Nvidia makes boldest move yet, and the fallout begins
Faizan Farooque
Fri, December 26, 2025 at 11:07 AM EST
4 min read
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Nvidia recently struck a $20 billion deal to acquire the brains of a fierce rival, marking its biggest move to date in the AI arms race. However, the massive chip manufacturer may soon have to respond to more difficult inquiries about the future of its chips.
CEO Jensen Huang offered further detail in an internal email obtained by CNBC.
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The move comes as Nvidia is getting more attention in Asia. Megaspeed International, a fast-growing Singapore-based importer of Nvidia chips, is being looked into for possibly smuggling banned H100 and H200 chips into China, according to a recent Bloomberg report.
The world's most valuable chipmaker is now stuck between two extremes: It has to deal with rising geopolitical threats and regulatory difficulties in one of its hottest regions while still dominating AI infrastructure around the world.
Nvidia buys brainpower, not branding, in record-breaking Groq deal
Groq, a nine-year-old firm started by former Google TPU engineers, was never for sale — at least not in public. But Nvidia came in with a $20 billion deal that includes licensing Groq's cutting-edge AI inference technology and bringing on its top leaders, such as CEO Jonathan Ross.
Sources informed CNBC that Nvidia is really buying all of Groq's assets, except for a small GroqCloud firm, even though Groq called the purchase a "non-exclusive licensing agreement."
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This is Nvidia's biggest deal ever in terms of money. The price of $20 billion is over three times what Groq was worth in its most recent investment round, which was $6.9 billion.
It also beats Nvidia's previous record, the $7 billion purchase of Mellanox in 2019, by a wide margin.
Key takeaways on Nvidia-Groq deal:
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Nvidia now controls Groq’s high-speed inference chip designs, allowing tighter integration into its broader AI platform.
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Groq’s leadership, including Ross and president Sunny Madra, will join Nvidia’s leadership team.
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The remaining GroqCloud unit will continue operating independently, led by its CFO.
This aggressive move is like Nvidia's smaller but similar AI acquisition in September, when it spent $900 million for chip IP and key staff from Enfabrica.
U.S. authorities zero in on Nvidia's Southeast Asian partner
As Nvidia continues to lead in AI, it is being caught up in the sticky politics of the semiconductor supply chain.
Megaspeed International, which used to be a small part of a Chinese gaming company, is now Nvidia's biggest customer in Southeast Asia. But U.S. investigators are now looking into the company because it may have smuggled prohibited AI chips into China.
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The dispute is over the difference between the number of chips Nvidia claimed to have for Megaspeed and what was found during inspections. This might put Nvidia in the sights of regulators who are already making it harder to export goods.
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The H100 and H200 chips at the center of this drama are subject to U.S. trade restrictions aimed at curbing China’s AI ambitions.
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Singapore is becoming a popular place for AI startups, but U.S. officials are still worried that they might be diverted to other countries through regional partners.
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Nvidia has repeatedly insisted it complies with all export laws, but the Megaspeed case could test that stance.
There is no proof of wrongdoing, but the optics are bad. Nvidia now has to convince both investors and authorities that its record-breaking expansion isn't causing problems with AI compliance.
The financial stakes are rising
Some analysts, such as Loop Capital, say that Nvidia's value might reach $6 trillion in a year, after it just exceeded the $4 trillion mark, Bloomberg reports. Its AI chips power everything from Google's data centers to OpenAI's models. But as Nvidia's profile grows, so does the scrutiny from regulators.
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Nvidia is solidifying its dominance over real-time workloads in the AI chip market with its Groq integration.
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The corporation has full control over AI infrastructure, since it has a growing collection of chip IP, developer tools, and cloud services.
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But probes like Megaspeed's could lead to stricter laws around the world or make it harder for companies to export.
Investors can clearly see that although Nvidia is outpacing its competitors in technology, its vulnerability to geopolitical events now poses a significant risk.
As 2026 nears, the world's top AI company may face more than just speed and size; it may also face scrutiny.
Related: Microsoft sends harsh message to millions of Microsoft 365 customers
This story was originally published by TheStreet on Dec 26, 2025, where it first appeared in the Economy section. Add TheStreet as a Preferred Source by clicking here.
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