Nvidia's $20B antitrust loophole

https://ossa-ma.github.io/blog/groq

by ossa-ma • 7 months ago

549 167 7 months ago

ossa-ma.github.io

ossa-ma6• 7 months ago

No shade but most other coverage will focus on whether this signals an AI bubble. That's missing the story.

Nvidia explicitly did NOT acquire Groq. They licensed the IP and hired the talent. This structure dodges CFIUS review (Groq had $1.5B in Saudi government contracts), antitrust scrutiny, and years of regulatory delays.

The $13B premium over the September valuation was the cost of regulatory arbitrage. Announced Christmas Eve while Trump's AI Czar (Chamath's All-In podcast co-host) is in office. Chamath's Social Capital made AT LEAST ~$2B on this exit.

My article breaks down: what Nvidia actually bought vs what they left behind, why the deal structure matters, who got paid, and the political connections nobody's talking about.

lotsofpulp• 7 months ago

Why do I hate Chamath?
Let's look at the sh he dumped on retail with his abysmal SPAC track record

I do not see why one would feel animosity towards Chamath for this reason. Was there fraud involved? Otherwise, all investors are liable for doing their own due diligence.

ossa-ma6• 7 months ago

Part of it is the irrational feeling of a disgruntled investor, doubt that I'm alone.

The other part is he has a track record of dumping on retail then telling them not to buy his next deal once he's already cashed out.

design22032• 7 months ago

Nobody in finance holds a high opinion of Chamath.

ALittleLight• 7 months ago

You can feel animosity towards someone without thinking they've met the elements of a crime.

lovich2• 7 months ago

Do you need someone to commit a crime to hate them?

Do you still need them to commit a crime when they are rich and powerful, and connected with the current administration that sets the law?

If a new law came out that said Chamath can do whatever he wants and it’s always legal, is it impossible to hate him in your worldview?

yellow_postit• 7 months ago

It will be interesting to see if this is an exit for investors and which ones. Given it wasn’t an acquisition but licensing.

throw123h1z1q2• 7 months ago

Axios claims that the $20B in cash will be paid out proportionally, so Trump Jr. will have his September investment tripled. The article looks AI assisted but claims "according to sources":

https://www.axios.com/2025/12/28/nvidia-groq-shareholders

throw123h1z1q2• 7 months ago

Trump Jr. also got in in September via 1789 Capital, where he is partner. After that Nvidia got permission to export GPUs to China.

In the meantime, Musk and Chamath have the gall to complain about the kleptocracy in democratic states and the poor suppressed billionaires:

https://xcancel.com/elonmusk/status/2005287147507769442#m

I wonder when Chamath will sit again on Tucker Carlson and tell a sob story about having self doubts.

LarsDu88• 7 months ago

So many companies doing non-"acquisitions" during this AI boom! Though this one is at least more comprehensive than say, Google simply hiring back Noam Shazeer from Character.AI or OpenAI taking Windsurf

frays• 7 months ago

Google also hired the core Windsurf engineering and research team, not OpenAI:

https://www.reuters.com/business/google-hires-windsurf-ceo-r...

yalogin• 7 months ago

Nvidia bought groq? I am out of the loop but what does groq have that they want?

daemonologist• 7 months ago

Nvidia hired all their top personnel and paid $20B to license their technology, but stopped short of actually acquiring the company. Very similar to how Google didn't buy Windsurf.

I assume it's more about what Groq had that Nvidia didn't want, which was competition (in inference hardware).

yesco• 7 months ago

I'll just make note here for anyone else confused that Groq and Grok are distinct entities. They just have similar names.

Groq is more of a hardware focused company.

tonyhart73• 7 months ago

Nvidia losses 200+ billions on recent weeks because Google TPU actually good and market realize that Nvidia have no "moat"

this is just panic buying to make stronger foothold

ThrowawayTestr• 7 months ago

A chip dedicated to inferencing that's better than their GPUs.

vineethy• 7 months ago

I think it's important to note that there's nothing forbidding LPU style determinism from being used in training. They just didn't make that choice.

Also tenstorrent could be a viable challenger in this space. It seems to me that their NoC and their chips could be mostly deterministic as long as you don't start adding in branches

ossa-ma6• 7 months ago

You're right but my understanding is that Groq's LPU architecture makes it inference-only in practice.

Like Groq's chips only have 230MB of SRAM per chip vs 80GB on an H100, training is memory hungry as you need to hold model weights + gradients + optimizer states + intermediate activations.

refibrillator• 7 months ago

H100 has 80 GB of HBM3. There’s only like 37 MB of SRAM on a single chip.

bionhoward• 7 months ago

Would SRAM make weight updates prohibitive vs DRAM?

