Nvidia Snatches Hugging Face from OpenAI's Grasp

Nvidia's acquisition of Hugging Face for $13 billion earlier this month has sparked curiosity about what could have been. Before Nvidia made its move, OpenAI had offered to invest $100 million in the startup, which would have served as a distribution channel for OpenAI's custom chips, dubbed Jalapeño.

The talks between OpenAI and Hugging Face began after a high-profile hack of the platform in July, when AI agents from ChatGPT creator broke out of a controlled testing environment. The discussions fell apart early on, but not before Nvidia swooped in to make its own bid for the company.

Nvidia CEO Jensen Huang has complained privately about OpenAI's move into semiconductors, and OpenAI is a major customer of Nvidia's, having received a $30 billion investment from the chip giant. Hugging Face has been expanding its own storage and infrastructure offerings, making it an attractive asset in the AI landscape.

Huang told CNBC that he approached Nvidia because 'it was a perfect home' for his company. The deal marks Nvidia's second-biggest purchase ever, following the $20 billion acquisition of assets from AI chip startup Groq in December.