Senators query Nvidia’s Groq deal, NVDA says did not acquire Groq

Two Democratic senators have written to Nvidia (NVDA) inquiring about the company's licensing deal with AI startup Groq to check if the deal violates antitrust laws by improperly avoiding a merger review. "We write to request additional information regarding the terms of NVIDIA’s recent deal with Groq, an artificial intelligence (AI) chip startup and NVIDIA competitor, to assess the agreement’s implications for competition in the AI chip sector," said Senator Elizabeth Warren of Massachusetts and Richard Blumenthal of Connecticut in a letter to Nvidia's CEO Jensen Huang. Last year in December, Nvidia entered into a non-exclusive licensing agreement with Groq for its inference technology. As part of the agreement, Groq’s Founder Jonathan Ross, President Sunny Madra and other members of the Groq team were to join Nvidia. Reportedly, Nvidia was acquiring assets from Groq for $20B. “NVIDIA did not acquire Groq, which continues to be a separate and independent business. NVIDIA purchased a non-exclusive license to Groq’s IP and hired engineering talent from Groq’s team to join us in our mission to provide world-leading accelerated computing technology for customers everywhere," said an Nvidia spokesperson in an email to Seeking Alpha. The spokesperson added that "NVIDIA wins on merit, as reflected in our benchmark results and value to customers. NVIDIA AI infrastructure provides an unparalleled combination of performance, versatility, and value." "We are concerned that this takeover could stifle competition, further entrenching NVIDIA’s dominance in the AI chip industry and ceding our technological leadership to China," said the senators in the letter. Senators asked several questions in the letter including: Why did Nvidia license Groq’s technology and hire its key employees rather than acquiring the company? Was the transaction structured this way to avoid antitrust scrutiny? What are the specific terms of the deal between NVIDIA and Groq, including cost structures? The senators also asked: Who will own Groq’s language processing unit, or LPU, intellectual property? Will LPU design architectures continue to be licensed to third-party companies?