AI chip startup Groq has confirmed

AI chip startup Groq has confirmed a non-exclusive licensing agreement with Nvidia for its high-performance AI inference technology, clarifying reports that had suggested a full acquisition. Groq is a U.S.-based artificial intelligence company, with headquarters in Mountain View and San Jose, California.

Groq investor Alex Davis of Disruptive as saying Nvidia is acquiring Groq for $20 billion. While Groq did not confirm an acquisition, it stated that the agreement involves licensing its inference IP, with key leadership transitioning to Nvidia.

As part of the deal, Groq founder and CEO Jonathan Ross, President Sunny Madra, and other senior team members will join Nvidia to help scale the licensed technology. Groq will continue to operate as an independent company, with Simon Edwards appointed as the new CEO, and GroqCloud will remain fully operational.

Groq’s core innovation is its Language Processing Unit (LPU)—a processor purpose-built for AI inference. Unlike traditional accelerators, the LPU integrates large on-chip SRAM as primary weight storage, dramatically reducing latency and enabling efficient, scalable inference across chips

The structure of the deal mirrors recent industry moves, such as Meta Platforms’ arrangement with Scale AI, where talent and technology were absorbed without a full acquisition. Regardless of terminology, the outcome is clear: Nvidia gains access to one of the most promising inference architectures in the market—marking a significant step in the ongoing consolidation of the AI chip landscape

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Dec 24 (Reuters) - Nvidia (NVDA.O), opens new tab has agreed to license chip technology from startup Groq and hire away its CEO, a veteran of Alphabet's (GOOGL.O), opens new tab Google, Groq said in a blog post on Wednesday.

The deal follows a familiar pattern in recent years where the world's biggest technology firms pay large sums in deals with promising startups to take their technology and talent but stop short of formally acquiring the target.

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Groq specializes in what is known as inference, where artificial intelligence models that have already been trained respond to requests from users. While Nvidia dominates the market for training AI models, it faces much more competition in inference, where traditional rivals such as Advanced Micro Devices (AMD.O), opens new tab have aimed to challenge it as well as startups such as Groq and Cerebras Systems.

Nvidia has agreed to a "non-exclusive" license to Groq's technology, Groq said. It said its founder Jonathan Ross, who helped Google start its AI chip program, as well as Groq President Sunny Madra and other members of its engineering team, will join Nvidia.

A person close to Nvidia confirmed the licensing agreement.

Groq did not disclose financial details of the deal. CNBC reported that Nvidia had agreed to acquire Groq for $20 billion in cash, but neither Nvidia nor Groq commented on the report. Groq said in its blog post that it will continue to operate as an independent company with Simon Edwards as CEO and that its cloud business will continue operating.

In similar recent deals, Microsoft's top AI executive came through a $650 million deal with a startup that was billed as a licensing fee, and Meta spent $15 billion to hire Scale AI's CEO without acquiring the entire firm. Amazon hired away founders from Adept AI, and Nvidia did a similar deal this year. The deals have faced scrutiny by regulators, though none has yet been unwound.

"Antitrust would seem to be the primary risk here, though structuring the deal as a non-exclusive license may keep the fiction of competition alive (even as Groq’s leadership and, we would presume, technical talent move over to Nvidia)," Bernstein analyst Stacy Rasgon wrote in a note to clients on Wednesday after Groq's announcement. And Nvidia CEO Jensen Huang's "relationship with the Trump administration appears among the strongest of the key US tech companies."