By D. Maan, Jadetimes News
Japanese Conglomerate Softbank Acquires Graphcore
British AI chip firm Graphcore, once seen as a rival to Nvidia, has been acquired by Japanese conglomerate Softbank. The purchase price was not disclosed but is reportedly much lower than the £2bn valuation from 2020. Graphcore head Nigel Toon praised the acquisition as a significant endorsement of the team. However, the deal raises concerns about the UK's ability to develop competitive firms in the AI chip market.
Softbank previously acquired British chip designer Arm in 2016.
The acquisition is seen as a setback for UK financial markets, particularly as London seeks to bolster its status as a global financial center.
Science Secretary Peter Kyle welcomed the resolution of uncertainty for Graphcore but highlighted the need for efforts to improve the UK business environment.
Positive Outlook and Future Plans
Despite concerns, Toon expressed confidence in the deal's positive implications for UK businesses, emphasizing that Graphcore has demonstrated its ability to compete with larger firms. The acquisition is expected to bring new investment and growth opportunities.
Toon will remain as head of the company.
Graphcore plans to hire new staff in its UK offices.
The firm will operate as a subsidiary of Softbank while remaining headquartered in Bristol.
Acquisition Details and Market Valuation
While the exact sale price of Graphcore has not been publicly disclosed, reports suggest it is around $500m (£390m). Graphcore head Nigel Toon refrained from confirming the figure, acknowledging the fluctuating valuations in the tech sector.
Toon highlighted the general volatility in tech firm valuations.
He expressed hope that the deal with SoftBank would bring significant investment and progress for Graphcore.
Graphcore's Journey and Challenges
Graphcore, founded in 2016 by Nigel Toon and Simon Knowles, developed the Colossus series of computer chips for powerful processing. Despite its initial promise and a high valuation in 2020, the company faced challenges with slowing sales, leading to the closure of offices in Norway, Japan, and South Korea in 2022.
Major investor Sequoia Capital wrote off its stake in Graphcore in 2023.
The company struggled to compete with Nvidia, which has significantly grown in value.
Positive Outlook and Future Potential
Dan Ridsdale, head of technology at Edison Group, sees the acquisition as a positive development for UK tech and Graphcore. He notes that while Nvidia dominates the Generative AI space, there are other opportunities within AI, and the industry needs viable competitors.
Ridsdale emphasizes the need for substantial capital for Graphcore to compete effectively.
He views SoftBank's investment as a willingness to take risks and provide necessary capital, positioning Graphcore for future success.
