The chips that wire GPUs together are the new prize. Xsight raised $300m to sell an open one.

The AI boom made GPUs famous. The dull chips that wire thousands of those GPUs together are quietly becoming just as valuable.

Xsight Labs, an Israeli chipmaker, has raised more than $300 million at a $2.8 billion valuation, it said on Thursday. Fidelity led the round. That is more than five times what the company was worth in 2021, a jump it made in a single year.

Xsight builds the plumbing of the AI data centre. Its two chips, the E1 processor and the X2 switch, shuttle data between servers, memory and networks. As models grow, moving that data has become one of the industry’s tightest bottlenecks, and the wiring between GPUs is now a prize of its own.

Taking on Nvidia’s other monopoly

Nvidia does not just sell the GPUs. It also dominates the networking layer, which it bought its way into with Mellanox. Xsight’s pitch is the opposite of that closed kit.

Its chips are open and programmable. They run standard Linux and SONiC, and operators can rewrite the X2 switch in software after it ships, instead of waiting for new silicon. The market wanted “a high-performance alternative to closed, legacy architectures,” said chief executive Yossi Meyouhas. Xsight joins a wave of startups chipping at Nvidia’s grip on the AI stack.

Already in orbit

This is not a lab project. Several global network operators have picked Xsight’s silicon, including SpaceX’s Starlink. Last week its processors passed a test aboard SpaceX’s new Starlink V3 satellites, Globes reported. Programmable chips suit space, where engineers fix a fault in software rather than swap out the hardware.

The selling point is efficiency. The E1 is the first 800-gigabit data processor to ship, and runs under 75 watts. The X2 moves 12.8 terabits a second while drawing 40% less power than older switches. As AI’s electricity bill balloons, every watt saved is a pitch.

A serial exit machine behind it

The pedigree helps. Veterans of EZchip, the Israeli networking firm Mellanox bought in 2016, founded Xsight in 2017, CTech reported. Its chairman is Avigdor Willenz, a serial chip entrepreneur who has sold past companies to Marvell, Amazon and Intel.

His backers followed him in. The round drew Fidelity, Intel Capital, T. Rowe Price, Battery Ventures and Valor Equity Partners, among others. The cash will fund the next chip generations and a bigger sales push at Tier-1 hyperscalers.

The money pouring into AI infrastructure is no longer chasing only GPUs. It is chasing everything around them, from power stations to the wires in the rack. Xsight is betting the winners in networking will be the open ones.