July 12 – Graphcore, a British artificial intelligence (AI) chip company once seen as a potential rival to market leader Nvidia, has been acquired by a Japanese conglomerate.
SoftBank did not disclose the amount it paid but it is thought to be significantly less than the £2 billion that valued the British company after a funding round in 2020.
Graphcore boss Nigel Toone told the BBC it was a “fantastic endorsement of our team”.
But the deal could raise questions about Britain's ability to develop companies that can compete with the biggest players in the fast-growing market for AI chips.
This is not SoftBank's first acquisition of a promising British start-up, having controversially bought another British chip designer, Arm, in 2016.
Ben Ballinger, a technology analyst at Quilter Cheviot, said Graphcore's following suit was “yet another brutal blow” to UK financial markets.
“The listing comes at a time when London is seeking to attract blockbuster tech company listings to re-establish its reputation as a global financial centre,” he said.
Science Secretary Peter Kyle called the deal “a welcome end to the uncertainty that Graphcore and its employees have faced.”
But he also acknowledged it was a “reminder of the important work that needs to be done” to make the UK “the best place to start and grow a business”.
Toon said the deal showed that British companies could compete with big tech companies, arguing that Graphcore had “go toe-to-toe with the biggest names in the sector, with much less capital and a smaller team”.
“It's a real positive for the UK, bringing new investment into the UK, which as we've heard recently, helps drive our growth plans, which is really important.”
He will remain in his role as head of the company and said the move will mean Graphcore will hire new staff in its UK office.
The company will become a subsidiary of SoftBank but will remain headquartered in Bristol.
Depreciation
The sale price has not been disclosed but is reported to be $500 million (£390 million).
Toon said he would “not enter into any speculation” about the amounts involved.
But he acknowledged that tech company valuations in general have “went up and down.”
“Certainly we have seen many other companies where the value has fallen and investors have made appropriate prudent decisions about how to value their investments on their books.
“We expect this transaction to result in significant investment and great progress for Graphcore in collaboration with SoftBank.”
Graphcore was founded by Toon and Simon Knowles in 2016. The company's Colossus series of computer chips enable powerful computing.
But the company has suffered slowing sales since a strong 2020 and announced it would close offices in Norway, Japan and South Korea in 2022.
Then in 2023, big tech investor Sequoia Capital announced it had written off the full value of its shares in the company.
This was a major disappointment, considering Graphcore was once seen as a potential competitor to Nvidia in the AI space.
Its rivals have seen their value soar, even briefly holding the title of the world's most valuable company this year.
“We think this is actually good news for the UK tech industry and for Graphcore,” said Dan Ridsdale, head of technology at Edison Group.
“Nvidia has established a dominant position in generative AI, but there are other opportunities in AI and the industry needs viable competitors.
“But Graphcore is going to need significant capital. It's good that Graphcore has found an investor willing to take on the risk and provide capital.”
From the BBC
