SAN FRANCISCO (Reuters) -German chipmaker Infineon said on Tuesday it will work with Nvidia ( NVDA ) on developing chips for new power delivery systems inside artificial intelligence data centers.

Infineon said it will work with Nvidia ( NVDA ) to develop high-voltage, direct current power delivery systems. In current data centers, most high-voltage power is distributed as alternating current and then converted to the direct current needed by computer chips by individual power supply units inside of servers. 

But that method of distributing power introduces losses in moving power around and converting it. With each server rack within AI data centers expected to take a megawatt of power by the end of the decade, Infineon and Nvidia ( NVDA ) said they are hoping to reduce those losses by creating a centralized direct-current distribution system.

"Through this innovative approach, Nvidia ( NVDA ) is able to optimize the energy consumption of our advanced AI infrastructure, which supports our commitment to sustainability while also delivering the performance and scalability required for the next generation of AI workloads," Gabriele Gorla, vice president of system engineering at Nvidia ( NVDA ), said in a statement.