"A first in NVIDIA's history"…Jensen Huang poured in '29 trillion won' [Stocks+]

Acquisition of AI chip startup Groq's personnel and licenses for $20 billion

NVIDIA's largest-ever acquisition…'AI inference competition' kicks into gear

Jensen Huang "securing talent and IP in the form of licenses"

NVIDIA has agreed to acquire the assets of AI accelerator chip startup Groq for about $20 billion. It is the largest deal in NVIDIA's history.

According to CNBC on the 24th (local time), the deal was disclosed by Alex Davies, CEO of Disruptive, which led Groq's recent funding round. NVIDIA will purchase Groq's assets, which design high-performance AI accelerator chips, for $20 billion in cash.

Groq was founded in 2016 by engineers who developed Google's Tensor Processing Unit (TPU) and has been developing AI inference chips that compete with NVIDIA's GPUs. Groq raised $750 million at a valuation of about $6.9 billion last September, with investors including BlackRock, Neuberger Berman, Samsung, Cisco, Altimeter, and 1789 Capital.

Groq described the deal on its blog as a "non-exclusive licensing agreement with NVIDIA." It did not disclose the price. Key executives, including Groq founder and CEO Jonathan Ross and President Sunny Madra, will join NVIDIA to support the expansion and advancement of the licensed technology.

However, Groq said it is not selling the corporate entity itself and will continue as an independent company with CFO Simon Edwards serving as CEO. Groq's cloud business, 'GroqCloud,' was not included in the deal.

NVIDIA CFO Colette Kress declined to comment on the deal.

This acquisition is the largest deal in NVIDIA's history. The previous largest acquisition was the purchase of Israeli chip designer Mellanox for about $7 billion in 2019. As of the end of October last year, NVIDIA held $60.6 billion in cash and short-term investments.

In an email to employees, NVIDIA CEO Jensen Huang said, "We plan to integrate Groq's low-latency processors into the NVIDIA AI Factory architecture to support real-time AI inference and a wider range of workloads." He also drew a line, saying, "We are not buying the company Groq; we are securing talent and intellectual property (IP) in the form of licenses."

NVIDIA has recently carried out similar deals. Last September, it invested more than $900 million to bring in the CEO and key personnel of AI hardware startup Enfabrica and to secure technology licenses. Big tech companies such as Meta, Google, and Microsoft have also aggressively pursued licensing agreements in recent years to acquire key AI talent.

As NVIDIA's cash holdings have increased, it has expanded investments in AI chip startups and the broader ecosystem. It has invested in AI and energy infrastructure firm Cruso, AI model developer Cohere, and increased investments in AI-specialized cloud provider CoreWeave.

NVIDIA also indicated last September an intention to invest up to $100 billion in OpenAI. OpenAI has committed to adopt at least 10 gigawatts (GW) of NVIDIA products, but an official contract has not yet been signed. In the same month, NVIDIA announced a $5 billion investment plan through a partnership with Intel.

Groq, backed by surging demand for AI accelerator chips this year, was targeting $500 million in revenue and, according to Davies, had not been planning to sell before receiving NVIDIA's acquisition proposal.

Meanwhile, competition in the AI chip market is intensifying. Cerebras Systems pursued an IPO earlier this year but withdrew its IPO in October, leaving open the possibility of relaunching an IPO after large-scale fundraising.

New York=Park Shin-young, correspondent nyusos@hankyung.com