Nvidia to Acquire AI Chip Startup Groq for $20 Billion in its Largest Deal Ever

The AI chip wars just escalated dramatically. Nvidia has agreed to acquire nine-year-old startup Groq for a massive $20 billion, absorbing a company founded by the very engineers who created Google's competing TPU. It’s Nvidia's largest purchase ever, a move that both strengthens its market dominance and removes a potent future rival from the board.

A Record-Breaking Deal

The $20 billion all-cash transaction was confirmed by Alex Davis, CEO of Disruptive, which led Groq's latest financing round. This figure shatters Nvidia's previous acquisition record, the nearly $7 billion purchase of Israeli chip designer Mellanox in 2019. With a war chest of $60.6 billion in cash and short-term investments as of late October, Nvidia is well-equipped to fund the deal. However, Davis noted that Groq's nascent cloud business is not part of the transaction.

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Who is Groq, the TPU Challenger?

Founded in 2016, Groq designs high-performance AI accelerator chips meant to compete with Nvidia'sGPUs. Its key founder and CEO, Jonathan Ross, was one of the creators of Google's custom tensor processing unit (TPU). This pedigree has made Groq a closely watched player. Just three months ago in September, the company raised $750 million at a $6.9 billion valuation from investors including Blackrock and Samsung. It was targeting $500 million in revenue this year.