TL;DR
Nvidia has agreed to buy assets from AI chip startup Groq for roughly $20 billion in cash, according to an investor involved in Groq’s recent financing. Groq described the arrangement as a non-exclusive licensing deal for its inference technology while several senior Groq executives will move to Nvidia and the startup will continue operating independently.
What happened
Nvidia reached an agreement to purchase assets from Groq, a nine-year-old maker of high-performance AI accelerator chips, for about $20 billion in cash, according to Alex Davis of Disruptive, an investor in Groq. Groq characterized the transaction as a non-exclusive licensing deal covering its inference technology; founder and CEO Jonathan Ross, president Sunny Madra and other senior leaders are slated to join Nvidia to help scale the licensed IP. Groq said it will remain an independent company under new CEO Simon Edwards and that its GroqCloud business is excluded and will continue operating. The startup raised $750 million at an approximate $6.9 billion valuation three months ago from backers including BlackRock, Neuberger Berman, Samsung, Cisco, Altimeter and 1789 Capital. Nvidia described the move as its largest purchase to date and plans to fold Groq’s low-latency processors into its AI factory architecture, while stressing it is licensing IP rather than buying Groq outright.
Why it matters
- The deal enlarges Nvidia’s portfolio of inference-focused processors, potentially broadening its capability for real-time AI workloads.
- Acquiring assets and talent from a TPU-originated startup may narrow alternative hardware options for AI inference.
- The transaction is Nvidia’s biggest purchase on record, underscoring the company’s growing role and financial firepower in the AI chip ecosystem.
- Keeping Groq as an independent entity while licensing its IP and onboarding leaders reflects an uncommon hybrid approach to tech deals.
Key facts
- Price reported by an investor: about $20 billion in cash for Groq assets.
- Groq was founded in 2016 by engineers that included creators of Google’s TPU.
- Groq raised $750 million three months before the deal at an estimated $6.9 billion valuation.
- Investors in that round included BlackRock, Neuberger Berman, Samsung, Cisco, Altimeter and 1789 Capital.
- Groq described the agreement as a non-exclusive license of its inference technology.
- Founder and CEO Jonathan Ross, president Sunny Madra and other senior leaders will join Nvidia.
- Groq will continue as an independent company under finance chief Simon Edwards as CEO.
- GroqCloud is excluded from the transaction and will continue to operate, per Groq.
- Nvidia’s prior largest acquisition was Mellanox for nearly $7 billion in 2019; Nvidia held about $60.6 billion in cash and short-term investments at the end of October.
What to watch next
- How Nvidia integrates Groq’s low-latency processors into its NVIDIA AI Factory architecture and the timelines for that work (source: Jensen Huang’s email).
- Operational status and customer access for GroqCloud, which Groq says is not part of the deal and will continue to operate.
- Whether regulators or other third parties review or seek to restrict the transaction: not confirmed in the source.
- Specific commercial terms of the licensing deal and any future product road maps: not confirmed in the source.
Quick glossary
- AI accelerator: A specialized processor designed to speed up machine learning tasks such as model training and inference.
- Inference: The process of running a trained machine learning model to generate predictions or outputs from new input data.
- Tensor Processing Unit (TPU): A custom chip architecture originally developed by Google to accelerate machine learning workloads, particularly neural network inference and training.
- Non-exclusive licensing agreement: A contract allowing the licensor to grant the same or similar rights to multiple parties, rather than granting exclusive rights to a single buyer.
Reader FAQ
Did Nvidia buy Groq outright?
According to Groq and Nvidia’s CEO, the transaction licenses Groq’s inference technology and brings several Groq leaders to Nvidia; Groq said it remains an independent company, and Nvidia said it was not acquiring Groq as a company.
Is GroqCloud included in the sale?
GroqCloud is not part of the transaction and Groq stated it will continue to operate without interruption.
How much did Groq raise recently and what was its valuation?
Groq raised $750 million three months before the deal at an implied valuation of about $6.9 billion.
Will regulators need to approve this deal?
Not confirmed in the source.
TECH Exclusive: Nvidia buying AI chip startup Groq’s assets for about $20 billion in its largest deal on record PUBLISHED WED, DEC 24 20253:54 PM ESTUPDATED AN HOUR AGO David…
Sources
- Nvidia to buy assets from Groq for $20B cash
- Nvidia to acquire Groq for $20 billion in its largest deal ever …
- Why Nvidia Struck a $20 Billion Megadeal with Groq
- Nvidia makes its biggest purchase ever – TheStreet
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