Key Points
- Nvidia is hiring Groq’s CEO and most of its engineering team.
- The deal includes a “non-exclusive” license of Groq’s AI technology.
- Groq specializes in “inference,” making AI responses much faster.
- This “acqui-hire” strategy helps big tech firms avoid antitrust lawsuits.
Nvidia is making a major move to stay ahead in the artificial intelligence race. On Wednesday, the startup Groq announced that Nvidia has agreed to license its technology and hire its top leaders. This includes Groq’s founder and CEO, Jonathan Ross, who previously helped Google build its AI chip program. Groq’s president and a large portion of its engineering team will also join Nvidia.
This deal follows a new trend in Silicon Valley. Instead of officially acquiring a startup, large tech companies pay large sums for a “license” and then hire the startup’s top talent. Microsoft and Meta have done similar deals recently. This strategy often helps large companies achieve their objectives without triggering lengthy, complex antitrust investigations that typically accompany a full takeover.
Nvidia currently dominates the AI model training market. However, it faces a tougher fight in the inference market—the part where the AI actually answers user questions. Groq is an expert at delivering these responses quickly.
Unlike most chipmakers, Groq doesn’t use the expensive memory chips that are currently in short supply worldwide. Instead, they use a special on-chip memory that makes chatbots feel much more responsive.
Even though Nvidia is taking the “brains” of the company, Groq says it will continue to operate as an independent business with a new CEO. While neither company disclosed the price, some reports suggest Nvidia paid as much as $20 billion in cash. For context, Groq was valued at roughly $7 billion just a few months ago.
Government regulators are already watching these kinds of deals closely. Analysts say that by calling the license “non-exclusive,” Nvidia is trying to show that competition still exists. However, with the top leadership moving over to Nvidia, the line between a partnership and a merger is very thin.
Fortunately for Nvidia, CEO Jensen Huang has built a strong relationship with the Trump administration, which may help the company avoid heavy legal pushback as it expands its AI empire.
