Two former Groq engineers have sued Groq's board in Delaware over the roughly $20 billion Nvidia licensing deal behind the Groq 3 LPU.
Two former Groq engineers are suing Groq's former board and former CEO Jonathan Ross, alleging that the board handed over employees and company technology to Nvidia in a $20 billion deal. The proposed class action, filed in Delaware's Court of Chancery by Benjamin Serebrin and Joshua Rubin and unsealed on Monday, alleges that the deal, which included a $17 billion license fee for all backers and a separate $3 billion Nvidia stock pool for engineers who transferred, kept billions from other shareholders. Meanwhile, Groq is planning to deploy its own technology, now Nvidia's Groq 3 LPX, according to the Financial Times.
Nvidia's annual report (10-K) books $14.4 billion of the license as goodwill, "primarily attributable to the workforce and future development of the licensed technology," plus $2.5 billion for the technology itself. The plaintiffs concede that "no Delaware decision has directly answered the question this case raises." The deal is already under a reported Department of Justice (DOJ) inquiry, and the lawsuit's outcome could have implications for future license-plus-hire deals. Groq told CNBC the suit is "meritless" and said its licensing agreement with Nvidia "delivered exceptional value for Groq, our investors, and our employees."
The deal involved both the LPU technology and the people who built it, including Ross, a former Google TPU engineer who founded Groq in 2016. The LP30 has 500MB of SRAM per die and 150 TB/s of bandwidth, uses Samsung's 4nm process technology, and is rated by Nvidia at up to 1.23 FP8 PFLOPS. A single LPX rack has 256 LPUs with 128GB of SRAM, 40 PB/s, and 315 FP8 PFLOPS in aggregate, and serves as a decode co-processor for the Vera Rubin NVL72. The LP30 appears to be the next-generation LPU that Groq put on its roadmap in August 2023, built on Samsung's SF4X process with its first-generation Tensor Streaming architecture.
During Hot Chips in August, Igor Arsovski, Groq's former chief architect and now Nvidia's VP of hardware, called the occasion "a pinch me moment for the Groq team that's now integrated into the Nvidia group." Arsovski said the rack was already in production at the time. This supports the complaint's factual premise but does not answer the legal question of whether more is owed.
Nvidia's 10-K notes that "no customer contracts, existing products, or equity interests were purchased," with "$13.0 billion paid at closing and $4 billion, inclusive of imputed interest, payable within one year." The goodwill figure is about 85% of the $16.9 billion Nvidia booked and around 5.8 times the value of the technology asset. In other words, Nvidia placed significantly more value on the LPU design team and the technology's future development than on the design itself.
When the deal was announced, Groq said it would continue "to operate as an independent company," and it joined the Nvidia Cloud Partner program in August. Also in August, "Groq LLC" completed a $350 million Series A at a $3.5 billion valuation, after raising $650 million in June. Before the deal, in September 2025, the company was valued at $6.9 billion after a $750 million round. Groq says it now operates 13 data centers and expects to scale from 54 to 200+ MW in 2027. Nvidia was slated to participate in the Series A, which Groq says will support customers seeking "clusters of NVIDIA accelerated computing."
Groq also said in August that it is "among the first adopters of NVIDIA Groq 3 LPX," deploying with Dell alongside Nvidia's Vera Rubin NVL72. Those racks are built on the LPU technology Groq licensed to Nvidia, and Groq claims to be "the only team with hands-on experience operating LPUs in production at scale." The Financial Times said Groq "pivoted entirely to AI cloud computing, dropping its chip design efforts."
The suit alleges that the Groq board was conflicted, failing to secure the best terms for every shareholder and denying some of them a vote on the deal. Specifically, it says Ross and 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 suit, Nvidia hired "nearly all" of Groq's engineers, as many as 200. The final payout, the plaintiffs allege, ignored potential upside and synergies with Nvidia.
The plaintiffs also argue that because Nvidia did not buy Groq outright, the $17 billion license payment was taxable as income at Groq, and that the Series A valued the remaining Groq above the price paid to the shareholders who were bought out. They say four "conflicted funds" on Groq's board (BlackRock, Social Capital, Infinitum, and Disruptive), which are not named as defendants, engineered that gap and profited by staying with Groq after the buyout.
As Axios reported in December 2025, however, sources close to the deal said most shareholders would receive per-share payouts "tied to the $20 billion valuation." Around 90% of employees would join Nvidia, with vested shares paid in cash and unvested shares paid in vesting Nvidia stock. Staff who stayed with Groq would be paid for vested shares and receive a package including "economic participation in the ongoing company."
As for the DOJ, the New York Times reported in September that the department had sent Nvidia a formal request for information, and that a fine was possible. Nvidia said at the time that the Groq deal was "a prime example of the American system working as designed." Some senators did not let the deal go unnoticed: in February, they placed it under the "reverse acqui-hire" label. In January, Federal Trade Commission Chair Andrew Ferguson said the agency is "beginning to examine these acqui-hires to make sure they are not an attempt to get around" its merger review process.
The litigation comes shortly after Nvidia agreed a month ago to acquire Hugging Face (HF), a deal that also includes a purchase price and equity for HF employees who join Nvidia, a similar split. That deal awaits approval but, unlike the Groq deal, is an outright purchase of the company. When the Groq deal was announced, Nvidia CEO Jensen Huang told employees in an email, obtained by CNBC, that while Nvidia was adding Groq staff and licensing its IP, "we are not acquiring Groq as a company."
The legal question surrounding the Groq deal remains open, and more details will emerge as the case proceeds and the defendants respond. As for LPX customers, Nvidia calls Nebius the first AI cloud to adopt LPX, and says the racks will come online there later this year. Looking ahead, Nvidia's roadmap includes the LP35, with NVFP4 support, alongside Rubin Ultra and the LP40 for Feynman.