Nvidia CEO Jensen Huang (Reuters)
U.S. semiconductor giant Nvidia has recently entered into a technology licensing agreement with artificial intelligence (AI) chip development startup Groq, with analysts suggesting this represents a strategy to circumvent antitrust regulations.
Groq is a hardware company that produces specialized AI inference chips known for their exceptional speed in running large language models. The company has nothing to do with “Grok,” an AI chatbot developed by Elon Musk’s company, xAI.
Groq announced on its blog on Dec. 24, “We have entered into a non-exclusive licensing agreement with Nvidia for inference technology,” and revealed that “as part of this agreement, Groq founder Jonathan Ross and President Sunny Madra, along with team members, will join Nvidia to support the development and expansion of licensed technology.”
According to CNBC and other media outlets on Dec. 26 (local time), Stacy Rasgon, an analyst at investment firm Bernstein, posted a memo on Dec. 25 stating, “Antitrust issues could be a major risk factor in Nvidia’s deal,” but also evaluated that “structuring the deal as a non-exclusive license can maintain the formal justification that competition exists.”
Founded in 2016, Groq was valued at approximately $6.9 billion (about 10 trillion won) during its funding round in September. The startup designs AI accelerator chips used to speed up inference-related tasks for large language models. Founder and Chief Executive Officer (CEO) Jonathan Ross previously worked at Google as a developer creating Tensor Processing Units (TPUs).
Groq also established a cooperative relationship with Samsung Electronics in August 2023 for next-generation AI chip production. Groq is known as the first company to be a customer of Samsung Electronics’ Taylor factory in Texas.
CNBC reported, citing sources close to Groq, that Nvidia agreed to acquire the company’s technology and other assets for $20 billion in cash (about 29 trillion won). Reuters described Groq as one of several startups that do not use high-bandwidth memory (HBM) chips. Accordingly, it noted that the company is relatively free from global memory semiconductor supply shortages.
As Wall Street’s positive evaluations of this deal continued, Nvidia’s stock price closed at $190.53 on the New York Stock Exchange on Dec. 26, up 1.02% from the previous trading day.