ChrisArchitect• 7 months ago

Nvidia to buy assets from Groq for $20B cash

https://news.ycombinator.com/item?id=46379183

georgeburdell• 7 months ago

This behavior is extremely damaging to the startup scene. Who would join a startup these days unless it’s run by a close friend or relative? At least in that case, the scorned junior employees would have social recourse.

some_guy_nobel• 7 months ago

Right? As a former founder, I laugh every time I get a 'Founding Engineer' recruit email...

paxys2• 7 months ago

Yeah unless you are a founder or top investor it’s pretty much a guarantee that there will be no exit.

evilduck• 7 months ago

I don't think this makes it much worse because that's hard to do, it's already terrible. Getting screwed by startup founders has been the status quo for at least 15 or 20 years now.

If you're just a worker then demand fair market wages, work healthy hours, and treat your useless class of shares as already used and discarded scratch off lottery tickets.

saghm2• 7 months ago

It's not like larger companies don't also screw over their employees in various ways. After having to leave AWS due to my fully distributed team that was formed during WFH being forced to "return" to an office that most of ever never lived near, I've preferred working for smaller companies not because I care about equity (I'm in the fortunate position that I can survive comfortably and save for retirement on my salary rather than needing to rely on the value from options/RSUs), but because my confidence in my ability to predict where things are headed goes down increasingly with each additional level of management between me and whoever has the power to arbitrarily decide to upend my employment on a whim. In the long run, I'll probably be fine if my employer doesn't make me rich, so as long as my projected retirement age isn't actively getting pushed back based on my current income and spending, I'd rather optimize for minimizing the likelihood I suddenly find myself unemployed due to untenable working conditions or getting unexpectedly laid off. My experience at startups has been that it's a lot easier to tell when things might start to get dicey several months down the line and start to prepare for if I need to find another gig. With a large company, I've seen that happen much more suddenly for people who had no reason to suspect they might need to in advance.

Arainach• 7 months ago

At larger companies I can sell my stock immediately, and the salary and benefits are better.

9999000009993• 7 months ago

If you need a job for things like food and housing a startup is cool.

I fully expect to be lied to repeatedly though about my own pay, our prospects, etc. I had to learn the hard way that these lies are defacto legal because employees won't realistically be able to sue.

But hey, the base pay is probably enough.

nharada• 7 months ago

In that case working at a startup would be a thing someone would only do as a last resort, and the talent pool would consequently be extremely low quality. Sounds damaging to the scene to me.

jmward012• 7 months ago

It is definitely time to stop looking at equity as part of pay at a startup. The trend is extremely clear, startups aren't paying out to employees but the C suite gets internal raises and IPO is pushed to infinity. It is nice to have some paper laying around but that is all it is, paper. Go to a startup for a year. Get the experience, move and get a 20-50% pay increase and keep doing that every year and you will be way happier and financially healthier.

tbrownaw• 7 months ago

I thought this was always the case? Hearing about examples certainly isn't new.

tyre• 7 months ago

This is always the case. Negotiate equity, but assume it’s worth zero. It’s not liquid and highly speculative. It’s a nice to have.

edit: which doesn’t mean join companies you don’t believe in! Please do. But don’t expect it to be there, don’t include it in life plans, don’t pay attention to valuations, etc.

toomuchtodo2• 7 months ago

If you join a startup, and have equity that isn’t special in some way (defending against liquidation preference or dilution), you’re the sucker. You’re just going to grind for someone else’s payday when a deal is made in a room you’re not in. You’ll only be made rich if someone with the power to drive the decision thinks you should be. As always, it’s who you know and being likable.

toomuchtodo2• 7 months ago

I’ve thought about this comment, and am replying to it to amend it (as the edit window has passed). I made this comment based on observations I’ve seen during this AI investment bubble and before it. Most times, common shareholders get the short end of the stick. But I will add, there are some “less than the majority” situations where I have seen employee shareholders treated with dignity and respect, and provided access to liquidity accordingly, and I would be remiss if I did not call that out. It will be challenging to know ahead of time, but there are decent people out there who won’t take advantage or use their power against you economically (imho). “Be lucky” is unfortunately not actionable.

cryptonector• 7 months ago

If you get an offer from a startup you'll need to pay a great lawyer to negotiate an iron-clad contract, so much so that any post-1st round startup would rescind the offer.

