NVIDIA acquires AI chip start-up Groq in $20B deal
What's the story
NVIDIA has announced its largest transaction yet, agreeing to a $20 billion deal to acquire assets from AI chip start-up Groq through a non-exclusive licensing agreement. The nine-year-old company was co-founded by the creators of Google's tensor processing unit (TPU), a competitor to NVIDIA in the artificial intelligence space. Groq was last valued at $6.9 billion during a financing round in September.
Leadership transition
Groq's CEO and senior leaders to join NVIDIA
The deal has been structured as a "non-exclusive licensing agreement," with Groq's CEO Jonathan Ross and other top executives set to join NVIDIA. They will help advance and scale the licensed technology. Despite this major shift, Groq will continue operating as an independent company under finance chief Simon Edwards's leadership.
Financial strategy
NVIDIA's cash reserves and future plans
As of October, NVIDIA had $60.6 billion in cash and short-term investments, a significant increase from $13.3 billion at the start of 2023. In an email to employees, CEO Jensen Huang said the deal would enhance NVIDIA's capabilities. He wrote, "We plan to integrate Groq's low-latency processors into the NVIDIA AI factory architecture." This move is expected to expand the platform for a wider range of AI inference and real-time workloads.
Past deals
NVIDIA's history of acquisitions and investments
This isn't NVIDIA's first major transaction in the AI chip start-up space. In September, it paid over $900 million to hire Enfabrica CEO Rochan Sankar and other employees at the AI hardware start-up. Other tech giants like Meta, Google, and Microsoft have also been spending big on top AI talent through various licensing deals.