By: Russ Spencer

When Groq quietly announced in a blog post on Wednesday that it had agreed to license its chip technology to Nvidia — and, more explosively, that its founder and chief executive Jonathan Ross was decamping to the world’s most powerful semiconductor company — the reverberations were felt far beyond Silicon Valley. In a single stroke, Nvidia managed to capture both the intellectual capital and much of the human capital of one of its most promising rivals in the high-stakes race to dominate the next phase of artificial intelligence.

As reported by Reuters on Saturday and amplified by The Algemeiner, the deal crystallizes a trend that has been gaining momentum for several years: technology giants acquiring the brains and blueprints of startups without ever formally buying the companies themselves. These transactions are dressed up as “licensing” or “partnership” agreements, yet they increasingly resemble acquisitions in all but name — and they are beginning to alarm regulators, investors, and smaller innovators alike.

To understand the significance of Nvidia’s move, one must first appreciate the tectonic shift underway in the AI hardware market. For the past decade, Nvidia has towered over the field as the unrivaled supplier of chips used to train large language models — the computationally intensive process that teaches systems like ChatGPT how to recognize patterns in oceans of data.

But as Reuters has chronicled, the center of gravity in AI is now drifting toward inference: the stage at which trained models respond to user queries in real time. Inference is less glamorous than training but ultimately more commercially consequential, because it is the engine that powers everything from chatbots to recommendation systems, fraud detection tools, and medical diagnostics.

Here, Nvidia faces more formidable competition. Advanced Micro Devices has sharpened its focus on inference workloads, while startups such as Groq and Cerebras Systems have built entire businesses around architectures optimized for this phase of the AI lifecycle.

Groq, in particular, has distinguished itself by abandoning the conventional reliance on external high-bandwidth memory chips — a design choice that has left much of the industry at the mercy of global supply constraints. Instead, Groq employs on-chip static random-access memory (SRAM), enabling blisteringly fast interactions with AI models and insulating the company from the memory bottlenecks that have plagued rivals.

The drawback, as The Algemeiner report explained, is that SRAM-based systems limit the size of the models that can be served. Yet for many applications — especially in conversational AI and enterprise automation — speed matters more than sheer scale. Groq’s technology has therefore found eager customers, particularly in the Middle East, where it has signed several large contracts alongside its chief competitor in the space, Cerebras.

Under the terms announced, Nvidia has secured a “non-exclusive” license to Groq’s inference technology. Groq will continue to operate as an independent company, now under the leadership of Simon Edwards, and will maintain its cloud business. Financial details were not disclosed, though CNBC reported — without confirmation — that Nvidia had agreed to acquire Groq for $20 billion in cash.

What is not in dispute is the exodus of talent. Jonathan Ross, who helped launch Google’s AI chip program before founding Groq, is joining Nvidia, as are Groq president Sunny Madra and a significant portion of the startup’s engineering team. A person close to Nvidia confirmed the licensing agreement to Reuters, effectively validating the core of Groq’s announcement.

For Nvidia chief executive Jensen Huang, the recruitment of Ross is a masterstroke. Ross is widely regarded as one of the most visionary architects in the AI hardware space, and his defection deprives Nvidia of a rival while fortifying its own technical bench.

The Groq deal slots neatly into a pattern that has come to define the post-pandemic technology sector. As Reuters and The Algemeiner have both observed, Microsoft’s top AI executive arrived via a $650 million “licensing” agreement with a startup; Meta spent $15 billion to lure away the chief executive of Scale AI without purchasing the company; Amazon hired the founders of Adept AI; and Nvidia itself executed a similar maneuver earlier this year.

These arrangements are not incidental. They are carefully engineered to avoid the regulatory tripwires that accompany outright acquisitions, even as they achieve much the same result. The startup remains a legal entity, but its strategic heart — its leadership and core technology — migrates to the dominant firm.

Bernstein analyst Stacy Rasgon put the dilemma bluntly in a note to clients cited by The Algemeiner: “Antitrust would seem to be the primary risk here, though structuring the deal as a non-exclusive license may keep the fiction of competition alive (even as Groq’s leadership and, we would presume, technical talent move over to Nvidia).”

Rasgon also noted that Huang’s “relationship with the Trump administration appears among the strongest of the key US tech companies,” hinting that political capital may play an understated but decisive role in insulating Nvidia from regulatory intervention.

For Groq, the transaction is a paradoxical triumph. Just three months ago, the company more than doubled its valuation to $6.9 billion from $2.8 billion, following a $750 million funding round in September. Investors saw it as one of the most promising challengers to Nvidia’s hegemony, a rare example of a hardware startup carving out a defensible niche in a brutally capital-intensive industry.

Now, with its founder and president departing, questions abound about whether Groq can retain its innovative edge. While the company insists it will continue operating independently, skeptics fear it may be reduced to a shell — a brand name sustained by legacy contracts while its intellectual momentum is siphoned off to Santa Clara.

This concern is amplified by the experience of previous “soft acquisitions.” In many cases, the startups involved struggle to articulate a clear identity once their visionary leaders depart. The danger, as The Algemeiner report noted, is that the ecosystem of independent innovation becomes steadily impoverished, even as the incumbents grow ever more formidable.

Groq’s chief rival, Cerebras Systems, offers a revealing counterpoint. Earlier this month, Reuters reported that Cerebras is planning to go public as soon as next year, buoyed by strong demand for its wafer-scale processors — massive chips designed to handle inference workloads at unprecedented speed.

Like Groq, Cerebras has secured large deals in the Middle East, positioning itself as a strategic supplier to governments eager to build sovereign AI capabilities. Whether it can avoid Groq’s fate — being cannibalized by a tech titan before achieving independent scale — may depend on how aggressively regulators choose to intervene in this emerging pattern of consolidation.

At its core, Nvidia’s Groq gambit reflects a sober assessment of the company’s own vulnerabilities. Huang devoted much of his most recent keynote speech to arguing that Nvidia will maintain its leadership as the market shifts from training to inference. The licensing of Groq’s technology and the recruitment of Ross are tangible expressions of that resolve.

Inference is not merely the next frontier; it is the arena in which AI will be monetized at scale. Whoever controls inference hardware will shape the economics of cloud computing, edge devices, and autonomous systems for the next decade. Nvidia, which has built its empire on training, is determined not to be outflanked as the terrain changes.

For regulators, the Groq deal presents an almost insoluble puzzle. Traditional antitrust frameworks are ill-equipped to address transactions that fall short of acquisitions yet have equivalent competitive effects. As Reuters has reported, authorities in the United States and Europe are increasingly scrutinizing these arrangements, but none has yet been unwound.

The challenge lies in proving harm before it materializes. Today, Groq remains a separate company, Cerebras continues to compete, and AMD presses forward with its own inference roadmap. Tomorrow, however, the cumulative effect of talent siphoning and technology licensing may leave Nvidia as the only truly viable supplier — not because it crushed its rivals in open competition, but because it quietly absorbed them.

In the end, the Nvidia-Groq deal is emblematic of a deeper transformation underway in the technology industry. Power is no longer consolidated through headline-grabbing mergers, but through subtle transactions that hollow out competitors while preserving the veneer of choice.

As The Algemeiner aptly summarized, this is not merely a story about two companies; it is about the evolving mechanics of dominance in the age of artificial intelligence. One conclusion is becoming increasingly inescapable: the real battle is no longer over who can build the fastest hardware, but over who can quietly appropriate the future before anyone has time to object.