Dell aims for highly lucrative hardware deal with xAI

According to anonymous sources, negotiations on a potential deal between Dell and xAI are at an advanced stage. However, they warn that the terms of the transaction could still change.

This was reported by the news agency Bloomberg. xAI, founded by Elon Musk in March 2023, is developing a series of language models under the name Grok. These LLMs are available through a chatbot and an API. To support the development, xAI built an AI-optimized supercomputer called Colossus in Memphis.

The system became operational last September with 100,000 graphics processors from Nvidia. Dell supplied tens of thousands of GPU-equipped servers powering Colossus. In December, the hardware manufacturer said it hoped to supply a disproportionate share of the GPU servers that xAI will add to Colossus in the future.

One million chips

Following a $6 billion funding round in December, xAI announced that it plans to double the number of GPUs in Colossus to 200,000 chips. The company’s ultimate goal is to grow that number to one million.

According to Bloomberg, the servers Dell would supply to xAI under the possible deal are based on Nvidia’s GB200 design. This system contains 36 GB200 Grace Blackwell Superchips from the chip manufacturer. Each processor features one Grace CPU and two Blackwell B200 GPUs.

The Grace CPU has 72 cores with a clock speed of 3.2 gigahertz. These cores are based on Arm’s Neoverse V2 design, which is optimized for use in data centers.

Newest GPU from Nvidia

The Blackwell B200 GPU, the other component of the GB200 Grace Blackwell Superchip, is Nvidia’s newest and most powerful GPU. The chip contains 208 billion transistors, produced with TSMC’s four-nanometer process. The GPU stores AI model data in 192 gigabytes of built-in VRAM memory.

The CPU and the two GPUs in each GB200 Grace Blackwell Superchip are interconnected via Nvidia-C2C technology. This system can transfer data at speeds of up to 900 gigabits per second. That’s seven times faster than PCIe 5, the common industry standard for chip connections.

Another key benefit of Nvidia-C2C is memory coherence. This feature reduces the need to copy data between CPUs and GPUs, speeding up processing and making hardware configuration easier.

The 36 GB200 Grace Blackwell Superchips in the GB200 system, the server at the center of Dell’s possible deal with xAI, are stored in 16 racks. Each rack provides up to 80 petaflops of computing power. The resulting heat is dissipated through metal plates connected to a liquid cooling system.

Substantial growth in AI server sales at Dell

Dell is expected to deliver the servers to xAI later this year. Analysts quoted by Bloomberg estimate that Dell’s AI server sales will reach $14 billion in the 11 months to January 2026, up 40% from the previous year. Following the news, Dell shares rose nearly 4% today.