Sept 3 (Reuters) - Nvidia will buy popular developer platform Hugging Face for $12.93 billion, betting that support for open AI models will drive future demand even as its biggest customers develop their own chips to reduce reliance on the semiconductor giant.
Shares of the company were slightly lower after the deal on Thursday, which ranks among its biggest ever.
The chipmaker is already a major open AI player in the U.S. with its widely used Nemotron model and vocal support for the technology. Acquiring Hugging Face will give it direct access to a platform developers use to collaborate, test and share tools, potentially providing valuable insight and data that could help it narrow the technology gap with top American and Chinese labs.
Demand for open-weight models has surged from businesses balking at the steep bill of deploying the technology, with Chinese companies such as DeepSeek and Z.ai emerging as crucial players with models that can match the best from the United States in tasks including generating computer code at a lower cost.
That surge has fueled fears that some American firms could become reliant on Beijing's models even as both countries race to dominate a technology they see as crucial to their future.
\"Hugging Face will remain an open platform for the entire AI ecosystem,\" Nvidia CEO Jensen Huang said, adding that his company's chips will not be required to build on or deploy through Hugging Face.
Under the deal, Nvidia will pay about $11.9 billion to Hugging Face investors, while offering an equity-based retention program of up to $1 billion for employees who join Nvidia.
For Nvidia, building up open source may help it cushion a demand slowdown from customers such as Meta, OpenAI and Microsoft, which are developing their own AI chips to cut reliance on its costly and supply-constrained processors.
Hugging Face has also been in the news recently after a hack by rogue AI agents that escaped OpenAI's testing environment. Beyond hosting AI models, it offers datasets, software libraries and cloud services used to build and deploy AI applications.
The New York-based startup, which is backed by Intel, Advanced Micro Devices and Amazon, was founded in 2016 by French entrepreneurs Clément Delangue, Julien Chaumond and Thomas Wolf.
(Reporting by Harshita Mary Varghese in Bengaluru; Editing by Pooja Desai and Leroy Leo)
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