LogicFailsMe6• 7 months ago

Oh FFS 0.1% of this acquisition is $20M. 0.5% is $100M. Junior to senior equity lies in this range. They'll be more than fine. They'll be 1%ers to 0.1%ers after taxes, yeesh. It's never ever enough. is it?

ricardobeat• 7 months ago

Those numbers are not realistic. At a company at this stage (series E I think?), you’ll be lucky to have 0.01% as an engineer.

Most importantly, there is no guarantee there will be any payout at all. It’s not an acquisition and we don’t know the terms.

neilv2• 7 months ago

I was talking with a great-sounding few-person early startup (nice people, non-evil business, interesting work, etc.), and they wanted me to fill a highly-skilled role... in-office in a VHCOLA, for $110K and "0.5%" in usual option schedule. (Presumably also with the usual barriers to options ever being exercised or liquidated equitably.)

Even fresh grads with no experience take home more in this town.

I live to work, and I'd be willing to spend a few more years in student-apartment quality of life, and to work like a strategic asset to make the startup successful. But I've learned that deal should include a FIRE lottery ticket, not a condo downpayment lottery ticket.

If your early startup doesn't want to share significant equity, https://levels.fyi/ provides TC numbers of what established companies are paying, even for people who wouldn't be good for a startup.

Maybe it's the recent years of what VC culture has devolved to. ("Why is your cap table cutting in early key hires significantly? Do you have a leadership problem, bro?") Maybe this is just another facet of the "mask-off" or "late-stage capitalism" that people have started calling out in other facets of society.

neilv2• 7 months ago

Absolutely, downvote down calls for founding engineers paid to get meaningful equity.

We wouldn't want someone accepting a small fraction of their market salary to get even 1% pre-dilution of an early startup (even in dark-pattern options), because that might align them with company success, or even be fair.

websiteapi2• 7 months ago

I wonder how the startup scene will adjust to this if it becomes mainstream. can employee contracts be modified to force compensation even in this case? seems difficult to write one up without weird second order effects.

if this does end up being something that is legal and successfully circumvents anti trust, does it mean antitrust actually is a failure in practice?

2026 hasn't even begun and more shenanigans are in flight.

tonyhart73• 7 months ago

if we use your logic then every law written would be failure since at some point people would discover loophole/flaw that would get abused

the fix is we use more ambiguous words or just stronger government control

see how China "control" capitalist on this case if you want absolute government control

websiteapi2• 7 months ago

isn't it true though that laws that have frequently abused loopholes that effectively go against the spirit of the law are indeed failures? isn't that the entire purpose of having lawmakers who are constantly evaluating such things?

altairprime2• 7 months ago

Regulations shouldn’t have to change with every new fintech innovation, and the IRS already has the necessary laws in place to catch and prosecute abuse of unpredicted loophole technicalities as tax fraud with intent. We’re better off applying a general tax to “gross revenue not paid as wages” and directing it to a universal basic income fund. The purchase price is gross revenue, and the less they pay out as employee wages, the more the (not subject to deductions) tax charge becomes. Sure, they might still fuck over workers, but at least the workers could afford to quit (thanks, UBI) — and VCs would face the choice of taking half the payment and fucking over workers, or taking the same size payment while not fucking over workers. They may be selfish, but they’re not so self-destructive as to choose the former out of spite: it would utterly destroy their ability to hire brilliance in the future, especially once people can afford to say no.

lovich2• 7 months ago

Regulations shouldn’t have to change with every new fintech innovation…

Hard disagree given that a lot of fintech innovation is increasingly devious ways to circumvent the spirit and the letter of the law

… and VCs would face the choice of taking half the payment and fucking over workers, or taking the same size payment while not fucking over workers. They may be selfish, but there not so self-destructive as to choose the former out of spite

Also hard disagree. The VC and investor people I’ve met and work with seemed to have a cultural aversion to labor being anywhere near the same level of compensation or power as them. I would fully expect them to take a deal that fucked over the employees if they got paid the same either way.

You’d have to tune your suggested system so that not fucking over the employees was heavily incentivized

irishcoffee3• 7 months ago

[flagged]

colechristensen3• 7 months ago

This won't last. It's just creative regulatory evasion and the loopholes will get closed.

newyankee• 7 months ago

but if it does, will it mean we are in the endgame. More and more value extraction by fewer and fewer people and entities under noble or complex reasoning.

notTooFarGone• 7 months ago

By which administration exactly?

jimnotgym• 7 months ago

IANAL, and am especially weak on US law, but I suspect this is only an antitrust loophole if the administration chooses not to act. Substance over form must apply? Pretty sure this wouldn't fly in European law.

thayne• 7 months ago

Sure, but the US has a history of not acting.

