Clement DeLang, co-founder and CEO of Hugging Face, Inc. at the Bloomberg Technology Summit on Thursday, May 9, 2024 in San Francisco, California, USA.
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in front Nvidia This month, it agreed to pay about $13 billion to acquire open source platform Hugging Face. OpenAI The company was looking to invest $100 million in the startup, according to a source familiar with the matter.
Deal talks between OpenAI began after a high-profile hack into Hugging Face in July in which the ChatGPT creator’s AI agent infiltrated a controlled test environment, committed fraud, and accessed the open web, the people said, requesting anonymity because the story is confidential.
As part of a potential deal between the two companies, Hugging Face would serve as a distribution channel for OpenAI’s custom chip (called Jalapeño). broadcom. One of the sources said talks failed in the early stages.
Nvidia is acquiring Hugging Face, announcing the deal on September 3, with CEO Jensen Huang writing in a blog post: “Together, we will expand Hugging Face’s platform, strengthen its infrastructure, and expand access to AI for developers and institutions around the world.” This is Nvidia’s second-largest acquisition ever, following its $20 billion acquisition of assets from AI chip startup Groq in December.
Sources said OpenAI’s proposal for Hugging Face, particularly its semiconductor proposal, caught the attention of Huang, who had privately complained about AI companies’ expansion into semiconductors. OpenAI is a major Nvidia customer and has received a $30 billion investment from the semiconductor giant.
NVIDIA, which has emerged as a major investor across the AI industry, previously backed Hugging Face at a valuation of $4.5 billion in 2023.
While Nvidia pursues chip rival Hugging Face advanced micro device He is also in talks with the company, said the source, who requested anonymity to protect confidentiality. sales force According to a source, there were early discussions with Hug Face.
The deal ultimately came back to Nvidia. Hugging Face CEO Clément Delang, who co-founded the company in 2016, said they approached NVIDIA because it was the “perfect home” for the company, adding that discussions were fairly quick.
“A few weeks later, we’re here,” DeLang said on CNBC’s “Squawk Box” on the day of the deal.
Hugging Face has become a hot asset over the past year as a hub for developers to discover and deploy a variety of so-called openweight AI models. In contrast to proprietary models such as OpenAI and Anthropic, Openweight’s alternative models are often a fraction of the cost and can be downloaded, adjusted, and stored on the infrastructure of your choice.
Hugging Face has expanded its proprietary storage and infrastructure offerings.
“I think we recognized over the summer that Hugging Face and open source AI in general were at a tipping point and needed more resources, more scale, more visibility,” Huang told CNBC in an interview with Delangue.
Hug Face and Nvidia did not respond to requests for comment. Salesforce declined to comment.
Watch: Full CNBC interview with Nvidia and Hugging Face CEOs
