Israeli technology lies at the heart of a major technological revolution that will fundamentally change the way data centers operate.
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Technology systems rely on one of two methods for transmitting electronic signals.
The first and older method is the transmission of electrons through copper cables; the second is the transmission of light photons through optical fibers.
The speed of light waves in a vacuum is the ultimate speed limit in nature — nearly 300,000 kilometers per second. When traveling through a medium such as optical fiber, the speed is lower, but still extremely high.
The drawback of optical fibers is the need to convert electronic signals into light pulses before transmission, and then convert them back into electronic signals at the receiving end.
Copper cables, on the other hand, have their own drawback: the more data sent through them, the greater the cable's resistance to the flow of electrons.
This resistance produces two consequences: more electrons are stopped and their motion is converted into heat, and accordingly the data becomes less reliable and more error-prone.
To address this problem, amplifiers must be placed along the line to boost and correct the signals. However, signal attenuation, heat generation, and the addition of amplifiers all significantly increase energy consumption and cooling costs — which is why optical fibers are used for long-distance signal transmission.
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Inside the servers themselves, data transmission still relies on copper.
Copper delivers the required speeds efficiently, is less expensive, and requires no optical converters.
But the age of artificial intelligence has changed the picture.
The server farms used to train and operate AI models demand as much processing power as possible and depend on enormous volumes of data.
As the volume of data flowing through the lines increases, heat generation rises and signals attenuate over shorter distances.
The result is steadily ballooning energy costs, as processor power consumption climbs alongside the need for ever more massive and wasteful cooling systems.
Now all of that is about to change — and an Israeli company is playing a central role in the transformation.
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Last week, a deal was signed between Israel's Tower Semiconductor and NVIDIA.
Under the agreement, NVIDIA will integrate an intra-server data transmission technology based on optical signals: Tower will provide the design, while actual manufacturing will be carried out by Intel in the United States.
The development is the result of research in a field known as Silicon Photonics, which focuses on using silicon itself as a medium for transmitting laser signals.
Tower developed the technology on the basis of silicon nitride, which loses less energy and generates less heat compared to standard silicon, and is specifically tailored to the needs of NVIDIA's AI servers.
Each optical data channel will deliver a speed of 200 Gb/s, and a combination of 8 parallel channels will provide an aggregate speed of 1.6 Tb/s. These massive data volumes will be transmitted with energy savings of up to 70% compared to copper-based interconnects.
In response to the deal, Tower's stock surged sharply, and it is now trading at earnings multiples more typical of a startup. The expectation is that this area of activity will generate approximately one billion additional dollars in annual revenue for the company.
It is worth noting that Tower is not operating in a vacuum. Broadcom has long been active in photonic technology, but focuses on a more universal solution designed to serve a broad range of customers.
Intel represents a significant risk factor, as it is already developing a similar solution — and manufacturing the technology for Tower could shorten its path to becoming a more direct and formidable competitor.
Pictured: A 300 mm silicon photonic wafer.
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👋 Hi, I'm Shlomo Strauss — follow me for more content on science and technology.