Nvidia's path to stunning success runs through Israel

Nvidia offices in Yokneam credit: Nvidia
Nvidia offices in Yokneam credit: Nvidia

Tech giant Nvidia has 13% of its global workforce in Israel and its second largest development center outside of the US.

US tech giant Nvidia is the hottest stock on Wall Street at the moment after beating the analysts' predictions in its fourth quarter 2023 results. The dominant supplier of AI hardware and software, Nvidia now has a market cap of over $2 trillion. The company's path to success runs through Israel.

Nvidia's second largest development center outside of the US is in Israel. The company has been operating in Israel since 2016 and it has 3,300 employees in Israel, representing 13% of its global workforce. The company's Israeli workforce has grown by 50% in the past four years.

Nvidia's strongest supercomputer

Over the years Nvidia has proven time and again that it believes in Israel. Its most recent vote of confidence in the Start-Up Nation was its decision to choose Israel as the home for Israel-1 - the world's strongest supercomputer.

In its announcement last May, Nvidia CEO Jensen Huang said, "With Nvidia’s Israel-1 AI supercomputer, a broad range of innovative companies in Israel will create AI that can transform the productivity and business models of enterprises around the world. Israel is home to world-leading AI researchers and developers creating applications for the next wave of AI developments." Nvidia's Israel 1 supercomputer is the world's six fastest computer. The cost of the project, according to estimates, will amount to hundreds of millions of dollars.

Nvidia's belief in Israel was also expressed in 2019 when the company acquired network solutions advanced chipmaker Mellanox for $6.9 billion. This was a bargain price with Huang and Nvidia CFO Colette Kress that annual sales of products based on Mellanox technology have reached $13 billion. Most of these products were developed in Israel.

Oppenheimer & Co. senior equity analyst Sergey Vastchenok adds that Mellanox gave Nvidia its entry card into the competitive AI market.

Not only Mellanox. Most of Nvidia's R&D activity in accelerated communications is in Israel - in Yokneam, Tel Aviv, Ra'anana, Beersheva and Tel Hai where a series of chips, switches, and software and hardware platforms is an activity that is growing and expanding. At the beginning of 2022, a group was established to develop Nvidia central processors for hot areas such as data centers, new AI technologies, autonomous vehicles and more. All of these, according to the company, will require hiring hundreds more engineers in the near future.

The big challenge: Competition for employees in Israel

According to Vastchenok, the big challenge for Nvidia in Israel will be the battle for human capital. "The company is continuing to hire employees here. What will be interesting to see is that despite the high demand there is not sufficient talent. It is likely that we will see processes in which companies steal talent from each other, especially from Apple."

The fact that a tech giant like Nvidia has a significant foothold in Israel permeates through to smaller companies in the country. For example, 1,000 Israeli companies that develop AI technologies in various fields are participating in Nvidia's startup program.

However, Nvidia's contribution to the country is limited says Bank Leumi foreign shares analyst Nir Orgad. "If Nvidia were like Intel, which has chip manufacturing fabs in Israel, we would see a bigger contribution. We would see a factory for the production of chips here, and then the state would also benefit from this. But of course the company can take advantage of its huge cash flow, to hire more talent, open another department and invest in new and important areas."

Published by Globes, Israel business news - en.globes.co.il - on February 26, 2024.

© Copyright of Globes Publisher Itonut (1983) Ltd., 2024.

Nvidia offices in Yokneam credit: Nvidia
Nvidia offices in Yokneam credit: Nvidia
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