Groq sued by ex-employees over $20 billion NVIDIA licensing deal

AI chip company Groq is facing a lawsuit in the Delaware Court of Chancery over its $20 billion non-exclusive licensing deal with NVIDIA. Two former employees claim the deal hurt minority shareholders.

Plaintiffs Joshua Rubin and Benjamin Serebrin used to work at Groq. They left before the deal but still hold shares. Court papers show the deal has two parts: $17 billion shared by all shareholders, and $3 billion in NVIDIA restricted stock given to Groq employees who moved to NVIDIA.

The plaintiffs say Groq's board had serious conflicts of interest and failed to get the best price and structure, while blocking some shareholders from voting. Some shares were cashed out at "low prices" without counting future value, while management made big profits.

Since the deal is not a real acquisition, the $17 billion fee counts as taxable income for Groq, adding a tax burden to the company.