Nvidia has spent more than $900 million in cash and stock to hire Enfabrica CEO Rochan Sankar and other key employees from the AI hardware startup, while also licensing the company’s technology.
The deal, which closed last week, allows Nvidia to integrate Enfabrica’s expertise in connecting massive clusters of GPUs, a critical component in the ongoing expansion of AI infrastructure.
An “acquihire” to bolster Nvidia’s networking capabilities
The transaction is structured as an “acquihire,” a strategy used by tech giants to acquire talent and intellectual property without a full merger, thereby avoiding extensive regulatory reviews. Enfabrica, founded in 2019, specializes in semiconductor interconnect technology that can link over 100,000 GPUs into a single, cohesive network. This is crucial for the large-scale data centers that power AI services, as it reduces latency and optimizes performance for training and deploying large language models.
Nvidia’s latest AI systems, such as those used in the new $4 billion Microsoft data center in Wisconsin, rely on rack-scale designs that integrate up to 72 GPUs per rack. Enfabrica’s technology is designed to make these large clusters function as a unified computing system, complementing Nvidia’s own hardware offerings.
Nvidia’s history with Enfabrica
Nvidia has been involved with Enfabrica since 2023, when it participated in the startup’s $125 million Series B funding round. Later that year, Enfabrica raised an additional $115 million from a group of investors that included Nvidia’s direct competitor, AMD, as well as Samsung and Cisco. This brought Enfabrica’s valuation to approximately $600 million, according to PitchBook data.
Part of a broader industry trend
The move is part of a larger trend of acquihires in the AI industry, as major tech companies compete for top talent.
For example:
- Meta’s $14.3 billion investment to hire the founder of data-labeling firm Scale AI and acquire a 49% stake in the company.
- Google’s $2.4 billion deal to recruit the CEO and R&D team from the AI coding platform Windsurf.
- Microsoft’s $650 million deal to hire key personnel from the AI assistant startup Inflection.
- Amazon’s acquihire of Adept, a company focused on AI agents for enterprise automation.
Nvidia’s strategic investments and acquisitions
While Nvidia has made fewer outright acquisitions than its peers, it has made several strategic moves to strengthen its position in the AI market. Its largest deal was the $6.9 billion acquisition of chip designer Mellanox in 2019, whose technology is now a key part of Nvidia’s Blackwell AI platform. More recently, Nvidia acquired the AI workload orchestration firm Run:ai for $700 million.
The company also disclosed a $5 billion equity investment in its rival Intel on Thursday and committed nearly $700 million to Nscale, a UK-based AI data center startup, earlier this week.
Following the new deal, Enfabrica’s CEO, Rochan Sankar, will report directly to Nvidia’s leadership in Santa Clara. A Nvidia spokesperson declined to comment on the arrangement, and Enfabrica did not respond to requests for information.
