Nvidia has agreed to license technology from startup Groq and hire away its CEO, according to a Groq blog post. The deal follows a pattern seen in recent years, with big tech companies entering deals with promising startups to take their technology and talent, without formally acquiring the startups.
Groq specializes in “inference”, which involves artificial intelligence models that have already been trained, responding to users. While Nvidia dominates the AI-training market, it faces higher competition from rivals like Nvidia as well as startups like Groq and Cerebras Systems.
The agreement has been described by Groq as “a non-exclusive licensing agreement with Nvidia for Groq’s inference technology.” “The agreement reflects a shared focus on expanding access to high-performance, low cost inference,” Groq said.
As part of this agreement, Jonathan Ross, Groq’s Founder, Sunny Madra, Groq’s President, and other members of the Groq team will join Nvidia to help advance and scale the licensed technology. Groq will continue to operate as an independent company with Simon Edwards, taking on the role of CEO.
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A person close to Nvidia confirmed the agreement, according to Reuters. Groq did not disclose the 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.
“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. And Nvidia CEO Jensen Huang’s “relationship with the Trump administration appears among the strongest of the key 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. It is one of the companies that do not use external high-bandwidth memory chips, freeing them from the memory crunch affecting the global chip industry. The approach uses on-chip memory called SRAM, and helps speed up interactions with chatbots and other AI models but also limits the size of the model that can be served.
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Groq’s primary rival in the approach is Cerebras Systems. This company, according to Reuters, plans to go public as soon as next year. Groq and Cerebras have signed large deals in the Middle East.
Nvidia’s Huang recently gave his biggest keynote speech of the year, stressing that Nvidia would be able to maintain its lead as AI markets shift from training to inference.