The $7b NVIDIA deal you’ve probably never heard about... but it’s powering the entire ai revolution

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Most people think NVIDIA = GPUs.

But here’s the twist: modern AI training isn’t just a GPU game—it’s a networking game.

Here’s why:
A single GPU, even a powerhouse like the A100, maxes out at ~50 billion parameters. But today’s AI models, like GPT-4, have trillions.

Training them means splitting the load across thousands of GPUs—each syncing and sharing data constantly. Without the right networking tech, everything grinds to a halt.

Enter Mellanox.

In 2019, NVIDIA acquired Mellanox for $7 billion. It flew under the radar at the time, but it might be one of the most strategic acquisitions in tech history.

Here’s why Mellanox is the unsung hero:
☑ RDMA (Remote Direct Memory Access): Allows GPUs to access memory on other machines without CPU bottlenecks.
☑ Infiniband: Cuts latency by 2-3x compared to Ethernet (100ns vs 200-400ns)—critical for syncing gradients across GPUs.
☑ GPUDirect RDMA: Enables GPUs to communicate directly with network cards, slashing latency by another 30%.

NVIDIA didn’t just buy Mellanox—they built it into their DNA:
→ Mellanox’s ConnectX NICs are baked into NVIDIA’s DGX systems.
→ NVIDIA optimized the entire stack: GPUs, NICs, switches, and drivers work in perfect harmony.

The results? Unmatched performance:

• HDR Infiniband: 200Gb/s per port

• Quantum-2 switch: 400Gb/s per port

• End-to-end latency: ~100ns

• GPU memory bandwidth: ~900Gb/s

This integration allows NVIDIA to dominate AI training at scale.

Meanwhile, the competition is floundering:
→ Intel scrapped its Omni-Path project.
→ Broadcom and Ethernet lag in latency.
→ Cloud providers are stuck with RoCE (and its limitations).

Looking ahead, NVIDIA has its sights set on:

• Tighter GPU-NIC integration (think CXL + Mellanox).

• Sub-50ns latency and terabit-per-second bandwidth.

• AI-first networks purpose-built for tomorrow’s workloads.

The takeaway?
While GPUs get all the glory, Mellanox is the silent kingmaker behind every breakthrough. NVIDIA didn’t just buy a networking company—they bought the future of AI.

Next time you marvel at a cutting-edge language model, remember this:
The GPUs may be the stars of the show, but Mellanox is the stage they perform on.

Sometimes, the most important tech is the one you don’t see.

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See you next week!

Cheers,

Jagger