Japan’s SoftBank steps in to acquire struggling UK AI chipmaker Graphcore

Japan’s SoftBank has acquired British AI chip developer Graphcore for an undisclosed sum. The announcement was made on Thursday, last week by Graphcore CEO Nigel Toon in a brief statement. This comes as Graphcore, once seen as a potential rival to Nvidia, faced financial difficulties.

While the final purchase price remains confidential, reports suggest it falls below the $700 million Graphcore had previously raised from investors.

The acquisition aligns with SoftBank's growing focus on artificial intelligence. The company already holds a significant stake in Arm, a leading designer of computer chips, including those used in smartphones. Graphcore, on the other hand, specializes in "Intelligence Processing Units" (IPUs) specifically designed to handle demanding AI workloads.

"Demand for AI compute is vast and continues to grow. 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," Toon wrote in his statement.

Analysts believe SoftBank's financial muscle and expertise in the chip industry could provide much-needed resources for Graphcore to compete effectively against established players like Nvidia.

A Lifeline for Graphcore

Financial reports show Graphcore's revenue has declined in recent years. In 2022 it reported revenue of just $2.7 million – down 46 percent year-on-year, and operating expenses of $206.8 million. Substantial job cuts followed as execs admitted it may struggle to stay afloat. To make matters worse, the company’s efforts to expand to China were hampered by US restrictions on technology sales.

SoftBank's acquisition provides a lifeline for Graphcore, potentially allowing them to focus on innovation and product development without the immediate financial pressure.

The acquisition is also expected to shake up the AI chip market by bringing competition to established brands. Nvidia has particularly enjoyed a great run since the advent of AI and currently sits as the 3rd most valuable company in the world, behind Apple and Microsoft.

"This move by SoftBank highlights the growing importance of specialized AI hardware," says an industry analyst. "The battle for dominance in AI chips is far from over, and Graphcore, with SoftBank's support, could become a major player."

Uncertainties Remain

While the acquisition offers new opportunities for Graphcore, some questions remain. It's unclear how SoftBank plans to integrate Graphcore's technology with its existing chip holdings. Additionally, employee retention and potential changes in leadership structure are topics of speculation.

Overall, SoftBank's acquisition of Graphcore is a significant development in the AI chip landscape. It will be interesting to see how this deal unfolds and what impact it has on the future of AI technology.