SoftBank buys struggling UK AI chipmaker Graphcore

Potential for combo with Arm tantalizes

Japan's SoftBank, which owns CPU designer Arm, has acquired UK chip house Graphcore for an unspecified sum.

Graphcore announced the deal on Thursday in a brief statement penned by CEO Nigel Toon, who said the takeover represents "a tremendous endorsement of our team and their ability to build truly transformative AI technologies at scale, as well as a great outcome for our company."

The acquisition is understood to be valued at about $600 million, which would be less than the $700 million or so Graphcore is said to have raised in funding.

The chip designer's key offering is a range of "Intelligence Processing Units" – accelerators for AI workloads – plus a software stack so developers can put its hardware to work.

The tech has often impressed: In 2022 we reported on a case study in which a Graphcore device trounced an Nvidia A100 GPU, and another in which its kit halved the time required to handle an otherwise GPU-based drug discovery workload.

Despite those successes, the biz has struggled to win revenue and become profitable. In 2022 it reported revenue of just $2.7 million – down 46 percent year-on-year, and operating expenses of $206.8 million. Substantial job cuts followed as execs admitted it may struggle to remain a going concern.

A push into China was one way Graphcore hoped to turn things around – but that move was stymied by the US restricting sales of its product to the Middle Kingdom. While Graphcore struggled, Nvidia's revenue boomed as it became the de facto standard for generative AI infrastructure.

Toon predicted that SoftBank can help Graphcore compete.

"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. In SoftBank, we have a partner that can enable the Graphcore team to redefine the landscape for AI technology," the CEO wrote.

Vikas J Parekh, managing partner at SoftBank Investment Advisers, chipped in his own canned quote to the effect that "next-generation semiconductors and compute systems are essential in the [artificial general intelligence] AGI journey, [and] we're pleased to collaborate with Graphcore in this mission."

Parekh didn't point out that SoftBank is already the majority owner of UK-based processor design house Arm which, like every other semiconductor concern on the planet capable of spelling AI, plans to offer an alternative to Nvidia's hardware and software stacks.

Graphcore possesses one such alternative – and as noted above already has a technical solid proof-of-concept. SoftBank's deep pockets, and links to Arm, may well help boost Graphcore's financial performance. It could also give a fillip to Arm-powered servers, as Graphcore's products are mostly intended to be integrated with third-party hardware.

In other words, Softbank may arm Arm's world with Graphcore offerings in some form or another, which could help make the AI infrastructure sector a little more competitive and spicy. ®

More analysis here: Can softbank be an AI supercomputer player? Will Arm lend a hand?