Photo credit: Akio Kon/Bloomberg

SoftBank, a Japanese multinational investment holding company, has acquired United Kingdom-based semiconductor startup Graphcore, ending speculations over the artificial intelligence (AI) chipmaker’s future.

The deal will see Graphcore becoming a wholly-owned subsidiary of SoftBank, continuing operations under the Graphcore name, the company said in a July 11 announcement.

The parties didn’t disclose the deal value, but according to The Financial Times, the amount was over $600 million.

Nigel Toon, Graphcore co-founder and CEO, said the demand for computing power to fuel AI is increasing, but acknowledged that unlocking the technology’s full potential requires improvements in current systems. He said in a statement:

“Demand for AI compute is vast and continues to grow. There remains much to do to improve efficiency, resilience, and computational power to unlock the full potential of AI.”

Toon added that their deal with SoftBank will enable them to “redefine” the sector.

Graphcore, a startup once valued at approximately $2.8 billion, was founded by seasoned semiconductor industry veterans Toon and Simon Knowles in 2016.

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Graphcore’s struggles

Rumors of SoftBank acquiring Graphcore have circulated for some time as the semiconductor firm, which was once touted as a rival to Nvidia, has reportedly struggled to secure the funding needed to scale.

The company’s latest filings revealed a significant loss of $204.6 million in 2022, with sales amounting to only $2.7 million. This financial strain has forced the company to reduce its workforce by 20% and close operations in several countries, including Norway, Japan, and South Korea.

The last time Graphcore had any capital injection was in 2022 when it announced raising $222 million in a Series E funding round led by the Ontario Teachers’ Pensions Plan Board. It has raised more than $700 million since its inception.

Graphcore’s recent acquisition by SoftBank could potentially revitalize the struggling AI chipmaker. SoftBank is reportedly investing significant resources to help Graphcore compete with industry giants Nvidia and AMD. The latest deal positions Graphcore alongside Arm, another UK chip designer in SoftBank’s portfolio.

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