By T. Jayani, JadeTimes News
British AI chip designer Graphcore, once seen as a potential competitor to market leader Nvidia, has been acquired by Japanese conglomerate Softbank. The acquisition price remains undisclosed but is believed to be significantly lower than the £2 billion valuation Graphcore received during a financing round in 2020.
Graphcore CEO Nigel Toon described the acquisition as "a tremendous endorsement of our team" in an interview with us. However, this deal raises concerns about the UK's capability to nurture firms that can compete with the leading players in the rapidly growing AI chip market. Softbank's purchase of Graphcore follows its controversial acquisition of another British chip designer, Arm, in 2016.
Ben Barringer, a technology analyst at Quilter Cheviot, termed the acquisition "another bitter blow" to UK financial markets, especially as London seeks a major tech listing to bolster its global financial center reputation. Science Secretary Peter Kyle welcomed the resolution of uncertainty for Graphcore and its employees but acknowledged the need for continued efforts to make the UK a prime location for starting and growing businesses.
Toon asserted that the acquisition demonstrates UK firms' ability to compete with major tech companies, highlighting Graphcore's achievements with a smaller team and less capital. He emphasized the positive impact of new investment on the UK’s growth agenda and announced plans to stay on as the company's head, with new staff hires anticipated for its UK offices. Despite becoming a subsidiary of Softbank, Graphcore will remain headquartered in Bristol.
While the sale price was not disclosed, reports suggest it is around $500 million (£390 million). Toon declined to comment on speculation regarding the sums involved but acknowledged the fluctuating valuations of tech firms and the cautious investment decisions in the current market. He expressed optimism about significant investment and progress for Graphcore under Softbank's ownership.
Founded in 2016 by Toon and Simon Knowles, Graphcore's Colossus series of computer chips enable powerful processing. However, the company has faced declining sales since its peak 2020 valuation, leading to the closure of offices in Norway, Japan, and South Korea in 2022. In 2023, major investor Sequoia Capital wrote off its stake in the company, a significant setback considering Graphcore's earlier potential to rival Nvidia in the AI space.
Dan Ridsdale, head of technology at Edison Group, viewed the acquisition positively, acknowledging Nvidia's dominance in Generative AI but noting the industry's need for viable competitors. He emphasized the importance of substantial capital for Graphcore and praised Softbank's willingness to invest and support Graphcore's ambitions in the AI sector.
