Groq shareholders sue Nvidia over licensing deal, alleging board bypassed vote
Version 2: This version adds the October 2 filing date, the split of the $20 billion deal between the licence payment and employee stock units, the plaintiffs' claim that a majority of Groq's board was conflicted, and Jensen Huang's stated rationale that Nvidia was hiring talent and licensing IP rather than buying the company.
In short
Two former Groq engineers who still hold Groq stock have sued over Nvidia's licensing deal with the AI chip startup, saying Groq's board skipped the shareholder vote required under Delaware law and never tested whether the assets could fetch more. They claim shareholders lost billions of dollars. Groq called the suit groundless and said it would defend itself strongly, while the deal's structure has separately drawn congressional criticism and a Justice Department investigation.
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Groq shareholders have sued over Nvidia's licensing deal with the AI chip startup, alleging that the transaction infringed their rights. Yonhap, citing the US business channel CNBC, reported that the case was filed at Delaware's Court of Chancery against Nvidia; Asia Economy, also citing CNBC, said the suit was filed on October 2 in a Delaware state court. The plaintiffs are Joshua Rubin and Benjamin Cherebrin, former Groq engineers who left the company before the deal but still hold Groq stock. [ 1 , 3 ]
The plaintiffs say Groq's board did not follow the shareholder voting procedure set out in Delaware law and handed the company over without any process to verify or maximise the value of the assets Nvidia bought. According to Asia Economy, the complaint also says shareholders were offered too low a price, and that a majority of Groq's board had interests tied up in the transaction. Both accounts say the plaintiffs claim Groq shareholders suffered losses running to billions of dollars. [ 1 , 3 ]
Yonhap reported that Nvidia signed a $20 billion contract in December last year for a non-exclusive licence to Groq's language processing unit (LPU) for AI inference. Asia Economy, citing the complaint, said $17 billion of that sum was for the non-exclusive licence to Groq's AI inference technology and $3 billion was allocated to restricted stock units for Groq employees moving to Nvidia. Between 150 and 200 Groq engineers moved to Nvidia, including founder and CEO Jonathan Ross and Sunny Madra — described as chief operating officer by Yonhap and as president by Asia Economy. [ 1 , 3 ]
Asia Economy reported that Nvidia chief executive Jensen Huang told employees in an email at the time of the contract that Groq's low-latency processors would be integrated into its AI factory architecture to expand AI inference and real-time processing, while stating that the company was “recruiting talent and licensing Groq's IP”, not acquiring Groq itself. Yonhap said Nvidia did not buy Groq outright, but that the deal has raised suspicions of a de facto bypass acquisition aimed at avoiding antitrust review, and that the transaction has been criticised in the US Congress as harmful to competition, with the Justice Department conducting a related investigation. [ 1 , 3 ]
Groq told CNBC that the licence agreement with Nvidia had brought substantial value to Groq, its investors and its employees, that the lawsuit was groundless, and that it would respond strongly, according to Yonhap and Asia Economy. Newsis carried the case in a headline saying Groq shareholders sued Nvidia over a “bypass acquisition” that left a shell company behind; its published article text on the case was not available. [ 1 , 2 , 3 ]
Why it matters
The case tests how shareholders can challenge AI licensing deals that move a startup's technology and staff to a larger buyer without a formal acquisition. Because the transaction has already been criticised in Congress and is under Justice Department scrutiny, the lawsuit keeps antitrust questions about Nvidia's expansion in view. Groq's public denial indicates it intends to contest the claims rather than settle quickly.
