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Semiconductor startup Groq has raised $640 million from investors including BlackRock to challenge Nvidia's dominance within the booming artificial intelligence chip market.
The funding round, led by BlackRock Private Equity Partners together with strategic investors including Cisco and Samsung Catalyst Fund, values Groq at $2.8 billion, greater than double its last valuation of $1.1 billion in 2021.
Yann LeCun, chief AI scientist at Meta, the social media giant that owns Facebook and Instagram, will even turn into a technical advisor to the corporate.
Silicon Valley-based Groq is considered one of several chipmakers which have benefited from a surge in the usage of artificial intelligence models. Powerful chips are the fundamental hardware used to coach and run chatbots similar to OpenAI's ChatGPT or Google's Gemini.
By far the largest player on this sector is Nvidia, whose flagship graphics processing units (GPUs) are used to coach cutting-edge AI models. Last month, SoftBank acquired Graphcore, one other UK-based AI chipmaker, in a $600 million deal. Several major technology firms, including Microsoft, Google, Amazon and Meta, are also developing their very own AI accelerator chips.
While Nvidia's chips, similar to the most recent H100 processor, might be used to each construct and run large AI models, Groq's technology focuses on deployment by increasing the speed at which chatbots can respond.
Groq's language processing unit (LPU) is designed just for AI “inference” – the method by which a model uses the info it was trained on to offer answers to queries.
Founded in 2016, the startup claims its LPUs are faster and more energy efficient than chips from competitors, including Nvidia.
The latest funding shall be used to extend the corporate's computing capability to run AI systems, said Jonathan Ross, CEO of Groq, a former engineer at Google and a founding member of the team that developed the corporate's AI chips.
Groq will roll out greater than 108,000 LPUs by the tip of March 2025, Ross said, adding that its goal is to handle half of the world's inference by the tip of next 12 months.
“We strive to get back the total amount for each dollar we spend on hardware. We don't wish to lose money,” Ross said.
BlackRock will play a key role, he said: “We have been in search of an (investor) with whom we could work for a very long time. BlackRock can operate each publicly and privately. There are things we would like to do beyond just raising capital.”
Groq has been trying to lift latest capital and has been in talks with investors for several months, people aware of the matter said. The company has not yet generated any significant revenue, so the investment decision is effectively a bet on the corporate's technology, they added.
During the fundraising, Groq board member Jay Zaveri was abruptly fired by Chamath Palihapitiya's enterprise capital firm Social Capital. The situation at Social Capital – an early investor in the corporate – “didn't really play a job within the fundraising,” Ross said. Zaveri was replaced on Groq's board by Social Capital partner Steve Trieu.
Groq has partnered with plenty of firms to fabricate and produce its chips to market, including Meta and Samsung, in addition to sovereign states similar to Saudi Arabia. Earlier this 12 months, Groq struck deals with Aramco Digital, a subsidiary of state-owned oil company Saudi Aramco, and Norwegian sustainable energy company Earth Wind & Power to expand computing capability and supply access to its chips.
The U.S. government has been scrutinizing deals between U.S. AI firms and partners within the Middle East, but Ross said Groq “hasn't found any problems with Aramco. We've worked very closely with the Department of Commerce and others.”
