The acquisition of Graphcore, a UK-based AI processing hardware company, by SoftBank has been confirmed after months of speculation. The financial details of the deal have not been disclosed, but reports suggest a purchase price of around $600 million, lower than the $700 million Graphcore had previously raised from investors.
Founded in 2016, Graphcore aimed to challenge Nvidia’s dominance in the AI processing hardware market with its “intelligence processing units” (IPUs), designed specifically for AI workloads. Despite early promise and backing from big names like Microsoft and Sequoia, Graphcore struggled to reach its full potential due to missed cloud deals, US export restrictions, and a forced exit from the Chinese market. The company reported a mere $2.7 million in revenue for 2022, coupled with significant losses.
With losses mounting and no new funding in sight, an acquisition seemed inevitable. SoftBank, already a major player in the chip industry through its ownership of Arm, emerged as the buyer. The acquisition provides Graphcore with the resources it needs to scale its operations and compete more effectively with Nvidia and other chipmakers.
Graphcore’s CEO Nigel Toon and co-founder Simon Knowles will retain their leadership positions. The acquisition is expected to result in a significant increase in Graphcore’s UK headcount, with no layoffs anticipated. SoftBank’s financial muscle, combined with its experience in the chip industry, is likely to be a boon for Graphcore.
Toon believes SoftBank’s backing will allow Graphcore to compete effectively in the AI technology landscape. “In SoftBank, we have a partner that can enable the Graphcore team to redefine the landscape for AI technology,” Toon said. The demand for AI compute is vast and continues to grow, and there remains much to do to improve efficiency, resilience, and computational power to unlock the full potential of AI.
Vikas J Parekh, Managing Partner at SoftBank Investment Advisers, highlighted the importance of “next-generation semiconductors” in achieving artificial general intelligence (AGI), adding that the Japanese company was pleased to collaborate with Graphcore. The acquisition could also lead to collaboration between Graphcore and Arm, potentially posing a more serious threat to Nvidia’s dominance.
Regulatory hurdles were surprisingly low in this case, with both companies securing all necessary approvals in the UK, US, and other relevant jurisdictions. Graphcore will operate as a wholly owned subsidiary of SoftBank, with its headquarters remaining in Bristol. However, some former Graphcore employees may not benefit from the deal, as their stock options were reportedly wiped out. Toon confirmed that current employees and investors fared better, but expressed regret for the former employees who will not participate in the company’s future.
