SoftBank announces acquisition of UK AI chip company Graphcore, price undisclosed
SoftBank Group announced the acquisition of struggling British semiconductor startup Graphcore Ltd., a Japanese company seeking to strengthen investments in chips and artificial intelligence (AI). Graphcore was once touted as a competitor to Nvidia, but its valuation skyrocketed due to a surge in demand for AI chips in the market. However, the company has been working hard to secure the investment needed to compete.
The two companies have announced the transaction, but have not disclosed the financial terms. Previously, it was reported that the transaction price was $500 million. Graphcore CEO Nigel Toon stated at a briefing that Graphcore, headquartered in Bristol, will operate as a subsidiary of SoftBank and retain its management team. Nigel Toon will remain in office.
This is the second UK semiconductor company acquired by SoftBank, following its acquisition of Cambridge based Arm in 2016, a chip design company whose technology is applied to almost all smartphones worldwide. Graphcore is often regarded as a leading enterprise in the UK technology industry - in 2023, Graphcore participated in the first AI Security Summit in the UK. But Nigel Toon has been publicly criticizing the government's insufficient support for the industry.
When reviewing the current state of the UK technology industry, Nigel Toon pointed out that UK pension funds have historically been reluctant to invest in rapidly growing startups, which is a factor hindering growth.
Graphcore is designing an IPU (Intelligent Processor Unit) chip with the aim of implementing AI applications. The company has secured $2.8 billion in financing from well-known investors such as Sequoia Capital, hoping to compete with Nvidia, but the company is struggling to acquire customers.
According to its latest documents, Graphcore had sales of $2.7 million and a loss of $204.6 million in 2022. As of the end of 2020, Graphcore was valued at $2.77 billion. A document released last year showed that Graphcore needs more cash to achieve breakeven after reducing its workforce by one-fifth to 494 and closing operations in Norway, Japan, and South Korea. In 2023, Graphcore withdrew from China, and Nigel Toon believed that the market had a bright future.
Nigel Toon pointed out that the cost of competing with Nvidia and other companies developing custom AI chips is difficult to control. The scale here is very large, "he said. The right outcome for the company is to work closely with partners who are willing to make such a big investment to achieve success, "he said. SoftBank's plan is to" invest and increase "its employee base in the UK.
Vikas Parekh, Managing Partner of SoftBank Investment Fund, stated in a statement that SoftBank is "pleased to collaborate with Graphcore" towards General Artificial Intelligence (AGI), which refers to machines that perform better than humans in a range of tasks.
Nigel Toon stated that the SoftBank deal will provide Graphcore with the resources it needs to compete globally, but he acknowledges that the company is facing difficulties.
SoftBank founder Masayoshi Son has shifted his strategy from high-profile venture capital deals to strategic investments in artificial intelligence and semiconductors, leveraging Arm's successful public listing. Nigel Toon stated that Graphcore will collaborate with the entire SoftBank family, but did not specify how it will work with Arm.
The documents show that prior to the announcement of the transaction, Graphcore had sent a letter to former employees stating that their company's stock was worthless. The letter explains that the quoted price is lower than the amount of investment capital it has raised.
Nigel Toon confirmed that the former employee will not profit from this sale, but declined to comment on the financial terms. He said Graphcore had raised "about $700 million" before being acquired.
This is the second UK semiconductor company acquired by SoftBank, following its acquisition of Cambridge based Arm in 2016, a chip design company whose technology is applied to almost all smartphones worldwide. Graphcore is often regarded as a leading enterprise in the UK technology industry - in 2023, Graphcore participated in the first AI Security Summit in the UK. But Nigel Toon has been publicly criticizing the government's insufficient support for the industry.
When reviewing the current state of the UK technology industry, Nigel Toon pointed out that UK pension funds have historically been reluctant to invest in rapidly growing startups, which is a factor hindering growth.
Graphcore is designing an IPU (Intelligent Processor Unit) chip with the aim of implementing AI applications. The company has secured $2.8 billion in financing from well-known investors such as Sequoia Capital, hoping to compete with Nvidia, but the company is struggling to acquire customers.
According to its latest documents, Graphcore had sales of $2.7 million and a loss of $204.6 million in 2022. As of the end of 2020, Graphcore was valued at $2.77 billion. A document released last year showed that Graphcore needs more cash to achieve breakeven after reducing its workforce by one-fifth to 494 and closing operations in Norway, Japan, and South Korea. In 2023, Graphcore withdrew from China, and Nigel Toon believed that the market had a bright future.
Nigel Toon pointed out that the cost of competing with Nvidia and other companies developing custom AI chips is difficult to control. The scale here is very large, "he said. The right outcome for the company is to work closely with partners who are willing to make such a big investment to achieve success, "he said. SoftBank's plan is to" invest and increase "its employee base in the UK.
Vikas Parekh, Managing Partner of SoftBank Investment Fund, stated in a statement that SoftBank is "pleased to collaborate with Graphcore" towards General Artificial Intelligence (AGI), which refers to machines that perform better than humans in a range of tasks.
Nigel Toon stated that the SoftBank deal will provide Graphcore with the resources it needs to compete globally, but he acknowledges that the company is facing difficulties.
SoftBank founder Masayoshi Son has shifted his strategy from high-profile venture capital deals to strategic investments in artificial intelligence and semiconductors, leveraging Arm's successful public listing. Nigel Toon stated that Graphcore will collaborate with the entire SoftBank family, but did not specify how it will work with Arm.
The documents show that prior to the announcement of the transaction, Graphcore had sent a letter to former employees stating that their company's stock was worthless. The letter explains that the quoted price is lower than the amount of investment capital it has raised.
Nigel Toon confirmed that the former employee will not profit from this sale, but declined to comment on the financial terms. He said Graphcore had raised "about $700 million" before being acquired.