- Bristol-headquartered Graphcore was once touted as a rival to Nvidia
- But it struggled to compete with larger rivals owing to shortfall in funding
- Boss says deal provides ‘resources it needs to compete at a global level’
Japanese investment giant Softbank Group has bought UK-based artificial intelligence chipmaker Graphcore for an undisclosed fee.
Bristol-headquartered Graphcore was once touted as a potential rival to chip behemoth Nvidia, having attained a valuation of more than £2.1billion in 2020, but it has struggled to compete with much larger rivals owing to a shortfall in funding.
It emerged last year that Graphcore needed more cash to break even and the group was forced to slash its headcount by a fifth, while shutting down its operations in Norway, Japan and South Korea.
Acquired: Japanese investment giant Softbank Group has bought UK-based artificial intelligence chipmaker Graphcore, founded by Nigel Toon and Simon Knowles (pictured)
Co-founder and chief executive Nigel Toon told a press conference late on Thursday that Softbank’s takeover would provide Graphcore with the resources it needs to compete at a global level.
Toon, who will remain as CEO, said: ‘The piece that surprised us was the speed at which this has taken off, and the scale that is involved.
‘This is a level of investment that is utterly massive. Graphcore, as a modestly-sized company compared to those we’re competing with, has actually managed to go toe-to-toe and build world-class technology.’
Softbank still holds a large stake in fellow British chipmaker Arm, which it acquired in a £26billion deal in 2016.
Arm opted to shun the City for a US listing in September last year, with the company’s share price having risen more than 185 per cent in that time.
Asked about a potential team-up with Arm, Toon said Graphcore would work with partners across Softbank’s portfolio.
In efforts to capitalise on the AI boom, the new Labour Government has pledged to establish a new ‘regulatory innovation office’, remove planning obstacles for building crucial data centres, and provide long-term research funding.
Head of technology at Edison Group Dan Ridsdale said: ‘The deal has been in the rumour mill for a while, but interesting to see it happen. In terms of the actual deal, I think this is actually good news for UK tech and Graphcore.
‘Nvidia has carved out dominant position in Generative AI processing with the ecosystem and capital it now has at its disposal, will be very hard to displace for large scale LLM/GenAI deployments.
‘There are other opportunities within AI however and the industry does will need viable competitors to Nvidia, but Graphcore will need substantial capital to remain in the mix.
‘It is a positive that Graphcore has found an investor willing to take the risk and provide the capital to put Graphcore in the mix. ‘
Reflecting on the state of the British tech industry, Toon cited pension funds’ historic unwillingness to invest in fast-growing startups as a barrier to growth.
He said: ‘There’s a massive opportunity here, but there’s a lot of structural things that still need to be fixed.
‘If you look at where our money came from, some of it came from the UK, but the majority of it came from other regions.
‘That’s the reality of it, and that’s the piece that we’re going to need to fix, going forward.’
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