WASHINGTON: Nvidia has agreed to license chip technology from startup Groq and hire away its CEO, a veteran of Alphabet’s Google, Groq said in a blog post on Wednesday. The deal follows a familiar pattern in recent years where the world’s biggest technology firms pay large sums in deals with promising startups to take their technology and talent but stop short of formally acquiring the target.
Groq specializes in what is known as inference, where artificial intelligence models that have already been trained respond to requests from users. While Nvidia dominates the market for training AI models, it faces much more competition in inference, where traditional rivals such as Advanced Micro Devices have aimed to challenge it as well as startups such as Groq and Cerebras Systems.
Nvidia has agreed to a “non-exclusive license” to Groq’s technology, Groq said. It said its founder Jonathan Ross, who helped Google start its AI chip program, as well as Groq President Sunny Madra and other members of its engineering team, will join Nvidia. Nvidia confirmed the licensing agreement. Groq did not disclose financial details of the deal. CNBC reported that Nvidia had agreed to acquire Groq for $20 billion in cash, but neither Nvidia nor Groq commented on the report.
In similar recent deals, Microsoft’s top AI executive came through a $650 million deal with a startup that was billed as a licensing fee, and Meta spent $15 billion to hire Scale AI’s CEO without acquiring the entire firm. Amazon hired away founders from Adept AI, and Nvidia did a similar deal this year. The deals have faced scrutiny by regulators, though none has yet been unwound.
Groq said in its 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.
“Antitrust would seem to be the primary risk here, though structuring the deal as a non-exclusive license may keep the fiction of competition alive (even as Groq’s leadership and, we would presume, technical talent move over to Nvidia),” Bernstein analyst Stacy Rasgon wrote in a note to clients on Wednesday after Groq’s announcement.