If it was a normal acquisition, it would automatically trigger anti-trust investigations. Under the current administration, I think it is unlikely the acquisition would be blocked (although it probably should be...), but it would involve more bureaucracy, and would take longer.

mahirsaid• 7 months ago

Acquiring a company due to a loophole strategy is worth exponentially more than what they paid for. Its a good strategy if the aim is to beat the AI bubble and survive it after the smoke clears. not bad. Better than financing numerous data centers for no use when the bubble crashes.

int_19h• 7 months ago

US has fairly weak antitrust post-Bork.

But even more importantly, NVIDIA is literally paying extra to the feds right now from each GPU sold to China. So they are "in good standing".

Why we allow such blatant bribery is another question.

dangus• 7 months ago

The part I don’t fully understand is: could this non-acquisition eventually make the deal less than ideal for Nvidia?

Is it really a given that GroqCloud is going to be sunset and the company will die?

Couldn’t this company hire talent and continue to operate and maybe even innovate? Couldn’t Groq even hire back some employees from Nvidia? If any of them live in California there’s nothing stopping them and they have a bunch of cash from Nvidia. There are all kinds of loopholes for that like contracting arrangements.

Nvidia doesn’t really have exclusive access to any part of the company. They didn’t necessarily remove a competitor, though I’ll grant that they likely did in practice.

It’s potentially possible that the regulations did their job and kept a competitor on the market, though again I imagine this is my naevity speaking and that the most likely outcome is that Groq will wither.

I also don’t fully understand if the Saudis are getting cashed out or not. Are they really going to roll over and allow their Saudi AI data center to become worthless? I would think they have a lot of motivation after this deal to make sure Groq still operates and serves their goals.

krupan3• 7 months ago

I agree, TFA seems to make a lot of assumptions. I kinda think they are correct just because they support the narrative that everyone involved is carefully taking care of their own, but it sure seems like it could go other ways.

krupan3• 7 months ago

Read the article and where it talks about accelerated vesting of Groq shares for both the leadership team that goes to Nvidia and the regular employees that stay at Groq. Is that even guaranteed? It's not an IPO or an acquisition, so why would vesting schedules change?

ossa-ma6• 7 months ago

Very interesting would love to read about this, do you have a link to the article?

krupan3• 7 months ago

It's in the article that we're all discussing here

wmf3• 7 months ago

I would assume there's no accelerated vesting but there's also nothing stopping Nvidia from issuing refreshers of equal value to unvested options. That's been a common recruiting tactic for a long time.

kccqzy• 7 months ago

The "non-exclusive" label is legal fiction. When you acquire all the IP and hire everyone who knows how to use it, exclusivity doesn't matter.

I have some doubts about this point. IP is IP, independent of the people who invented it. If a different hardware company were to also pay for a non-exclusive IP license, maybe it will just take a few months to catch up. It’s like inheriting a codebase written by another team, and there will be some pain and some time needed to integrate it.

In fact if GroqCloud wishes to survive, it should very well just attract licensees for its IP and collect license fees for the foreseeable future.

Havoc• 7 months ago

I wonder how much of the cap table knew

Matthew Berman (youtuber) mentioned he's invested in groq and found out same time as everyone else. Guessing he's a small/indirect investor but still telling

spiantino3• 7 months ago

I don't think you can treat owners of the same shares differently in the way this is suggesting. The VC shareholders and the employee shareholders are probably on equal footing and getting the same price. VCs will own preferred but I doubt that is enough to windfall them at the expense of the common shareholders.

So if VCs are getting paid a certain share price, employees with vested stock almost certainly are getting the same price. And probably employees with vested options can either exercise now or will just get paid the net during the transaction.

Yes, the company is probably doomed so people staying there are not doing well, but they also just got paid a 3x premium on their vested equity.

Salman232• 7 months ago

Yes I think you are right here. The purchase price is high enough for all parties to be get return on their shares, and whilst there will be a waterfall for who gets paid first, I doubt many people will be unhappy with this deal.

Unlike Windsurf... who's 2nd employee only got 1% of what their shares were worth (https://news.ycombinator.com/item?id=44673296)

lumost4• 7 months ago

Doesn’t this depend on how the ip was structured? If it was kept as a separate entity, or the firm named ownership of the ip in nonstandard terms, then they could pay investors but not employees.

