Nvidia recently struck a $20 billion deal to acquire the brains of a fierce rival, its biggest move yet in the artificial intelligence arms race. However, the big chipmaker may soon have to respond to more difficult inquiries about the future of its chips.
CEO Jensen Huang provided more details in an internal email obtained by CNBC.
The move comes as Nvidia gains more attention in Asia. Megaspeed International, a fast-growing importer of Nvidia chips in Singapore, is under investigation for possible smuggling of banned H100 and H200 chips into China, Bloomberg recently reported.
The world’s most valuable chipmaker is now caught between two extremes: It must contend with rising geopolitical threats and regulatory difficulties in one of its hottest regions while still dominating global artificial intelligence infrastructure.
Nvidia has launched an offensive in artificial intelligence and now must defend its supply chain.Photography: I-HWA CHENG, Getty Images
Groq, a nine-year-old company founded by former Google TPU engineers, has never been for sale — at least not publicly. But Nvidia struck a deal worth $20 billion that includes licensing Groq’s cutting-edge artificial intelligence inference technology and hiring top leaders including CEO Jonathan Ross.
Sources told CNBC that Nvidia is actually buying all of Groq’s assets except for a small GroqCloud company, although Groq calls the purchase a “non-exclusive licensing agreement.”
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In terms of funding, this is Nvidia’s largest ever deal. The $20 billion price tag is more than three times the value of Groq’s most recent investment round ($6.9 billion).
It also significantly broke Nvidia’s previous record, its $7 billion acquisition of Mellanox in 2019.
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Nvidia now controls Groq’s high-speed inference chip design, allowing it to be more tightly integrated into its broader artificial intelligence platform.
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Groq’s leadership, including Ross and president Sunny Madra, will join Nvidia’s leadership team.
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The remaining GroqCloud units will continue to operate independently and will be led by the Chief Financial Officer.
The aggressive move is similar to Nvidia’s smaller but similar AI acquisition in September, when the company spent $900 million to buy chip IP and key employees from Enfabrica.
As Nvidia continues to lead the field of artificial intelligence, it has also become entangled in the thorny politics of the semiconductor supply chain.
Megaspeed International, once a small part of a Chinese gaming company, is now Nvidia’s largest customer in Southeast Asia. But U.S. investigators are now looking into the company for potentially smuggling banned artificial intelligence chips into China.
