SoftBank closer to buying Graphcore, say reports

SoftBank closer to buying Graphcore, say reports

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By Peter Clarke

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Talks between SoftBank Group and AI chipmaker Graphcore over a potential acquisition of the latter have moved forward according to Bloomberg News and other reports.

The possibility of a purchase was raised back in February (see Could SoftBank, OpenAI buy lossmaking Graphcore?) but although the talks have progressed the financial terms have not been finalized, the report said.

It is likely that any potential purchase of Graphcore will come under scrutiny by the UK government under National Security and Investment legislation. However, given that ARM is 90 percent held by SoftBank and the alternative might be the death of the company SoftBank would probably receive a green ligtht.

At one time Graphcore was touted as a “unicorn” valued at more than a billion dollars having raised US$682 million in venture capital. However, with a lack of traction in competing against market leader Nvidia valuations of Graphcore have reportedly dropped to a few hundred million dollars and the company is said to be in need of more cash to continue operations.

If SoftBank did make the purchase it would make UK-based Graphcore a sibling company to ARM Holdings plc. Although Cambridge-based ARM is publicly listed SoftBank retains a majority shareholding in the processor IP licensor. As a result SoftBank could have choice between operating them apart or folding Graphcore into the successful Arm.

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. 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 a Sunday Telegraph report.

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:

Could SoftBank, OpenAI buy lossmaking Graphcore?

AI ‘unicorn’ Graphcore set to cut jobs

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

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