Unfortunately, we could likely find thousands of different ways not to pay employees given they don’t have board seats, and are typically on non standard equity.

spiantino3• 7 months ago

i thought so at first, but I did some digging and changed my mind. it's possible the following is how it goes:

- secondary transaction with the preferred shareholders (VCs) at some price that implies a 20b valuation

- founders quit and get new employment agreements

- some cash is transferred to the company as a license fee

- no acquisition means no DOJ approval

in this scenario the headline can be $20b but the cash expense can be much lower, you have full flexibility to direct whatever cash or equity you want to founders vs the rest of the company, as an up front payment or as retention/salary, and the founders have no hinderance from working on anything they touched at previous company because of IP license.

I actually bet this is how it went down. This is becoming the standard in the industry and it's just awful for the future of SV

DivingForGold2• 7 months ago

EXCELLENT analysis Ossama

"Non-exclusive" means no monopoly concerns (anyone can license Groq's tech)

- except that you can bet only Nvidia gets the absolute top of the line architechture and design - - - - - all others get 2nd best or worse.

The "non-exclusive" label is legal fiction. When you acquire all the IP and hire everyone who knows >how to use it, exclusivity doesn't matter.

But the “non exclusive” part is what significantly weakens any case the US DOJ may consider bringing forth, if at all..

If I was in the Nvidia camp I would be admiring how brillant the strategy was all formulated, in fact, I have to believe that IP attorney's were consulted on how best to avoid DOJ scrutiny.

On the other hand, there will be those who can see how this limits competition. It would be interesting to have some of our HN attorneys weigh on on this deal.

As you said about the remaining employees: . . . Their equity is worthless. . . <they> got nothing while Chamath made $2B. Is Chamath a conniving scoundrel ? I'll let others judge. Maybe someday we'll see Zuckerberg and Chamath in the ring together - - Elon seems to have bowed out.

nwellinghoff• 7 months ago

The “non exclusive” thing may come back to bite them. If another big player comes in to lic the tech and get “different” tech than nvidia it opens up law suits. Also this seems like it’s just a bet on time. The head engineer who invented this technology will be replicated. But I guess that will take a while and the margin money machine will print Bs while the dust settles.

theptip4• 7 months ago

It’s also possible that both are correct, and the deal is actually illegal. It’s pretty common for deals to push close to the line to extract maximum value for one set of parties, and sometimes this is misjudged.

I guess we just need to wait and see if the common holders are happy or sue.

ece• 7 months ago

If you join a startup, be ready to hire a lawyer.

jiveturkey• 7 months ago

owners of the same shares differently

it’s true, you can’t. however the VCs and the employees don’t own the same shares. even the VCs in different rounds don’t own the same shares.

where TFA analysis falls short is assuming employees have to be paid out at all. since the execs are moving over, there’s definitely some equity being traded in this “non-exclusive licensing deal” but it doesn’t have to involve common stock at all.

ethbr12• 7 months ago

there’s definitely some equity being traded in this “non-exclusive licensing deal”

It does bring up a curious question - what happens to the Groq equity owned by the leadership team that's being hired by Nvidia? And/or VC equity?

If they're all being paid, then is Nvidia left holding that equity? Or is it being returned to Groq (the company)?

One of two things would seem to be true:

   - Nvidia now owns a big chunk of Groq
   - Remaining investors in Groq now own a lot more of the company (on a percentage basis)

didntknowyou3• 7 months ago

very likely the VCs have a clause that allows them to trade at every re-valuation, whereas employees are locked in vested periods, and likely to see their stocks devalue by the time they can cash out.

cubefox2• 7 months ago

Most production AI applications aren't running 405B models. They're running 7B-70B models that need low latency and high throughput.

Really? At least for LLMs, most actual usage is concentrated on huge SOTA models. 1 trillion parameters or more. And LLMs seem to be the lion's share of AI compute demand.

wmf3• 7 months ago

OpenAI is trying to move as many requests as they can to a "smaller" model (still suspected to be ~200B).

cubefox2• 7 months ago

I suspect it to be >1T, just without reasoning.

pton_xd• 7 months ago

So I guess this talent hire + tech license is the new way to acquire startups? Chatacter.ai, Windsurf, and now Groq.

Any employees of those companies lurking here? I'm curious how the morale is now.

monkeydust• 7 months ago

Also worth thinking a about the private equity market scene, groq was afaik tradable be it thinn liquidity on platforms like equityzen. What did those shareholders get?

putlake• 7 months ago

I'm one of those shareholders. No word from anyone so far.

grensley• 7 months ago

A la carte in AI is going to be the name of the game for a couple reasons:

- Avoids regulatory scrutiny (for now at least)

- Nobody is actually entrenched enough for customers to matter

- Weird "celebrity" culture in tech, and AI especially. Everyone is looking for a "whisperer" or a "godfather" or whatever.

