AI boom. It wants to conquer almost everything else that makes those chips tick, too. From a report: Chief Executive Jensen Huang is increasingly broadening his company's focus -- and seeking to widen its advantage over competitors -- by offering software, data-center design services and networking technology in addition to its powerful silicon brains. More than a supplier of a valuable hardware component, he is trying to build Nvidia into a one-stop shop for all the key elements in the data centers where tools like OpenAI's ChatGPT are created and deployed -- or what he calls 'AI factories.'

Huang emphasized Nvidia's growing prowess at data-center design following an earnings report Wednesday that exceeded Wall Street forecasts. The report came days after rival AMD agreed to pay nearly $5 billion to buy data-center design and manufacturing company ZT Systems to try to gain ground on Nvidia. 'We have the ability fairly uniquely to integrate to design an AI factory because we have all the parts,' Huang said in a call with analysts. 'It's not possible to come up with a new AI factory every year unless you have all the parts.' It is a strategy designed to extend the business success that has made Nvidia one of the world's most valuable companies -- and to insulate it from rivals eager to eat into its AI-chip market share, estimated at more than 80%. Gobbling up more of the value in AI data centers both adds revenue and makes its offerings stickier for customers.

Nvidia is building on the effectiveness of its 17-year-old proprietary software, called CUDA, which enables programmers to use its chips. More recently, Huang has been pushing resources into a superfast networking protocol called InfiniBand, after acquiring the technology's main equipment maker, Mellanox Technologies, five years ago for nearly $7 billion. Analysts estimate that InfiniBand is used in most AI-training deployments. Nvidia is also building a business that supplies AI-optimized Ethernet, a form of networking widely used in traditional data centers. The Ethernet business is expected to generate billions of dollars in revenue within a year, Chief Financial Officer Colette Kress said Wednesday. More broadly, Nvidia sells products including central processors and networking chips for a range of other data-center equipment that is fine-tuned to work seamlessly together.

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