12 July 2024 , 10:22
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Deal for undisclosed sum secures Bristol-based company’s future after ‘material uncertainty’ in 2023
Graphcore, a British chipmaker once seen as a potential competitor to Nvidia, has been bought by Japan’s SoftBank in a deal that secures the company’s future.
The Bristol-based startup’s products are focused on artificial intelligence and it has been acquired by the powerful Japanese tech investor for an undisclosed sum. Last year, Graphcore warned that there was a “material uncertainty” over its survival and that it needed fresh funding by May 2024.
Peter Kyle, the secretary of state for science, innovation and technology, alluded to Graphcore’s problems as he backed the deal, saying it was a “welcome end to the uncertainty that has faced Graphcore and its employees”.
Graphcore is the latest UK tech company to be bought by SoftBank, which acquired the Cambridge-based chip designer Arm for £24bn in 2016.
SoftBank remains the biggest shareholder in Arm after its listing in New York last year. It also recently led a $1bn (£774m) investment in the British self-driving technology startup Wayve.
Graphcore’s co-founder and chief executive, Nigel Toon, said the demand for computing power to train and operate AI systems was vast and was continuing to grow. Graphcore makes chips called intelligence processing units, which can be used to train and operate AI models.
Chips are a core piece of technology behind AI models such as GPT-4, and demand for them has driven the valuation of Nvidia, the market leader, which makes a different type of chip called a GPU, to more than $3tn.
However, Graphcore’s promise, which drew comparisons with its much bigger US rival, has been clouded by financial struggles now solved by the SoftBank deal.
“Demand for AI compute is vast and continues to grow,” Toon said. “There remains much to do to improve efficiency, resilience, and computational power to unlock the full potential of AI. In SoftBank, we have a partner that can enable the Graphcore team to redefine the landscape for AI technology.”
SoftBank said products such as Graphcore’s would be vital as the tech industry pushed for artificial general intelligence – systems with human-level capabilities.
“Next-generation semiconductors and compute systems are essential in the AGI journey. We’re pleased to collaborate with Graphcore in this mission,” said Vikas J Parekh, a managing partner at SoftBank Investment Advisers.
The Financial Times, citing two people familiar with the matter, put the value of the deal at $600m.
Graphcore, which employs 350 people, will continue to be based in Bristol, with offices in Cambridge, London, Gdańsk in Poland and Hsinchu in Taiwan.
Valued at $2.8bn at the end of 2020, a filing published last year revealed Graphcore needed more cash to break even, after cutting its headcount by a fifth and shutting operations in Norway, Japan and South Korea.