CNBC reported on Wednesday that Nvidia spent $20 billion for Groq. The artificial intelligence company has been eating away at Nvidia’s market dominance, especially in an important part of AI.
This is the biggest ever deal for Nvidia, sending a strong message that it wants to be in control of not only how AI models are trained but also how customers and businesses use them.
This is an aggressive consolidation move in a crowded AI chips market that can change the way enterprises purchase and use artificial intelligence.
Groq and Nvidia: What it does, why you need it
This is the short version. Nvidia dominates the training AI systems market. That’s where the costly, computationally-intensive part comes in.
Groq has a different specialty. Inference is the focus. It’s basically just running that AI trained in real-time.
Imagine that Nvidia has built the kitchen in which AI is cooked, and Groq the restaurant.
Groq has a compelling pitch. The chips are four times more powerful than Nvidia’s GPUs, and use far less energy.
This is important at large scale. It would be great if a company that processes millions of requests from customers through ChatGPT systems each day could find a faster, cheaper way.
Groq has already proved that this approach works. Its GroqCloud Platform is used by over one million developers, and Meta, among other major clients, runs inference workloads using Groq hardware.
Nvidia raised $750m in just three months at a valuation of $6.9billion. The $20b price tag represents how Nvidia was determined to secure this deal.
This consolidation is about
Nvidia has just grown bigger and monopolist. About 90% of AI-training chips are controlled by the company.
It’s now adding Groq’s tech and a credible alternative to inference.
Customers often choose to buy from a single vendor rather than buying parts from several suppliers.
Nvidia knows this game, because it is simpler and cheaper to maintain.
Consolidation has its downside. Nvidia is being closely watched by the Federal Trade Commission.
Groq’s purchase could raise antitrust issues at a moment when Washington scrutinises Big Tech more than ever.
The regulators will most likely examine closely whether the deal limits choice to customers such as Amazon, Google and Microsoft who are already desperate to decrease their Nvidia dependency.
This is a warning to other AI chip companies. Cerebras SambaNova and Graphcore bet they could compete with Nvidia on specific niches.
Nvidia has made it clear that they will only buy and remove the most dangerous threats.
The post Nvidia buys AI chip company Groq for $20 billion in a blockbuster deal could be updated as new information unfolds
