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Nvidia announced on Thursday its intention to acquire the artificial intelligence startup Hugging Face for $12.9 billion. This major move by the chip manufacturer is aimed at expanding the reach of open-source AI technologies.

Hugging Face, which provides a service for hosting and accessing open-source AI models and datasets, recently drew public attention after OpenAI models it hosted went out of control during a test incident.

The company also became the subject of industry discussion regarding whether access to advanced AI technologies should be open or 'closed,' similar to popular models from OpenAI and Anthropic, and restricted to prevent misuse. Hugging Face reported that it had to use an open-source Chinese model to protect against OpenAI hacking due to restrictions on using popular closed models.

Unlike closed models, open-source AI models hosted on Hugging Face allow companies and developers to upload the parameters defining the model's operation and customize them for specific tasks. Some believe that when these models are uploaded and run on clients' own infrastructure, their confidential or proprietary data becomes more secure.

Nvidia CEO Jensen Huang has advocated for open models, asserting that they can promote security and accelerate innovation. This acquisition may also strengthen Nvidia's plans to solidify its role as the technological foundation of the AI boom.

Huang wrote in a blog post on Thursday that by acquiring Hugging Face, Nvidia will be able to provide access to the platform's models to a larger number of developers and companies worldwide. Hugging Face currently boasts over 18 million developers and researchers using more than 3 million models, as well as 200,000 enterprise clients. Before the deal, Nvidia itself had released over 500 open models on Hugging Face.

In his blog post, Huang addressed millions of creators on Hugging Face, thanking them for pushing the boundaries of what is possible, and confirmed Nvidia's plan to keep the platform open. He stated: 'Together we will make AI more open, more capable, and more accessible to people and institutions around the world.'

Last week, the chip manufacturer reported that sales more than doubled in the last quarter, reaching over $96 billion. Nevertheless, investors continue to question whether the aggressive spending on AI infrastructure will continue, and whether Nvidia can stay ahead of the growing number of competitors.

Nvidia is investing heavily in maintaining and expanding the AI ecosystem, including investments in AI labs and providing credits to customers who purchase its chips to build data centers.

According to the deal announced on Thursday, Nvidia will pay Hugging Face shareholders $11.9 billion. The agreement also includes an additional $1 billion in equity to retain Hugging Face employees moving to Nvidia. The acquisition is expected to close in the first half of next year, according to filings with securities regulators.

This deal represents a significant increase compared to Hugging Face's 2023 valuation of $4.5 billion following a $235 million funding round. According to the Financial Times, Hugging Face turned down a $500 million investment from Nvidia last year, which would have valued the company at $7 billion, because it wanted to maintain its independence.

However, Hugging Face CEO Clément Delanghe told CNBC on Thursday that he pursued this deal with Nvidia in the summer, realizing that open-source AI was at a 'turning point and needed more resources, more scale, and more visibility.'