Nvidia, the leading manufacturer of artificial intelligence chips and the world’s most valuable public company, has entered into a licensing agreement with Groq, an innovative AI chip startup. The announcement made on Wednesday reveals that Groq will provide its technology to Nvidia while also seeing its founder and CEO, Jonathan Ross, along with other key executives, join Nvidia’s team.
Under the terms of this nonexclusive licensing agreement, Groq will continue to operate as an independent entity. The startup, which specializes in custom-built chips designed for AI processes known as inference, has attracted Nvidia’s attention amid the growing demand for AI technologies, particularly in applications like chatbots. A source familiar with the deal noted Nvidia’s interest in integrating Groq’s capabilities into its future product offerings.
This partnership is part of Nvidia’s broader strategy to solidify its dominance in the AI chip market, where it currently holds over 90% of the market share. With a market capitalization nearing $4.6 trillion, Nvidia has made substantial investments in various AI initiatives. Notably, in September 2023, the company announced a significant investment of $100 billion in OpenAI, the organization behind the popular AI model ChatGPT, allowing it to utilize Nvidia’s semiconductors in its data centers.
Representatives from both Nvidia and Groq confirmed the details of the licensing agreement but did not provide additional comments. This type of arrangement reflects a trend among major technology companies in Silicon Valley, which have increasingly shifted from outright acquisitions of startups to more complex deal structures. By licensing technology and hiring top talent, these firms can effectively absorb key assets without assuming ownership of the entire company.
This strategic approach is reportedly influenced by the desire to reduce regulatory scrutiny. Tech giants including Nvidia, Amazon, Apple, Google, Meta, and Microsoft have faced increasing oversight from authorities in the European Union, Britain, and China. According to Nvidia’s financial filings, regulators have sought information regarding the company’s chip sales, supply allocations, and investments in other firms.
Founded in 2016, Groq has raised over $3 billion in funding, with its most recent valuation estimated at nearly $7 billion, as reported by PitchBook. Notable investors in Groq include Samsung, BlackRock, and 1789 Capital, a venture firm linked to Donald Trump Jr. and Chamath Palihapitiya, a prominent venture capitalist and co-host of the tech podcast “All-In.”
As Nvidia continues to expand its influence in the AI landscape, this partnership with Groq marks a significant step in integrating advanced capabilities into its product line, promising to further enhance the company’s offerings in the rapidly evolving tech sector.
