Former Groq engineers sue over Nvidia's $20bn licensing deal for the startup
The Delaware suit says Nvidia's deal split $17bn into a non-exclusive licence and $3bn into stock for staff who joined Nvidia, without a shareholder vote.
- Courts & copyright
- Money & business
- Compute & infrastructure
- Minor
Two former Groq engineers, Joshua Rubin and Benjamin Serebrin, filed suit against the AI chip startup’s board in the Delaware Court of Chancery on 2 October, alleging that a licensing deal with Nvidia announced the previous December “squeezed out” the company’s stockholders at a lowball price. Both men held Groq stock but had left the company before the deal was announced, according to the suit and their LinkedIn profiles; CNBC reported the filing on 5 October.
The deal, valued at around $20 billion, gave Nvidia a licence to Groq’s inference technology that the suit says was structured as $17 billion for a licence Nvidia itself labelled “non-exclusive,” plus $3 billion in restricted Nvidia stock set aside for roughly 150 to 200 Groq engineers — including founder and chief executive Jonathan Ross and president Sunny Madra — who moved to Nvidia as part of the arrangement. The suit alleges Groq’s board approved the transaction without the stockholder vote Delaware law requires, and without a process designed to test or maximise the value of what Nvidia was buying, calling the board’s position “conflicted” and saying it cost stockholders “billions of dollars.”
Nvidia chief executive Jensen Huang had described the deal at the time as integrating Groq’s low-latency processors into Nvidia’s AI factory architecture while explicitly “not acquiring Groq as a company,” which has continued to operate independently and has raised roughly $1 billion since June, including from Nvidia itself. A Groq spokesperson told CNBC the licensing agreement “delivered exceptional value for Groq, our investors, and our employees” and called the lawsuit “meritless.” None of the suit’s allegations has been tested in court.
The case tests, from a shareholder’s side, a deal structure increasingly used across the AI industry: licensing a startup’s technology and absorbing most of its technical staff rather than completing an outright acquisition, a shape that can avoid both merger antitrust review and, the suit argues, a required shareholder vote.
In the commentary
What people were saying around this time — external links, from the record's commentary rail.