Groq plans to set up over 12 data centers next year: report

[Woman standing in aisle of server room]
Erik Isakson

Groq's CEO Jonathan Ross said the company intends to set up over a dozen data centers next year, the _Wall Street Journal_ reported.

Groq, which develops hardware made specifically for AI inference, was last valued [https://seekingalpha.com/news/4495637-ai-inference-chipmaker-groq-raises-750m-to-reach-6_9b-valuation] at $6.9B following a $750M funding round that was led by Disruptive including investments from BlackRock, Neuberger Berman, Deutsche Telekom Capital Partners, Samsung (OTCPK:SSNLF [https://seekingalpha.com/symbol/SSNLF]) and Cisco (NASDAQ:CSCO [https://seekingalpha.com/symbol/CSCO]).

So far this year, the American company has established 12 data centers, and next year it wants to exceed that number, according to Ross, the report noted [https://www.wsj.com/business/ai-unicorn-groq-charts-data-center-expansion-plan-5d6a130e].

“Expect that [number] to grow rapidly,” Ross, who founded the company, said in an interview, the report added.

Groq did not immediately respond to a request for comment from Seeking Alpha.

Groq has data centers in the U.S., Canada, the Middle East, and Europe, and intends to establish its first in Asia this year, as per Ross who previously headed Alphabet (NASDAQ:GOOG [https://seekingalpha.com/symbol/GOOG]) (NASDAQ:GOOGL [https://seekingalpha.com/symbol/GOOGL]) unit Google’s AI chip-development program.

Asia is a vital market, about half of the developers that use Groq’s technology come from the region, the report added.

“One reason that we’ve done so well in all of Asia, but in particular in India, is it’s a very price-sensitive market," said Ross.

Groq builds custom hardware known as Language Processing Units, or LPUs, and a full-stack platform called GroqCloud. These are designed to accelerate AI inference and create new use cases for large language models and other AI applications.

AI inference is the ability of trained AI models to recognize patterns and draw conclusions from new information that they have not seen before.

Groq has deployed chips to Saudi Arabia, where it secured a $1.5B deal earlier this year to expand the delivery of its infrastructure. The demand there is already surpassing supply, as per Ross.

“Every time we overcompensate by trying to build more, people surprise us by needing even more than we built,” said Ross.

As companies look to achieve self-sufficiency in AI, Ross anticipates many to try to build their own chips. However, he thinks that the odds are stacked against them.

“The failure rate’s…probably 9 out of 10 or higher despite [these companies] spending billions and billions of dollars,” said Ross.

In addition, when asked if Groq has received any acquisition offers, Ross indicated that he has no plan of selling the company at the moment, nor has he sold any of his Groq shares, the report added.

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