Nvidia challenger Groq expands with first European data center

• Groq said it has established its first European data center in partnership with Equinix.
• The AI semiconductor startup is looking to take advantage of rising demand for AI services in Europe following other U.S. companies also ramping up investment in the region.
• Groq, which is backed by investment arms of Samsung and Cisco, said the data center will be in Helsinki, Finland.

Artificial intelligence semiconductor startup Groq on Monday announced it has established its first data center in Europe as it steps up its international expansion.

Groq, which is backed by investment arms of Samsung and Cisco, said the data center will be located in Helsinki, Finland and is in partnership with Equinix.

Groq is looking to take advantage of rising demand for AI services in Europe following other U.S. firms which have also ramped up investment in the region. The Nordics in particular is a popular location for the data facilities as the region has easy access to renewable energy and cooler climates. Last month, Nvidia CEO Jensen Huang was in Europe and signed several infrastructure deals, including data centers.

Groq, which is valued at $2.8 billion, designs a chip that the company calls a language processing unit (LPU). It is designed for inferencing rather training. Inferencing is when a pre-trained AI model interprets live data to come up with a result, much like the answers that are produced by popular chatbots.

While Nvidia has a stranglehold on the chips required for training huge AI models with its graphics processing units (GPUs), there is a swathe of startups hoping to take a slice of the pie when it comes to inferencing. SambaNova; Ampere, a company SoftBank is in the process of purchasing; Cerebras and Fractile, are all looking to join the AI inference race.

There are a number of areas where Groq wants to stand out from its rivals, including Nvidia, according to CEO Jonathan Ross.

In a Monday interview with CNBC, Ross said that Nvidia chips will use expensive components such as high-bandwidth memory, which currently have very few suppliers. Groq's LPUs meanwhile do not use such chips, and the company's supply chain is broadly based in North America.

“We're not as supply limited, and that's important for inference, which is very high volume, low margin,” Ross told CNBC's “Squawk Box Europe.”

“And the reason that we're so good for Nvidia's shareholders is, we're happy to take that high volume but lower margin business and let others focus on the high-margin training.”

Ross also touted Groq's ability to deploy its technology at speed. He said that the company decided four weeks ago to build the data center in Helsinki is currently unloading its server racks into the location now.

“We expect to be serving traffic starting by the end of this week. That's built fast and so it's a very different proposition from what you see in the rest of the market,” Ross said.

European politicians have been pushing the notion of sovereign AI — where data centers must be located in the region. Data centers that are located closer to users also help improve the speed of services.

Global data center builder Equinix connects different cloud providers together, such as Amazon Web Services and Google Cloud, making it easier for businesses to have multiple vendors. Groq's LPUs will be installed inside the Equinix data center allowing businesses to access Groq's inference capabilities via Equinix.

Groq currently has data centers in the U.S. and Canada and Saudi Arabia with its technology.