Nvidia strikes $20B deal with AI startup Groq

Computer chip company Nvidia has struck a deal to acquire assets from startup AI chip maker Groq for a reported $20 billion.

The news was revealed by Alex Davis, CEO of Texas-based investment firm Disruptive, according to a CNBC report. Davis, whose company invested more than half a billion dollars in Groq since 2016, said the deal came together quickly.

In a blog post on the company website, Groq said it has entered into a “non-exclusive licensing agreement with Nvidia for Groq’s inference technology.” A price wasn’t revealed in the blog.

The post noted Groq founder Jonthan Ross, president Sunny Madra and other senior officials will join Nvidia “to help advance and scale the licensed technology. The company stated it will continue to operate as an independent company with current finance manager Simon Edwards as CEO.

What Nvidia gets in the deal

In an interview with CNBC, Davis said Nvidia will get all of Groq’s assets, except for GroqCloud, which isn’t part of the transaction. Davis said GroqCloud “will continue to operate without interruption.”

The $20B deal is likely Nvidia’s largest purchase to date. The chip company previously purchased Israeli chip maper Mellanox for nearly $7 billion in 2019.

Jensen Huang, CEO of Nvidia, said in an email to employees that the Groq deal will expand the capabilities of the company by integrating Groq’s “low-latency processors into the NVIDIA AI factory architecture, extending the platform to serve an even broader range of AI inference and real-time workloads.”

Haung said while Nvidia is getting Groq’s IP and employees, it is “not acquiring Groq as a company.”

Nvidia wants to lead AI market

Nvidia has reportedly been making investments in AI infrastructure companies and is trying to keep a big lead in the market by running models once they have ben developed, Bloomberg reported.

Bloomberg noted Nvidia leadership has already pledged billions of dollars to a number of projects that will further the AI business. Examples included Nvidia investing as much as $100 billion in OpenAI and buying a stake in rival chip company, Intel Corp.

The investments has shown that Nvidia is willing to be flexible and add novel capabilities, Bloomberg reported. It’s a concept that’s likely to keep customers and new adopters focused on its technology.