Nvidia's $20bn licensing deal with Groq faces lawsuit from jilted engineers

Nvidia's $20bn licensing deal with Groq fleeced employees who were left out of the transaction, according to a lawsuit filed by two engineers who owned shares in the start-up.

The legal complaint filed on Friday in a Delaware corporate law court alleges that Groq's board improperly sold the company's core assets and top employees to the $5tn tech titan in 2025, consigning those left behind to a hollowed-out shell.

The transaction was framed by Nvidia at the time as a "non-exclusive" licensing arrangement, with Groq remaining as an independent and functioning company.

But, according to the lawsuit, the Groq board was riven with conflicts of interest and failed to observe its legal obligation to get the best price and structure for all shareholders, not allowing some of them to vote on the transaction.

The deal grabbed "Groq's valuable technology and the engineers who built Groq, took billions of dollars in benefits for itself, senior management, and affiliated funds that it did not share with Groq's other stockholders", wrote lawyers for Benjamin Serebrin and Joshua Rubin, two former Groq engineers.

Nvidia declined to comment, while Groq did not immediately respond to requests for comment.

The $20bn paid to Groq came in the form of a $17bn licensing deal whose proceeds were shared among all backers. A separate $3bn Nvidia stock bonus pool was created for certain engineers who joined the company, including the Groq founder and board member Jonathan Ross, a former Google executive.

Groq developed a so-called "language processing unit" chip, or LPU. It claimed the chip was capable of running some AI models faster and more efficiently than Nvidia's market-leading graphics processing units.

The lawsuit said common stockholders were cashed out cheaply while Ross and the other top Groq employees were allowed to "take a discount on those shares and be paid separately for following the technology to Nvidia", according to the lawsuit.

On Christmas Eve last year, the two companies announced that Ross and other top executives would join Nvidia while the chip group would pay to license Groq's technology. The lawsuit says the deal, in fact, involved Nvidia hiring "nearly all" of Groq's engineers at the same time, estimated at as many as 200 workers in total.

The Nvidia deal, along with other similar Big Tech transactions, has drawn condemnation from Democrats. Senators Elizabeth Warren, Richard Blumenthal and Ron Wyden said earlier this year that "'acqui-hires' appear to be designed to evade antitrust scrutiny and risk further consolidating the Big Tech industry", a reference to poaching talent without actually buying the target company.