AI Chip Startup Graphcore Acquired by SoftBank
LONDON, UK — British AI chip startup Graphcore has been acquired by Japanese technology giant SoftBank Group. Graphcore will become a wholly owned subsidiary of SoftBank Group and will keep the name Graphcore. Financial terms of the deal were not disclosed, but industry insiders tell EE Times the figure is around $400 million. Graphcore had been valued at $2.8 billion after its last funding round, which brought its total investment close to $700 million.
Graphcore, founded in 2016 and headquartered in Bristol, UK, had developed multiple generations of its data center AI accelerator chip, the intelligence processing unit (IPU), and its accompanying software stack, Poplar.
“We’ve managed to build an incredible team that has gone toe-to-toe with the dominant player in AI processors, on both hardware and most importantly software,” said Graphcore CEO Nigel Toon. “We’ve helped researchers build the next generation of AI models, in some cases we’ve had deployments with major infrastructure companies, both in the U.S. and China, and IPUs have deployed very large AI workloads in real deployment situations with large numbers of users. It’s incredible what we’ve been able to build with just a few hundred people in the company, but the amount of capital we’ve had access to is tiny compared to other players in this space.”
During a press conference to announce the acquisition, Toon repeatedly placed the blame for Graphcore’s modest commercial traction on a lack of investment, which meant the company lost out to market leader Nvidia. Graphcore raised $700 million in funding since its inception.
“[The acquisition] will give us huge resources to be able to continue on [our] mission and we’re very much aligned with SoftBank in terms of the scale of the opportunity and what is possible, with help to access large customers and […] it gives us the access to capital which has become more challenging over the last 12-24 months,” he said.
The level of investment required to compete with market leader Nvidia is now within reach, Toon added.
“We’ve built something and now we’re able to double down on it and get massive investment to move forward and compete on a really global scale, with somebody who’s got the same massive ambition as we have,” he said.
Graphcore did not disclose the value of the transaction, other than to confirm that a $500 million figure currently listed on Wikipedia is not correct. If EE Times sources are correct in valuing the deal at $400 million, that would mean considerably less than return on investment for investors. Despite several investors either devaluing or writing off their stakes in Graphcore in recent months, Toon said all the company’s investors were happy with the terms of the deal.
“Our investors fully support the deal and this outcome, and this is a great outcome for Graphcore employees,” he said.
Confirming rumors that former Graphcore employees with restricted stock units (RSUs) would receive nothing are true, he said the structure of the deal was such that former employees would not participate going forward.
“We’re sorry about that, but what I can say is for all of Graphcore’s current employees, and people who will be working with the company going forward, this is a great outcome for all those people,” he said.
Toon explained Graphcore has been working on the deal with SoftBank for “quite some time,” adding that this time frame gave Graphcore time to withdraw from its “advanced” activities in China. This included closing the company’s Chinese office, despite the “enormous potential” in the country.
“[Leaving China] was something we chose to do so that we could focus on the opportunity with SoftBank,” he said. “[As a relatively modest-sized company], we have to make choices, and the choice we made was to close down the activities in China, which were becoming very difficult due to U.S. export restrictions.”
The deal passed regulatory scrutiny from both the outgoing and incoming UK government and received approval from the UK’s Competition and Markets Authority (CMA). While the regulatory process did not require any binding assurances for SoftBank to keep Graphcore’s HQ in the UK, Toon said SoftBank’s intention to keep Graphcore British is “very clear.”
Existing Graphcore employees in the UK, Poland and Taiwan will retain their jobs under SoftBank. SoftBank plans to invest further in Graphcore and grow the company’s team in the UK, Toon said.
Graphcore co-founders Nigel Toon and Simon Knowles will retain their CEO and CTO positions, respectively, and remain directors of the company. Board directors from current investors will step down to make way for new directors from SoftBank.
Future products
Graphcore developed three generations of its IPU chip. The third generation, launched in 2022, was the first processor to be built using 3D wafer-on-wafer technology from Taiwan Semiconductor Manufacturing Co.(TSMC). It achieved 40% better performance with the same microarchitecture as the second-gen IPU, which launched in 2020.
Graphcore will continue to support existing IPU customers. Toon said the company has already been working with SoftBank on new products, promising details “soon.”
“We are working on next generation products and we’ve been working on those for some time,” he said. “They will build on what we’ve created so far, but will go much further in terms of the scale and completeness of the product, and obviously we will have much more capital available behind us to support that.”
At the company’s AGM last month, SoftBank Group’s chairman Masayoshi Son presented his grand vision for the future of the company, in which he said it had become clear to him that his life’s work was to achieve artificial superintelligence (ASI). ASI, which he defined as a system with 10,000× human intelligence and clarified could be a network of robots with AGI, will be SoftBank’s new mission, he said. Though he declined to give any details on how SoftBank would achieve this.
At the time, he presented SoftBank portfolio companies, including U.S. robotics leader Boston Dynamics, British autonomous driving startup Wayve, and British semiconductor IP giant Arm, as a part of the solution. It is now clear that Graphcore will be a part of this plan.
Graphcore also introduced The Good Computer, a commercial 8192-chip AI supercomputer offering 10 ExaFLOPS of AI compute to support models up to 500 trillion parameters. At the time, Graphcore described this system as “ultra-intelligence”—that is, it could exceed the capacity of the human brain. This concept “continues,” Toon said, noting that the idea fits with SoftBank’s ASI vision.
“The ambition that we set out is very aligned with the ambition that SoftBank has and that’s partly why this is such a good combination,” he said. “We’re part of the delivery behind a very grand vision, and the reality of how that looks and how that gets delivered will…unfold over the coming period of time.”