Key facts
- Joshua Rubin and Benjamin Cherebrin, former Groq engineers who left the company before the deal but still hold Groq stock, brought the suit, Yonhap reported, citing CNBC, and Asia Economy also reported, citing CNBC. [ 1 , 3 ]
- Yonhap said the suit was filed at Delaware's Court of Chancery; Asia Economy said it was filed on October 2 in a Delaware state court. [ 1 , 3 ]
- The plaintiffs say Groq's board did not follow the shareholder voting procedure set out in Delaware law and handed the company over without any process to verify or maximise the value of the assets Nvidia bought. [ 1 , 3 ]
- The plaintiffs claim Groq shareholders suffered losses running to billions of dollars. [ 1 , 3 ]
- Nvidia signed a $20 billion contract in December last year for a non-exclusive licence to Groq's language processing unit (LPU) for AI inference. [ 1 , 3 ]
- Asia Economy, citing the complaint, said $17 billion of the $20 billion was for the non-exclusive licence to Groq's AI inference technology and $3 billion was allocated to restricted stock units for Groq employees moving to Nvidia. [ 3 ]
- Between 150 and 200 Groq engineers, including founder and CEO Jonathan Ross and Sunny Madra, moved to Nvidia; Yonhap described Madra as chief operating officer, while Asia Economy called him president. [ 1 , 3 ]
- Groq said the suit is groundless and that it will defend itself strongly. [ 1 , 3 ]
Confirmed by several sources
- Groq shareholders have sued over Nvidia's licensing deal with the AI chip startup, according to reports by Yonhap and Asia Economy citing CNBC. [ 1 , 3 ]
- The plaintiffs are former Groq engineers Joshua Rubin and Benjamin Cherebrin, who still hold Groq stock. [ 1 , 3 ]
- The plaintiffs allege Groq's board did not hold the shareholder vote required under Delaware law and did not run any process to verify or maximise the value of the assets Nvidia acquired. [ 1 , 3 ]
- The plaintiffs claim Groq shareholders lost billions of dollars. [ 1 , 3 ]
- Nvidia agreed in December last year to a $20 billion deal for a non-exclusive licence to Groq's AI inference technology. [ 1 , 3 ]
- Between 150 and 200 Groq engineers, including founder and CEO Jonathan Ross and Sunny Madra, moved to Nvidia as part of the transaction. [ 1 , 3 ]
- Groq said the lawsuit is groundless and that it will defend itself strongly. [ 1 , 3 ]
Still unclear
- Whether the licensing deal amounted to a de facto bypass acquisition intended to avoid antitrust review. Both documents describe this as a suspicion raised around the transaction, not a finding; the suit alleges procedural violations rather than a ruling on the deal's structure.
- The response of Nvidia itself to the lawsuit. Yonhap and Asia Economy give Groq's denial but no comment from Nvidia.
- The exact filing date and current procedural status of the Delaware case. Asia Economy, citing the complaint, dates the filing to October 2; Yonhap does not give a filing date, and neither document describes a schedule.
- The size of shareholders' losses. The billions-of-dollars figure is the plaintiffs' own claim, reported as an assertion in both documents.
- The breakdown of the $20 billion between the licence payment and the restricted stock units. Only Asia Economy, citing the complaint, gives the $17 billion and $3 billion split; no second document corroborates it.
- The claim that a majority of Groq's board had a conflict of interest in the transaction. Stated only by Asia Economy, attributed to the complaint, and not reported by the other documents.
- The assertion that the deal left a shell company behind. Appears only in the Newsis headline; its published article text on the case was not available, and no other document makes this claim.
- Details of the Justice Department investigation and the congressional criticism. Reported only by Yonhap, which says such transactions were criticised in the US Congress and that the Justice Department is conducting a related investigation, without further detail.
What local media are saying
Timeline, local time
- Yonhap publishes its report on the lawsuit against Nvidia, citing CNBC, including the plaintiffs, Groq's denial and the deal terms. [ 1 ]
- Newsis publishes the headline that Groq shareholders sued Nvidia over the “bypass acquisition”, saying a shell company was left behind. [ 2 ]
- Asia Economy publishes its report adding the October 2 filing date, the $17 billion licence and $3 billion stock-unit split, and the board conflict claim. [ 3 ]