Nvidia Seals a Record $20B Licensing Agreement with AI Chip Competitor Groq
Nvidia has confirmed a landmark licensing agreement with AI chip startup Groq in a deal reported to be worth approximately $20 billion, marking the chipmaker’s largest transaction ever. The agreement gives Nvidia access to Groq’s innovative language processing unit (LPU) technology, while Groq CEO Jonathan Ross and other key executives will join Nvidia.
The deal, structured as a non-exclusive licensing agreement rather than a full acquisition, allows Groq to continue operating independently under new CEO Simon Edwards. Nvidia plans to integrate Groq’s low-latency processors into its AI factory architecture to expand capabilities for AI inference workloads.
Founded in 2016, Groq has been targeting $500 million in revenue this year with its specialized chips designed for AI inference tasks. The startup raised $750 million in September at a $6.9 billion valuation. Industry analysts suggest the deal is strategic for Nvidia to maintain dominance in AI chip markets while potentially keeping competitive technology from rivals.
The transaction far exceeds Nvidia’s previous largest acquisition—the $7 billion purchase of Mellanox in 2019. With over $60 billion in cash reserves, Nvidia is leveraging its massive balance sheet to secure key AI technologies amid intense competition in the sector.
Source: CNBC