Nvidia recently struck a $20 billion deal to acquire the brains of a fierce rival, marking its biggest move yet in the AI arms race. However, the massive chipmaker will soon have to answer more difficult questions about the future of its chips.
CEO Jensen Huang offered more detail in an internal email obtained by CNBC.
The move comes as Nvidia is gaining more attention in Asia. Megaspeed International, a fast-growing Singapore-based importer of Nvidia chips, is being investigated for smuggling banned H100 and H200 chips into China, according to a recent Bloomberg report.
The world’s most valuable chip is now stuck between two extremes: It must deal with rising geopolitical threats and regulatory difficulties in one of its hottest regions while still dominating AI infrastructure around the world.
Groq, a nine-year-old firm started by former Google TPU engineers, has never been for sale — at least not publicly. But Nvidia came in with a $20 billion deal that includes licensing Groq’s advanced AI inference technology and bringing on its top leaders, such as CEO Jonathan Ross.
Sources have informed CNBC that Nvidia is indeed buying all of Groq’s assets, except for a small GroqCloud firm, even though Groq called the purchase a “non-exclusive licensing agreement.”
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This is Nvidia’s biggest deal ever in terms of money. The price of $20 billion is more than three times what Groq was worth in the most recent investment round, which was $6.9 billion.
It also beats Nvidia’s previous record, the $7 billion purchase of Mellanox in 2019, by a wide margin.
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Nvidia now controls Groq’s high-speed inference chip designs, allowing tighter integration into its broader AI platform.
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Groq management, including Ross and president Sunny Madra, will join Nvidia’s management team.
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The remaining GroqCloud unit will continue to operate independently, led by its CFO.
This aggressive move is like Nvidia’s smaller but similar AI acquisition in September, when it spent $900 million for chip IP and key personnel from Enfabrica.
As Nvidia continues to lead in AI, it’s getting caught up in the sticky politics of the semiconductor supply chain.
Megaspeed International, formerly a small part of a Chinese gaming company, is now Nvidia’s largest customer in Southeast Asia. But US investigators are now looking into the company because it may have imported AI chips banned in China.