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Semiconductor start-up Groq has raised $640mn from investors including BlackRock as it aims to challenge Nvidia’s dominance of the booming market for artificial intelligence chips.
The funding round, led by BlackRock Private Equity Partners alongside strategic investors including Cisco and Samsung Catalyst Fund, values Groq at $2.8bn, more than double its last valuation of $1.1bn in 2021.
Yann LeCun, chief AI scientist at Meta, the social media giant that owns Facebook and Instagram, will also become a technical adviser to the company.
Silicon Valley-based Groq is one of a number of chipmakers that have benefited from a surge in usage of artificial intelligence models. High-powered chips are the essential hardware used to train and run chatbots such as OpenAI’s ChatGPT or Google’s Gemini.
By far the largest player in the sector is Nvidia, whose flagship graphics processing units, or GPUs, are used to train cutting-edge AI models. Last month SoftBank acquired Graphcore, another UK-based AI chipmaker, in a $600mn deal. Several big tech companies, including Microsoft, Google, Amazon and Meta, are also developing their own AI accelerator chips.
While Nvidia’s chips, such as its latest H100 processor, can be used to both build and run large AI models, Groq’s technology focuses on deployment, by accelerating the speed with which chatbots can respond.
Groq’s language processing unit, or LPU, is designed only for AI “inference” — the process in which a model uses the data on which it was trained, to provide answers to queries.
The start-up, founded in 2016, claims its LPUs are faster and more power efficient than chips from rivals, including Nvidia.
The new funding will go towards boosting the company’s capacity for computational resources required to run AI systems, said Groq chief executive Jonathan Ross, a former Google engineer who was a founding member of the team behind its own in-house AI chips.
Groq will roll out more than 108,000 LPUs by the end of March 2025, Ross said, adding that his aspiration was to handle half the world’s inference by the end of next year.
“We aim for a full dollar returned for every dollar we spend on hardware. We don’t intend to lose money,” said Ross.
BlackRock will play a key role, he said: “We were looking for [an investor] we could partner with for a long time. BlackRock can do public and private . . . There are things we want to do beyond a pure equity raise.”
Groq had been seeking to raise new funding and held discussions with investors over several months, according to people familiar with the matter. The company has yet to generate significant revenue, making the investment decision effectively a bet on the company’s technology, they added.
During the fundraise, Groq board member Jay Zaveri was abruptly sacked from Chamath Palihapitiya’s venture capital firm Social Capital. The situation at Social Capital — an early investor in the company — “didn’t really factor in” to the fundraising, said Ross. Zaveri has been replaced on Groq’s board by Social Capital partner Steve Trieu.
Groq has partnered with a number of companies, including Meta and Samsung, and sovereign nations including Saudi Arabia to manufacture and roll out its chips. Earlier this year Groq struck deals with Aramco Digital, a subsidiary of state-owned oil company Saudi Aramco, and Norwegian sustainable energy company Earth Wind & Power, to build out compute capacity and provide access to its chips.
Deals between US AI companies and Middle Eastern partners have come under scrutiny from the US government, but Ross said Groq “hasn’t found any issues with Aramco. We’ve worked very closely with the Commerce Department and others.”
Additional reporting by Ivan Levingston in London
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