Five things to know about Nvidia’s $20 billion licensing deal
The chipmaker’s AI-inference agreement with startup Groq indicates growing competition for top talent and technology.
Nvidia’s licensing deal with startup Groq is a sign of growing competition for top talent and technology on the next front of the AI war: inference.
The $20 billion licensing agreement gives Nvidia access to Groq’s specialized inference-chip technology used to run artificial-intelligence applications, and prevents a GPU alternative from becoming a serious competitor.
The deal represents a remarkable turn for the nearly decade-old chip startup. The company at one point nearly ran out of cash and asked staff to trade salaries for equity, its founder, Jonathan Ross, said on the 20VC podcast earlier this year.
It is unclear when the two companies initiated deal talks. Ross and Nvidia Chief Executive Jensen Huang grew closer over the past two months, and spent time together in November at the U.S.–Saudi Investment Forum in Washington, D.C., according to people familiar with the matter, before announcing the deal on Christmas Eve.
Here is what we know about the deal:
What Nvidia is paying Groq
Nvidia is paying $20 billion for a nonexclusive licensing agreement with Groq, according to people familiar with the matter. Of that, about $13 billion has already been wired to the startup, with the remainder set to be sent in the coming months, the people said. The overall deal size includes stock packages for the employees joining Nvidia, one of the people said.
How much Groq’s founder stands to make
Groq founder Ross, who previously worked at Google and helped create its TPU chips, has received an Nvidia stock package worth at least several hundred million dollars, the people said. Ross owns about 10% of Groq—a stake worth $2 billion based on the headline value of the Nvidia deal. Other investors that stand to see significant gains include venture firm Disruptive, the company’s largest outside investor, which led its most recent financing at a $6.9 billion valuation, as well as Chamath Palihapitiya’s Social Capital, BlackRock and Donald Trump Jr.’s 1789 Capital.
More specifics on the deal
There are no performance milestones tied to Nvidia’s licensing payments. The company, which raised billions in venture-capital funding, will make distributions to investors and employees soon.
How much revenue Groq was expected to generate
Groq had been projecting revenue of $1.4 billion in 2026, up from about $500 million this year and about $90 million in 2024, people familiar with its financials said. Its revenue growth was driven largely by sovereign customers, including Saudi Arabia’s Aramco.
What’s next for the remaining portion of Groq
There are expected to be at least six bids for Groq’s remaining assets, including its AI-inference platform, GroqCloud, people familiar with the matter said. Bids for that portion of the company are expected to top $1 billion, one of those people said. Groq Chief Financial Officer Simon Edwards has been named CEO.
Write to Kate Clark at kate.clark@wsj.com
topics
