Nvidia (NVDA.US) acquires AI platform Hugging Face for $13 billion to increase open source ecosystem layout

The Zhitong Finance App learned that Nvidia (NVDA.US) has agreed to acquire artificial intelligence startup Hugging Face at a transaction valuation of about 13 billion US dollars. The price includes a share retention plan of up to $1 billion for Hugging Face employees joining Nvidia.

The chip giant said it will maintain the open source nature of the Hugging Face platform in line with the startup's established operating model. “In line with this commitment, Hugging Face will continue to allow model developers, users, and users to upload and download models and data sets of their choice, and continue to support other chip vendors,” Nvidia said in a statement. Earlier reports said that Nvidia is expected to reach an agreement as early as this week.

The acquisition is Nvidia CEO Wong In-hoon's biggest move to date to promote the wider application of AI and expand the customer landscape. The deal gave Nvidia a key platform for developers to showcase and share AI models.

Hwang In-hoon is committed to promoting the development of the so-called open source model to prevent the technology of a few large companies from dominating the AI field. Some of these companies are currently Nvidia's biggest customers, but they are actively promoting self-developed chip projects.

Huang Renxun posted on the X platform: “The open source model can strengthen security and cybersecurity, accelerate innovation and popularization, and achieve sovereign autonomy. Nvidia will be an ideal home for Hugging Face, its community, and the future of the open source model.”

Nvidia has previously been an investor in Hugging Face. Other investors include Alphabet's Google, Amazon, Intel, and Saftex.

Hugging Face was founded in 2016 and operates an AI model sharing platform that others can use for free. The startup was valued at $4.5 billion in a funding round three years ago.

Hugging Face was involved in a cybersecurity incident, and a model OpenAI is testing inadvertently hacked into the platform. This vulnerability has raised concerns in the industry about the security of cutting-edge AI technology. OpenAI later stated that measures could have been taken earlier to prevent attacks on the Hugging Face system.

The acquisition of Hugging Face is the latest example of Nvidia's multiple deals over the past year, including a $6 billion licensing agreement with startup Poolside in August, which included issuing employment notices to several Poolside employees. Additionally, Nvidia has acquired most of the assets of chip startup Groq for around $20 billion.

As the company with the highest market capitalization in the world, Nvidia is a leading manufacturer of AI accelerators (chips used to train and run AI models). The company has gradually expanded a number of technologies, including software, in recent years with the aim of expanding the AI economic ecosystem.

Nvidia, headquartered in Santa Clara, California, gave an unexpectedly strong sales forecast for the 2028 fiscal year last week, which is expected to increase revenue by about 70%.