- Investors still get paid out

Smart operational talent will probably adapt by demanding higher salary, signing bonuses, severance packages in lieu of equity. Distribution of the true "lottery tickets" will get more uneven.

atif089• 7 months ago

GroqCloud will wind down over 12-18 months. They'll either get laid off or jump ship to wherever they can land. They built the LPU architecture, contributed to the compiler stack, supported the infrastructure, and got nothing while Chamath made $2B.

This is depressing.

bilbo0s2• 7 months ago

That’s just it.

We’ve entered a new era. Big companies don’t need your startup. They only need your smart guys. Just those few guys. You keep the rest of your engineers and figure out what to do with them.

And lately, the answer has been, “wind it all down”.

This sucks so bad for most of their employees. But it’s a signal to the labor market:

Be very honest about what you are when you’re considering working at an AI startup. Are you an AI expert? Or a TF/Pytorch monkey? There’s an enormous difference between those two things. If you’re not the key guy, require a good salary up front. Because I don’t see a future where the “acquiring” companies start needing you as well.

MrGilbert• 7 months ago

But it’s a signal to the labor market:

Or... Maybe we should start to think about how we let corporations get bigger and bigger? What happens if an entity (read: company) becomes so valuable, that it is basically indestructible? Does it have the power to change politics to their discretion? And as such, also influence the legislative?

I find that highly concerning.

stefan_• 7 months ago

Nvidia didn't buy Groq because they need any "smart guys" at all.

manquer• 7 months ago

Unlike other SaaS "acquisitions" of late, this will be not as straightforward closure of a subscription business.

The $1.5B contract with the Saudi Arabia is substantial and investors will want that monetized too, there are also existing DCs GroqCloud have in the ME region and also other spots around the world that are quite valuable for their hardware and power agreements etc.

Nvidia has CIFUS and other regulatory concerns and also don't want to compete against their customers be a neo cloud provider, the Saudis likely still want their DC build outs to proceed.

All this to say, the remaining parts while no longer as glamorous is still worth a lot and cannot be easily sold to big tech co. GroqCloud is more be like Nokia Technologies/ Networks rather be killed.

---

As a result, staff not part of the Nvidia deal likely have solid jobs and also now the opportunity to climb the ladder quickly now that a lot of leadership positions have opened up.

They are also going to have to be compensated higher in cash or poached by an upcoming chip startup as they are no longer tied to equity options vesting scheduled of a very valuable company (Pre deal Groq or now Nvidia).

In any scenario they will come out better of the deal, not as much they could have in a full acquisition yes, but certainly better than most engineers not working for a hyped AI startup nonetheless.

CalChris• 7 months ago

What is keeping Google/Amazon/Microsoft from licensing Groq’s tech? Sans people to be sure but at substantially reduced price. The Groq Cloud people should owe no allegiance to Ross.

BTW, the FA says Nvidia bought the patents. That’s probably an overstatement. Grow said non-exclusive licensing and Nvidia hasn’t said anything.

I think Nvidia licensed the IP and ‘bought’ (handcuffed) the people.

rynn• 7 months ago

What is keeping Google/Amazon/Microsoft from licensing Groq’s tech?

Nothing, but they likely can't implement it as well as they could had they bought Groq first.

dang• 7 months ago

Nvidia to buy assets from Groq for $20B cash - https://news.ycombinator.com/item?id=46379183 - Dec 2025 (400 comments)

Nvidia just paid $20B for a company that missed its revenue target by 75% - https://news.ycombinator.com/item?id=46403041 - Dec 2025 (133 comments)

esaym• 7 months ago

Timing it for Christmas Eve ensures minimal media scrutiny of these connections.

Sounds like the media is truly the one in charge.

jandrese• 7 months ago

nVidia's big problem right now is they have more money than they can productively spend and are way down the stupid money hole just looking for any kind of return. This is a failure of capitalism.

FL33TW00D• 7 months ago

Mr Kwok already analysed these deals and gave them a nice little acronym: HALO

https://kwokchain.com/2025/07/15/the-halo-effect/

pjb88• 7 months ago

So... What will the actual impact on groq services be?

I'm a fan, and I use Groq a lot for systems I build. I think they offer something different to most other providers (cheaper, faster, and until recently "we don't store your data by default") and it will be sad to see that fade.

wmf3• 7 months ago

It's going to be the same. It may never get better though.

whatevertrevor2• 7 months ago

Groq built the region's largest inference cluster in eight days in December 2024. From that Dammam facility, GroqCloud serves "nearly four billion people regionally adjacent to the KSA." This isn't API access. This is critical AI infrastructure for a nation-state, funded by the Public Investment Fund, processing inference workloads at national scale.

