Could SoftBank, OpenAI buy lossmaking Graphcore?

Could SoftBank, OpenAI buy lossmaking Graphcore?

Business news |
By Peter Clarke

Graphcore Ltd. (Bristol, England), a developer of AI processors for the data center, is exploring a trade sale of the company after struggling to gain market traction, according to a Sunday Telegraph report.

Among the companies that have reportedly expressed an interest are the Japanese conglomerate SoftBank; OpenAI, the startup behind ChatGPT; and Arm Holdings plc. However, the fact that AI and semiconductors are now seen as strategic by politicians may make the sale of UK-based Graphcore to a foreign entity problematic.

One of the reasons that SoftBank and OpenAI could be rumoured to be taking an interest in Graphcore is that their companies are benefitting from the surge in AI interest. This has bolstered company finances at a time when the companies also appear interested in hedging against Nvidia’s domination of the AI chip market.

Graphcore was founded in 2016 to bring to market a novel processor it calls the IPU. The IPU is designed to address artificial intelligence workloads. The company has subsequently raised US$682 million in venture capital. In 2020 the company raised more than US$200 million in a Series E round of funding (see US$222m round values Graphcore at over $2.7 billion).

Big loss in 2022

However, like many other companies trying to address AI in the datacentre it has struggled to compete with market leader Nvidia. In its financial results for the year to December 31, 2022, Graphcore reported it made a loss before tax of more than US$200 million on annual revenue of US$2.7 million that was down from sales of US$5.0 million for the previous year. In 2023 Graphcore was hit by restrictions imposed by the US on sales of AI technology into China.

The accounts for 2022 also stated that forecasts indicated additional funding would be needed in 3Q23. No such fundraising has been announced and explorations of a trade sale may have resulted from fundraising discussions, according to the Sunday Telegraph report. The report also said that an Arm spokesperson had denied the company was in acquisition discussions with Graphcore.

Graphcore’s CEO Nigel Toon has recently written a book about AI and has a schedule of book festival appearances in 2024 (see Graphcore’s CEO Nigel Toon authors AI book, goes on the road).

Related links and articles:

News articles:

AI ‘unicorn’ Graphcore set to cut jobs

Graphcore’s CEO Nigel Toon authors AI book, goes on the road

Graphcore takes on Nvidia with UK AI datacentre offer

US$222m round values Graphcore at over $2.7 billion

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