SoftBank acquires British AI chipmaker Graphcore

SoftBank has announced its acquisition of Graphcore, a prominent British AI chipmaker, in a deal that makes Graphcore a wholly-owned subsidiary of SoftBank. Valued at approximately $600 million, this acquisition is not SoftBank’s first venture into the UK tech industry. In 2016, SoftBank acquired British chip designer Arm in a larger and more controversial deal. Interestingly, the Graphcore purchase is at a lower valuation than the total funding the company has raised, which was around $700 million.

Despite the acquisition, Graphcore will continue to operate under its own name and maintain its headquarters in Bristol, UK. The company will also keep its offices in Cambridge, London, Gdansk, and Hsinchu, demonstrating SoftBank’s commitment to preserving Graphcore’s established presence and operations. Nigel Toon, co-founder and CEO of Graphcore, expressed his enthusiasm, saying: “This is a tremendous endorsement of our team and their ability to build truly transformative AI technologies at scale, as well as a great outcome for our company.”

Toon emphasized the ongoing demand for AI compute and the necessary advancements in efficiency, resilience, and computational power to fully realize AI’s potential. Graphcore is renowned for its “Intelligence Processing Units” (IPUs) – accelerators specifically designed for AI workloads – and a software stack that enables developers to effectively utilize its hardware.

The company’s technology has garnered significant attention. In 2020, a Graphcore device outperformed an Nvidia A100 GPU, and in another instance, its hardware halved the time required for a GPU-based drug discovery workload. However, despite these technological successes, Graphcore has struggled to generate significant revenue and achieve profitability. In 2022, the company reported revenue of just $2.7 million – a 46 percent year-on-year decrease – while operating expenses reached $206.8 million.

Vikas J. Parekh, Managing Partner at SoftBank Investment Advisers, commented: “Society is embracing the opportunities offered by foundation models, generative AI applications, and new approaches to scientific discovery. Next generation semiconductors and compute systems are essential in the AGI journey, and we’re pleased to collaborate with Graphcore in this mission.” Parekh’s mention of AGI (Artificial General Intelligence) suggests that SoftBank sees Graphcore’s technology as crucial in the quest for advanced AI systems that can match or surpass human-level intelligence across various tasks.

Graphcore has established itself as a leading employer in the UK’s high-tech economy and is committed to continuing its investment in creating high-skilled jobs across various disciplines. The acquisition by SoftBank is likely to provide Graphcore with significant resources and opportunities for expansion, reflecting the growing competition in the AI chip market where companies like NVIDIA, Intel, and AMD are striving for dominance.

As AI continues to infiltrate various sectors of the economy and society, the demand for specialized AI hardware is expected to grow. Graphcore’s integration into SoftBank’s portfolio positions both companies to capitalize on this trend.