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Riding the wave of rising artificial intelligence (AI) adoption, a Silicon Valley startup that develops AI chips is reportedly eyeing a new funding round that would give it a valuation of $6 billion.
Groq, based in San Jose, California, has approached investors to raise between $300 million and $500 million, according to The Information, which cited people familiar with the matter, as reported by Reuters.
The company is known for its language processing unit (LPU) chips to handle the unique demands of large language models (LLMs) and other AI inference tasks. LPUs differ from GPUs in that they do sequential processing, making them more suitable for tasks such as text generation, translation, and other language-based applications.
The AI inference chips manufactured by the company optimize speed and execute commands of pre-trained models.
Groq is one of several smaller AI chipmakers competing with established players like Nvidia (NVDA) and Advanced Micro Devices (AMD). Nvidia stock closed at a new record high on Wednesday, giving the company the distinction of being the first to breach the $4 trillion market capitalization mark.
In July 2024, Groq unveiled a partnership with Meta Platforms (META), launching Llama 3.1 models powered by its LPU AI inference technology.
Established in 2016, Groq was founded by Jonathan Ross, a former Google engineer, and Douglas Wightman.
In August 2024, the company raised $640 million in a Series D funding round, led by Cisco Investments, Samsung Catalyst Fund, and BlackRock Private Equity Partners.
Groq reportedly plans to use the proceeds from the offering to fulfill a contract it struck with Saudi Arabia in February. The company stated at the time that it had secured a $1.5 billion contract to expand the delivery of its AI chips to the country.
The company informed potential investors that the Saudi deal is expected to generate approximately $500 million in revenue by 2025.
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