Maybe I'm just completely out of touch, and hardware has never been my expertise, but does it take O(days) and not O(years) to build data centers these days? I know Grok DCs in Memphis were built under a year cutting many corners and using plenty loopholes, but even by those standards, bringing up a full data center in just over a week sounds impossible without some insane construction automation to me.

lumost4• 7 months ago

they are likely referring to their hardware deployment. Which can be done in days. The datacenter is owned and operated by someone else and they just bring in the racks.

tw04• 7 months ago

Physically building a datacenter yes. Repurposing a crypto datacenter for a new purpose, no. But days is hyperbolic no matter how you look at it unless they’re reusing ALL the existing infrastructure (network/security/hvac/physical server racks/some amount of compute). And aren’t actually including the time to procure the inferencing chips.

You can call up Cisco tomorrow and offer them a billion dollars to get you an entire datacenter worth of switches tomorrow and the answer is going to be no because they just don’t keep that much inventory sitting around. That’s why covid was such a shitshow.

I should give a caveat of: they could in theory redirect existing orders to you but would likely be violating contractual obligations and risk a lawsuit from the fortune 500 Peter they robbed to pay you Mr. Paul.

whatevertrevor2• 7 months ago

"Smart" accounting by not counting design, planning, procurement timelines would explain it, that makes sense.

If that's the case, it's saddening to see details like this hyped up to borderline fraudulent levels.

burnerRhodov2• 7 months ago

Well, you have different players now... working at a different scale.

They are purchasing crypto infrastructure for a huge premium, importing massive turbines from old generation facilities, making huge personal investments in nvidia stock for "preference", and acquiring companies that happen to have an order.

It went from we need to make a data center as cost efficient as possible to we need a data center at all costs.

chongli• 7 months ago

I'd like to call back to yesterday's discussion on IP law [1] sparked by recent comments from Rob Pike.

There was a major thread on the issue of regulatory regimes and the dysfunction that can arise. How is this acquisition not a textbook example of said dysfunction? This non-acquisition acquisition does not happen at all in a world without IP law.

I think we're seeing a culmination of the dysfunction that results from IP law. The sheer amount of capital has given unbelievable momentum to the forces of consolidation. I still can't foresee the endgame (who can?) but it's even harder to see how it'll turn out well.

[1] https://news.ycombinator.com/item?id=46396075

paxys2• 7 months ago

This has nothing to do with antitrust. Not like the current administration is going to enforce it anyways. Nvidia simply wants Groq’s tech and leadership without the burden of 500+ employees.

SilverElfin5• 7 months ago

Nvidia should still pay the 500+ employees their due, based on their percentage of ownership.

g947o• 7 months ago

"should" or "will"?

lizknope• 7 months ago

I've posted this in many threads about startups. I have worked at 2 and had bad experiences at both.

Why didn't I get any money from my startup? - A guide to Liquidation Preferences and Cap Table

https://old.reddit.com/r/startups/comments/a8f6xz/why_didnt_...

I have told people that before they join a startup ask about the liquidation preferences and cap table. If the ownership doesn't tell you then consider that a red flag.

I would add this new Groq scenario to the list of questions to ask. "Can you and the executive team go to another company with the IP leaving the employees behind with stock worth $0?" Maybe phrase it better than that but I know a few former coworkers at Groq. I didn't know them well but this probably stinks for them.

danaris3• 7 months ago

Of course it has to do with antitrust.

In an America with robust, sane antitrust, first of all, a company as big as Nvidia probably never exists in the first place. Second of all, if it does, an "acquihire" like this will have to pass regulatory muster, regardless of whether it's a full-on corporate acquisition.

Because in an America with robust, sane antitrust, if a company as big as Nvidia does exist, it is operating under fairly tight strictures as a company with heavy market dominance. It does not get to just act like any other company.

That's what antitrust law is for.

camillomiller• 7 months ago

The chatgpt-ism and the gpt section headlines make this piece immediately unreadable. Why do you outsource your own blog’s thoughts to a machine? Terrible.

jbs789• 7 months ago

Feels like a frenzy! To me, the willingness to spend 20bn for a different architecture speaks to the competition in the market, across the big players, which doesn’t seem to be factored into their valuations.

peter_d_sherman• 7 months ago

"The question isn't just why Nvidia paid $13.1B more than market rate for technology they could build themselves (they have the PDK, volume, talent, infrastructure, and cash). The question is why they structured it this way.

