Nvidia, joining Big Tech deal spree, to license Groq technology, hire executives
By Stephen Nellis
Dec 24 (Reuters) – Nvidia has agreed to license chip technology from startup Groq and hire its CEO, a Google veteran from Alphabet, Groq said in a blog post on Wednesday.
The deal follows a familiar pattern in recent years in which the world’s biggest tech firms have paid huge sums of money into deals with promising startups to acquire their technology and talent, only to fall short of formally achieving the goal.
Groq specializes in what is known as inference, where currently trained AI models respond to requests from users. While Nvidia dominates the market when it comes to training AI models, it faces much more competition, with start-ups like Groq and Cerebras Systems as well as traditional rivals like Advanced Micro Devices aiming to challenge it.
Groq said Nvidia agreed to a “non-exclusive” license to Groq’s technology. In addition to founder Jonathan Ross, who helped launch Google’s AI chip program, Groq President Sunny Madra and other members of the engineering team will join Nvidia, he said.
A person close to Nvidia confirmed the licensing deal.
Groq did not disclose financial details of the deal. CNBC reported that Nvidia agreed to acquire Groq for $20 billion in cash, but neither Nvidia nor Groq commented on the report. Groq said in the blog post that it will continue to operate as an independent company with Simon Edwards as CEO and that its cloud business will continue operating.
In similar recent agreements, MicrosoftThe top AI executive struck a $650 million deal with a startup billed as licensing fees, and Meta spent $15 billion to hire Scale AI’s CEO without buying the entire company. Amazon hired founders from Adept AI, and Nvidia made a similar deal this year. The deals have come under scrutiny from regulators, but none have yet been resolved.
“Antrust appears to be the primary risk here, but structuring the deal as a non-exclusive license could keep the competitive fiction alive (even assuming Groq’s leadership and technical talent moves to Nvidia),” Bernstein analyst Stacy Rasgon wrote in a note to clients Wednesday following Groq’s announcement. And Nvidia CEO Jensen Huang was quoted as saying “its relationship with the Trump administration appears to be the strongest among major US tech companies.”
Groq more than doubled its valuation to $6.9 billion from $2.8 billion in August last year, following a $750 million funding round in September.
Groq is one of a number of startups that do not use external high-bandwidth memory chips, saving them from the memory shortage afflicting the global chip industry. The approach, which uses a type of on-chip memory called SRAM, helps speed up interaction with chatbots and other AI models, but also limits the size of the model that can be serviced.
