SoftBank has bought Graphcore, the latter has confirmed. According to The Telegraph, which originally broke the story, the deal values the UK chip design firm at £400m, though neither party has officially confirmed the sum. Valued at $2.8bn in 2020, Graphcore has since struggled to compete against larger rivals like Nvidia in designing new AI chips.
The company’s acquisition by Softbank would finally give it the capital necessary to meet the expectations implicit in its valuation four years ago, explained the former’s chief executive Nigel Toon. “What this deal does is give us access to a huge amount of investment and support to be able to continue to grow,” Toon told the BBC. “The challenge is that AI has become so critical in so many places now, especially in the large hyperscalers, that the amount of investment and the scale you need to operate at is just enormous.”
Graphcore falters during generative AI boom
Founded in 2012, Graphcore specialises in the design of so-called ‘intelligence processing units’ for AI applications. Despite their technical superiority in certain instances, the startup has struggled to sell its IPUs in an increasingly competitive marketplace for AI chips. In 2022 Graphcore sold a mere £2.1m worth of its products and made pre-tax losses of £161m, a set of circumstances company insiders blamed on poor management and indecisive go-to-market strategies. Layoffs followed, with several of the startup’s investors writing down their stakes, including Molten Ventures and Sequoia.
Graphcore also faced substantial competition from Nvidia, which has dominated the market for GPUs used to train and run large language models since the current generative AI boom began in 2022. The British startup’s acquisition by Softbank, argued Toon, was nonetheless an endorsement of its ability to compete effectively at a technical level with its US rival.
“Demand for AI compute is vast and continues to grow,” he said. “There remains much to do to improve efficiency, resilience, and computational power to unlock the full potential of AI. In Softbank, we have a partner that can enable to Graphcore team to redefine the landscape for AI technology.”
Softbank hard charging on AI
Softbank’s purchase of Graphcore is the latest in a series of acquisitions by the banking group aimed at burnishing its AI credentials. Last year, its telecommunications division began using a 350bn-parameter LLM to provide “generative AI services tailored to Japanese business practices and culture” and a generative AI platform to support its customer service agents. Its chip subsidiary Arm has also announced its intentions to begin selling AI chips by 2025 – a venture that Graphcore may be required to assist.
Softbank’s founder Masayoshi Son has been evangelical about the potential of AI, predicting last month that certain models would be 10,000 times smarter than the average person within the next decade. Son said that one of the banking group’s responsibilities was to shepherd what he termed artificial superintelligence, or ASI, into existence. “Softbank was founded for what purpose?” he told delegates at the firm’s annual general meeting in Tokyo. “For what purpose was Masa Son born? It may sound strange, but I think I was born to realise ASI. I am super serious about it.”
