Nvidia is ramping up its investment in the AI boom with new hires and licensing deals from AI hardware startup Groq.
Groq acknowledged in a blog post Wednesday that it has “entered into a non-exclusive license agreement with Nvidia for Groq's inference technology” and said the company will continue to operate independently.
The startup is known for its Language Processing Unit, a custom chip designed for AI inference, the process by which trained AI models make predictions and decisions. Groq was valued at about $6.9 billion three months ago and raised about $750 million in its latest funding round.
“As part of this agreement, Groq Founder Jonathan Ross, Groq President Sunny Madra, and other members of the Groq team will join Nvidia to help advance and scale the licensed technology,” Groq added in the blog.
People familiar with the matter told Business Insider on Wednesday that Nvidia will not acquire the chip startup.
Neither Nvidia nor Groq mentioned financial terms of the deal.
Jonathan Ross and Douglas Wightman were engineers at Google who started the project that became Google's first TPU chip before leaving to found Groq. TPUs are custom-made to accelerate large-scale machine learning tasks designed to handle AI workloads, and are the primary rival to Nvidia's GPUs.
The deal between the two companies comes amid a growing number of new types of deals in Silicon Valley. While traditional startups aim to go public or be acquired, new acquisition deals could leave some startup employees behind and benefit only a small number of staff and founders with desirable AI skills.
For example, in 2024, Google agreed to pay $2.5 billion to license Character.AI's technology, but only hired two superstar co-founders and 20% of the startup's employees. That same year, AI developers Adept and Inflection signed similar deals with Amazon and Microsoft, respectively.
Most recently, Meta's acquisition of Scale AI was one of its biggest bets on talent, after Meta agreed to invest about $14 billion for a 49% stake and bring CEO Alexandr Wang on board to lead Meta Superintelligence Labs.
These acquisitions don't always work out. Windsurf employees were left in limbo after the AI coding startup was nearly acquired by OpenAI for $3 billion, but the deal fell through and the company was split up. Google spent billions of dollars hiring Windsurf's CEO and top engineers, but the remaining few hundred employees were acquired by another startup, Cognition.