Where the premium was spent:

Regulatory arbitrage:

Non-exclusive licensing avoids years of antitrust review. Structure the deal as IP licensing + talent acquisition, and regulators have no grounds to block it.

This alone is worth billions in time and certainty."

Isn't that fascinating!

Observation: For any given Deal (in business or in life in general) -- there may be one or more legal components -- to it...

But (equal-and-oppositely!) there also may NOT be one or more legal components to it!

What each deal has in some legal components -- it may lack in other legal components...

Conversely, what each deal does not have in some legal components -- it may have in other legal components...

Now, perhaps this may sound like a "self-evident truth", and as such, apparently may not be worthy of a deeper exploration, but it seems that there exists an:

Intersection of Set Theory and Legal Aspects -- applied to Deals

(AKA "Transactions", "Exchanges", "Barters", "Trades", "Exchanges Of Value", etc., etc.) in various jurisdictions (which can be thought about as how contracts, both legal and natural, arising from such exchanges are, or would be interpreted through its courts, through its regional statutes (aka "Laws") IF there are inter-party disputes which subsequently require a court for such interpretation...)

And that intersection -- could well be worthy of further study!

Phrased another way -- it (and this article!) are highly interesting from a legal perspective!

(And also a Set Theory / Set Theoretical one!)

moralestapia• 7 months ago

And 10x better energy efficiency because you're not constantly moving data across a memory bus.

Moving data is not that expensive, many times there's no overhead over the nominal consumption of your system.

The rest of the article is spot on, though.

tzahifadida• 7 months ago

Great read. Thanks.

c-c-c-c-c• 7 months ago

this entire article is seemingly written by an LLM

MallocVoidstar• 7 months ago

I'm going to assume this is a predominantly AI-written article since for some reason it's talking about GroqCloud serving Llama 2, which they don't.

It claims they serve Llama 2 7B @ 750 tokens/s with 2K context, but over on OpenRouter Groq is listed as serving Llama 3.1 8B @ 1300 tokens/s with 128K context. (And the official GroqCloud site says 840 tokens/s.)

aiisahik• 7 months ago

The analysis here is excellent. However, Groq's success was not obvious or straight forward. It require huge amounts of investment to keep it alive for many years long before any real positive cashflow. It was on its death bed for years before the ChatGPT moment in 2023. It has been over 9 years since its founding. If you know anything about VC funds and exit timelines, you will know that investors in Groq needed an exit by this time.

I'm happy that the investors and founders got a long and well deserved exit. I'm happy that the tech here will continue to see development and investment under Nvidia so we may one day get to use Claude Opus at 500 tokens per second.

Does it suck that certain employees got screwed over? Yes. Does this happen ALL THE TIME in startups? More often than you think. The expected value for employee options for this type of company is very very close to zero. Anyone who thinks otherwise is lying to themselves.

Does it suck that it didn't happen via a normal M&A process? As someone who used to work on tech M&As as an attorney, I would be first one to say that I hope this DOES become the norm. M&A sucks for the employees, the investors, the founders, the acquirers - it sucks for EVERYONE. The only people who it doesn't suck for are the lawyers and bankers who earn more fees the more complex and longer the process is. Best M&A I ever witnessed was the FB acquisition of Instagram that happened over the weekend (my old law firm was part of that deal).

Ask yourself: do you want to spend 2% of your funding round and 2 months on lawyers when you raise a $5m Series A? Then why do you want to do the same when you exit?

peteforde• 7 months ago

I actually managed to find video of Jonathan Ross discussing how GroqCloud was moving forward with Simon Edwards. It puts everything in proper perspective:

https://youtu.be/rurhk1hadp8?si=pnKrF7w48NhChK2r&t=253

ossa-ma6• 7 months ago

LMAO you got me

moezd• 7 months ago

That's why we can't have nice things.

Mikho• 7 months ago

That kind of M&A shenanigan without actual M&A to not attract scrutinization is pretty popular this year. E.g., Meta's "acquisition" of ScaleAI for $14.8 billion and Alphabet's "reverse acquihire" of key talent from Windsurf in July 2025 for $2.4 billion for non-exclusive technology licensing rights and the hiring of top executives. Apparently, in all deals employees lost while founders gained personally but didn't explicitly try to make good for people who actually took a risk by trusting them.

That really diminishes attractiveness of working in a startup where all your efforts could be swooped out by a big player via just buying IP and acquihiring founders for a price cheaper than buying the whole company and without the hustle of regulatory scrutiny. Big tech literally kills competition and innovation guaranteeing its monopoly.

cmxch• 7 months ago

Close the loophole, grill Nvidia anyway.

Nvidia's $20B antitrust loophole

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