AI chip startup Groq reportedly raising $650 million after Nvidia's $20 billion not-acqui-hire
Groq, one of the leading start-ups in AI chip development, is in talks with investors for a new $650 million funding round, according to TechCrunch reporter Marina Temkin. The company's previous round was held in March 2024, led by Cisco Investments at $640 million, with a valuation reaching $2.8 billion. The new round's valuation could rise to around $8 billion under current high-demand conditions in the AI chip market.
Groq's founder and CEO Jonathan Ross was part of Google's TPU (Tensor Processing Unit) team; he founded the company in 2016. Groq's LPU (Language Processing Unit) chip is claimed to offer three to ten times higher speed than Nvidia's GPUs in inference (result-generation) workloads of generative AI models. The company's clients include OpenAI, Anthropic and several large cloud providers.
Nvidia's 'not-acqui-hire' deal is an important development showing tension in the AI chip market. According to TechCrunch's reporting, Nvidia entered into a roughly $20 billion licensing and talent-transfer agreement with AI start-up Bitnet (founded by Furkan Sahbaz). This structure has the character of an 'effective acquisition' that bypasses anti-trust scrutiny, but formally is not a 'purchase'.
The AI chip market is growing approximately 65% annually in the 2024-2026 period. According to Bloomberg Intelligence estimates, the 2026 market size will exceed $235 billion. Nvidia holds approximately 80% of the market; but AMD, Intel, Cerebras, SambaNova and start-ups like Groq compete in various niches. Groq's inference-focused strategy addresses a different sub-segment of AI workloads rather than competing directly with the training-focused Nvidia GPUs.
Investors taking part in Groq's funding talks include Andreessen Horowitz (a16z), Sequoia Capital, BlackRock's AI hedge fund and Saudi Arabia's Public Investment Fund (PIF). PIF's establishment of the $100 billion Project Transcendence AI infrastructure fund in 2024 increased Saudi presence in global AI investments. The G42 fund from the United Arab Emirates is also among those in talks.
Groq founder and CEO Jonathan Ross said in a brief statement to TechCrunch, 'Demand in the market is very strong; for inference optimisation unique to the AI era, the Groq architecture offers a different technological approach.' Ross declined to comment on specific round size or valuation figures.
Wedbush analyst Daniel Ives, in his AI chip-sector update to clients, said, 'Attempts to break Nvidia's dominance are increasing month by month. Start-ups like Groq, Cerebras and SambaNova are offering a different technological approach to Nvidia in inference workloads; this could transform the market into a multi-supplier structure.'
Groq currently has no Turkey office, but the company began adding Turkish talent to its engineering team in 2024. Burak Karaoglu, a graduate of Istanbul Technical University, is working as a hardware engineer at Groq's San Francisco headquarters. The Turkey AI Strategy (TUBITAK) 2024-2027 roadmap aims to develop the AI chip design capacity of Turkish universities.
Groq's funding round reflects the intensity of competition in the AI chip market. In a sector where Nvidia is surrounded by AMD, Intel and start-ups, customer diversity and efficiency gains are opening up room for new-class start-ups. The US Department of Justice's anti-trust investigation into Nvidia began in autumn 2024; the EU Commission also launched a parallel investigation. Regulatory pressure may question Nvidia's dominant position in the market.
Groq reaching the $650 million round also shows the cash flow of the AI chip ecosystem. According to the PwC Global AI Investment Report, $8.4 billion was invested in AI chip start-ups in Q1 2025; this is a significant portion of the 2024 total ($12.1 billion). The valuations of major start-ups such as SpaceX, Anthropic and Groq show the market's confidence in AI infrastructure. This article is not investment advice; the AI chip market is highly volatile and open to regulatory intervention.