Nvidia's announcement yesterday that it is building one of Israel's largest data centers in Mevo Carmel near Haifa at an investment of more than $500 million, which will also include its new labs, is the latest example of the US chip giant's deepening commitment to the country. The facility will house Blackwell processors, graphics processors with four times the computing power for training artificial intelligence models compared with those that house Nvidia's supercomputer, "Israel-1."
Nvidia Israel is second only to India in importance to the company outside of the US. In India, Nvidia has 10,000 employees and in Israel over 4,500, but the construction of the Israel-1 supercomputer and the new AI facility in Mevo Carmel indicate the chip giant's long-term plans in Israel, because it is invested here not only in employees, but also in real estate and heavy infrastructure, such as electricity and cooling.
In response to a question from Globes at the CES consumer electronics conference in Las Vegas earlier this month, Nvidia's CEO Jensen Huang said that "When we acquired Israeli company Mellanox, they only had 2,000 employees. We have become one of the largest employers in Israel and we are proud of that."
Nvidia acquired Mellanox in 2019 for $7 billion and over the past year alone has acquired Israeli startups Run:ai and Deci AI for over $1 billion.
Awkward timing: Biden's processor export restriction
Nvidia's announcement of the new Israeli data center comes at a critical time, just days after US President Joe Biden's decision to restrict the export of graphics processors used for AI processing to 170 countries, including Israel. Nvidia led the opposition to the plan, calling the move "an imposition of bureaucratic control over how chips and even software are developed and marketed around the world."
Nvidia added, "The law will stifle competition and threaten to squander America's technological advantage." Nvidia's stock has fallen nearly 12% over the past week, giving the company a market cap of $3.23 trillion. It is by no means certain that Nvidia would have decided to build the new data center if the restrictions had been imposed earlier. The new regulations encourage cloud giants such as Nvidia, Amazon and Microsoft to set up data centers and R&D in 18 allied countries, and Israel is not one of them. For territories such as Israel, the legislation contains restrictions such as the amount of chips that can be exported to that country and a cap on the number of graphics processors that can be owned in a single country that does not belong to the group of allied countries.
The $500 million investment includes the purchase of hundreds of AI processor racks at a cost ranging from $1 million to $3 million each, the conversion of the logistics center into a data center, the installation of a cooling and electrical infrastructure developed specifically for the facility, and rent. The new facility is located in the Mevo Carmel industrial zone in Ramot Menashe, a few minutes' drive from the company's headquarters in Yokne'am. It will also house development labs and offices and will begin operating in the first half of this year.
The new center is expected to be more powerful in terms of computing and processing power than Nvidia's Israel-1 supercomputer, which last November ranked 34th in the world's most powerful supercomputers. According to estimates, the data center at the Mevo Carmel facility is four times larger than Israel-1, and the number of chips is correspondingly larger.
Although this will be a processor-intensive facility and with the highest power consumption seen in Israel, it is part of a trend of more and more companies launching large data centers to meet cloud processing and AI needs.
According to research by the consulting firm Stream 11, plans are underway to build a significant number of higher-capacity data centers, such as expanding the SDS farm in Modi'in to 45 megawatts and building a new data center by Edge Connects in Neve Yamin, which will consume 50 megawatts of electricity and will likely be built by 2027. Oracle also recently stated that it intends to build three particularly large data centers for AI processing with a combined electricity consumption of one gigawatt.
Nvidia Israel site leader: A leap in technology
Amit Krig, SVP networking software and Nvidia-Israel site leader tells "Globes," "The new lab and server facility will allow us to develop Nvidia's future technology, When we talk about new AI centers, we talk about efficiency, but also about intensive power consumption that was not there before. Even in relation to the Israel-1 supercomputer, it is a leap - there we used 30-kilowatt server racks, and in the new center we will be able to support 140-kilowatt racks."
In the US, there is talk of building "AI factories" with gigawatt power. According to Krig, "They can certainly be built, we built one of these, but it is important to note that in our case, the center was built for internal R&D needs.
He adds, "At first, we had difficulty getting a commitment from the electricity company to start the project, but we received a commitment and since then we have been working very closely with its northern division."
Published by Globes, Israel business news - en.globes.co.il - on January 16, 2025.
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