The latest earnings report from Nvidia highlights a remarkable trend. The company’s networking division, which began with its 2020 acquisition of Israeli firm Mellanox Technologies, has quickly become one of Nvidia’s biggest growth drivers.
With huge jumps in revenue and technology that could reshape AI infrastructure, this division now stands right alongside Nvidia’s famous graphics and AI platforms.
Nvidia’s Networking Business Surges to New Heights
Since buying Mellanox for $6.9 billion, Nvidia has turned its networking arm into a real revenue machine. In the most recent quarter, networking revenues shot up 46% from the previous quarter and nearly doubled compared to last year, landing at an eye-popping $7.25 billion.
At this rate, the division is on track for an annual run rate of $25–30 billion, blowing past the original investment in just a matter of weeks.
Networking now makes up 16.1% of Nvidia’s total revenue. If you zoom in on the Israeli research and development hub in Yokneam, that slice gets even bigger—closer to 20%.
It’s a pretty clear sign that something special is happening there.
The Role of the Yokneam R&D Center
Yokneam teams work on an impressive range of projects. They’re building communications chips and CPUs for data centers, and they’re also creating SoCs for robotics and automotive uses.
On top of that, these engineers are designing advanced AI algorithms and some of Nvidia’s most cutting-edge software stacks. Their work touches multiple business lines, and it really shows.
Breakthrough Networking Technology: Spectrum-XGS
One of the most exciting innovations out of Nvidia Israel lately is Spectrum-XGS. This technology links the processing power of data centers that are miles—or continents—apart, letting them work together like a single high-performance machine.
Nvidia calls these setups massive “AI factories.” It’s a bold idea that’s starting to take shape.
Solving the Latency Problem
Latency has always been the big headache when connecting remote facilities. Spectrum-XGS tackles this, allowing data centers in different cities or even different countries to act as one unified AI supercomputer.
It’s not just a technical trick; it could change the game for global AI scaling, cloud infrastructure, and high-performance computing.
CEO Jensen Huang described Spectrum-X as a “home run” for Nvidia. He sees it as a key driver for the next wave of AI deployment at truly massive scales.
Strategic Significance for Nvidia’s Future
In the next three years, three of Nvidia’s four major product lines will be led by Israeli R&D teams. That puts the Yokneam hub right at the center of Nvidia’s global innovation, especially in data center, robotics, and AI infrastructure.
Billions Invested in a New Mega-Campus
Nvidia’s pouring billions into a gigantic new campus in northern Israel. This will be the country’s biggest high-tech site—and Nvidia’s largest R&D base anywhere.
The new campus aims to bring together top engineering talent and speed up the rollout of next-gen networking and AI solutions. It’s an ambitious move that could shape Nvidia’s future for years to come.
Key Takeaways for the AI and Tech Industry
Nvidia’s networking division has taken off in a way that’s hard to ignore. There are a few lessons here for anyone keeping an eye on tech:
- Strategic acquisitions can become transformative engines of growth when you really weave them into the heart of your business.
- Spreading R&D hubs across the globe? That can seriously boost both revenue and innovation.
- Breakthroughs in networking—think Spectrum-XGS—aren’t just cool, they’re essential for pushing AI to work at worldwide scale.
- When a company pours resources into infrastructure, it’s usually betting big on a specific tech future.
Nvidia’s networking arm is now matching its most famous product lines in impact. Israel’s also become a major force in AI and data-center progress. Maybe the next big Nvidia story won’t be about chips, but about the lightning-fast connections that keep the world’s computers humming.
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Here is the source article for this story: Nvidia’s Israeli network: The $7 billion bet that built a $30 billion business