AI chip startup Groq confirmed on Monday that it has raised $640 million in a funding round led by BlackRock, Cisco, and Samsung Catalyst Fund.

This funding has boosted Groq's valuation to $2.8 billion, more than double its previous valuation of $1.1 billion in 2021.

This development is seen as a challenge to Nvidia in the high-end market of advanced semiconductor manufacturing, aiming to capture a larger share from the market leader. As more cloud service providers and social media platforms strive to produce their own products to reduce reliance on Nvidia and weaken its dominant position in the chip manufacturing field, other competitors such as AMD are also competing in the evolving race.

Upon announcing the funding, the company stated, "Groq will use this funding to expand the capacity of its Token-as-a-Service (TaaS) product and add new models and features to GroqCloud."

Groq focuses on AI "inference" chips

Groq should not be confused with Elon Musk's Grok AI project. After the current X and Tesla heavyweight distanced himself from OpenAI to focus on his own plans, he announced the arrival of Grok at the end of last year, aiming to compete with OpenAI's ChatGPT.

Groq registered its name early on in 2016, so it comes as no surprise that they sent a cease-and-desist letter to the outspoken billionaire, requesting him not to use such a similar brand name.

Both entities claim ownership of this science fiction term, but Groq released a sharp and disrespectful statement directly targeting someone while showcasing the impressive and astonishing capabilities of their AI models.

Groq is now intensifying the development of its chips to enhance the capacity of AI systems. The Silicon Valley-based company has specialized language processing units (LPUs) designed for AI "inference," which is the process where models provide output to queries using their training data.

The company plans to use over 108,000 LPUs by the end of March next year.

Groq also announced the appointment of Stuart Pann as Chief Operating Officer, who previously held senior management positions at Intel and HP. He will join forces with Meta's Chief AI Scientist Yann LeCun, who will serve as a technical advisor.