The U.S. Justice Department is examining whether Nvidia structured its agreement with artificial intelligence chip startup Groq in a way that could have avoided closer antitrust scrutiny, according to a report by The New York Times.
The investigation focuses on a $17 billion arrangement Nvidia announced with Groq last year. Rather than acquiring the startup outright, Nvidia described the agreement as a “non-exclusive license” for Groq’s chip technology. As part of the deal, Nvidia also hired several Groq executives, including the startup’s founder, Jonathan Ross.
According to The New York Times, citing two people familiar with the matter, the Justice Department began looking into the arrangement shortly after it was announced in December. The agency has also sent Nvidia a formal request seeking information about the transaction.
The inquiry comes as regulators continue to closely examine major deals involving leading technology companies and businesses developing artificial intelligence products. Nvidia has become a central player in the AI industry through its chips and related technology, while Groq has developed specialized technology aimed at AI computing.
Nvidia defended the arrangement and rejected any suggestion that the transaction was designed to sidestep regulatory oversight.
“The Groq story is a prime example of the American system working as designed to promote innovation, reward entrepreneurs, and benefit consumers,” an Nvidia spokesperson said in a statement.
Groq and the U.S. Justice Department did not immediately respond to Reuters requests for comment outside regular business hours.
The Justice Department’s review could result in financial penalties if the agency determines that Nvidia improperly handled the agreement, The New York Times reported. However, the agency is considered unlikely to seek to reverse or unwind the transaction.
The structure of the deal is a key element of the investigation. Nvidia did not announce a conventional acquisition of Groq. Instead, the agreement involved licensing Groq’s chip technology while bringing some of the startup’s senior personnel, including Ross, into Nvidia.
The arrangement gives Nvidia access to technology developed by a company operating in the increasingly competitive AI chip sector, while allowing the transaction to be structured differently from a traditional corporate takeover.
The Justice Department’s decision to request information indicates that officials are examining the details of how the agreement was organized and carried out. The inquiry does not, by itself, establish that Nvidia violated U.S. antitrust law.
Nvidia announced the Groq arrangement last year in a period of rapid investment and competition across the AI industry. Demand for advanced computing technology has surged as companies expand their development and deployment of AI systems, increasing the strategic importance of specialized chips and the companies that design them.
The review also highlights the growing regulatory attention surrounding Nvidia, whose position in the AI chip market has made its business practices an important focus for competition authorities.
For now, the Justice Department investigation remains focused on the structure of Nvidia’s arrangement with Groq. The agency could impose a fine if it concludes that the company mishandled the deal, but according to the New York Times report, breaking up the transaction is not expected to be the likely outcome.
The investigation was first reported by The New York Times. Reuters reporting was by Carlos Méndez in Mexico City, with additional reporting from Preetika Parashuraman and Nethra Sailesh. Sherry Jacob-Phillips and Rashmi Aich edited the report.
