Having taken over Arm in 2016 and launched its IPO last year, Japan’s SoftBank is acquiring another British chip company. To fulfill its AI ambitions, it has bought Graphcore. The once hyped-up AI firm faces hefty challenges and promising competitors.
Neither party disclosed the amount for which Graphcore is being sold. According to Bloomberg sources, SoftBank will have to pay less than the $700 million investors put into the British company.
Good start, but problems pile up
Graphcore, an AI chip company founded in 2016, had plenty to boast about in a rather short space of time. Microsoft even signed a contract in 2019 to buy a supply of Graphcore’s so-called “intelligence processing units.” These IPUs were developed with help from TSMC and were said to run some AI workloads up to 16 times faster than market leader Nvidia.
Graphcore, however, is currently facing significant challenges. The Microsoft deal fell through, and by the end of 2023, the company appeared to be just months away from bankruptcy. By 2022, revenue had already plummeted 46 percent due to “lower hardware sales to key strategic customers.”
Legal trouble
In March, problems for Graphcore intensified. Dutch cloud provider HyperAI filed a lawsuit for a breach of contract. In 2021, its CEO Andrew Foe believed Graphcore could count as superior to Nvidia, he tells Sifted, which details the failed relationship between HyperAI and the British AI chip firm.
Technical support proved to be unavailable, after which HyperAI, like many others, became an Nvidia partner. Graphcore was forced to lay off many employees over the past few years, leaving it unable to execute on its promises and support its hardware in the manner required.
Now up to SoftBank
It is now up to SoftBank to turn the tide. It bought Arm in 2016 for 32 billion euros, another British chip player. Arm, the founder of the architecture behind virtually every smartphone in the world, hoped to grow even further under SoftBank’s stewardship. Even after Arm’s IPO in September 2023, those hopes remain very much alive: only 10 percent of the British company is available for outside investors.
As for Graphcore, what the future looks like under SoftBank is highly uncertain. The simplest “drop-in” alternatives to Nvidia, AMD and Intel, are joined by all sorts of start-ups that promise to complete AI workloads significantly faster and/or more efficiently. Following Graphcore, there is plenty of enterprise AI hardware to be found that would also outperform current Nvidia chips. Groq’s Language Processing Unit and Cerebras’ enormous AI chips are prominent examples.
Also read: AMD targets Europe with acquisition of Silo AI for 665 million