Nvidia’s $20 billion Groq deal is facing a legal challenge. The lawsuit, filed in a Delaware corporate law court, claims Groq’s board improperly structured the 2025 transaction as a licensing agreement instead of a full acquisition. Two former Groq engineers who owned shares in the AI chip startup have sued the company’s board, alleging that the transaction gave Nvidia Groq’s technology and most of its engineers while leaving other shareholders with a poor deal.
The two companies announced on Christmas Eve last year that Ross and other senior executives would join Nvidia, while Nvidia would license Groq’s technology. Nvidia announced its first new chip based on Groq’s technology in March, with the chip going into full production in August.
The lawsuit claims the arrangement also involved Nvidia hiring “nearly all” of Groq’s engineers, estimated at as many as 200 employees. Groq developed a specialised AI chip known as a language processing unit, or LPU. The company claimed that its technology could run some AI models faster and more efficiently than Nvidia’s graphics processing units. The deal has also reportedly come under scrutiny from US regulators, who are examining whether such deals can evade traditional merger review.
Nvidia later participated in a funding round that valued the remaining Groq at $3.5 billion. The startup subsequently shifted its focus to AI cloud computing and dropped its chip design efforts.
The plaintiffs also claim that the $17 billion licensing payment was treated as taxable income for Groq, further reducing the value available to shareholders.
Common shareholders were bought out at a low price, while Ross and other senior employees received separate compensation for moving to Nvidia with the technology, according to the lawsuit.