Nvidia strikes licensing agreement with AI inference specialist Groq

Nvidia reached an agreement to work with AI chip startup Groq to enhance its inference capabilities.

CNBC is calling this a $20-billion acquisition in cash, citing the top investor in Groq’s latest financing round (which valued it at roughly $6.9 billion in September). Groq’s press release on the matter, however, refers to this only as a “non-exclusive licensing agreement” and that “Groq will continue to operate as an independent company,” with no financial details provided. The lack of an official acquisition may be a bid to duck any potential antitrust concerns.

However, this is definitively an acqui-hire, as Groq founder Jonathan Ross and president Sunny Madra, as well as other members of their team, will be joining the chip designer “to help advance and scale the licensed technology.”

Inference is the “thinking” part of AI models (as opposed to training, which is more of the “learning”). Groq’s AI chips are LPUs (language processing units), distinct from GPUs (graphics processing units) or TPUs (tensor processing units). The company boasts that these chips “run Large Language Models (LLMs) and other leading models at substantially faster speeds and, on an architectural level, up to 10x more efficiently from an energy perspective compared to GPUs.” These products don’t need external high-bandwidth memory chips (which are facing a supply crunch), but rather use a different method of on-chip memory (SRAM, or static random-access memory).

Through this deal, Nvidia is likely looking to boost the efficiency of its AI solutions in a power-hungry (and scarce) world. It may also be viewed as a response to the success of Google’s Gemini 3 model, which utilizes TPUs that are also cheaper to operate than Nvidia’s GPUs. (In a fun twist, Ross, the Groq founder, was one of the architects of what would become Google’s first TPU during his time with the search giant).

“We plan to integrate Groq’s low-latency processors into the NVIDIA AI factory architecture, extending the platform to serve an even broader range of AI inference and real-time workloads,” wrote Nvidia CEO Jensen Huang in an email to employees, as reported by CNBC.

Good news for Groq is also good news for one of America’s most controversial and outspoken VCs: Chamath Palihapitiya, whose Social Capital fund was an early investor in the company. Chamath’s SPACs have generally tended to go over like a lead zeppelin, but this investment is already a massive winner.