NAIROBI, Kenya- In a surprising turn of events, British AI chip company Graphcore, once touted as a potential rival to Nvidia, has been acquired by Japanese conglomerate SoftBank.
Although the exact amount of the deal remains undisclosed, it’s speculated to be significantly less than Graphcore’s £2 billion valuation from a 2020 financing round.
Nigel Toon, Graphcore’s head, hailed the acquisition as a “tremendous endorsement” of his team.
However, this development raises questions about the UK’s capability to nurture firms that can challenge industry giants in the AI chip market.
This isn’t SoftBank’s first acquisition of a promising UK tech firm; it controversially bought British chip designer Arm in 2016.
Ben Barringer, a technology analyst at Quilter Cheviot, described the acquisition as “another bitter blow” to the UK’s financial markets, especially as London seeks a major tech listing to bolster its global financial standing.
Graphcore, founded in 2016 by Nigel Toon and Simon Knowles, developed the Colossus series of computer chips, enabling powerful AI processing.
Despite a promising start and a hefty 2020 valuation, the company faced challenges with slowing sales, leading to the closure of offices in Norway, Japan, and South Korea in 2022.
In 2023, major investor Sequoia Capital wrote off its stake in the company, marking a significant setback.
Toon remains optimistic, stating the acquisition demonstrates UK firms can compete with big tech. He believes this move will attract new investment and growth for Graphcore, which will remain headquartered in Bristol.
The deal will lead to hiring more staff in the UK, and Toon will continue to lead the company.
Though the sale price is rumored to be around $500 million (£390 million), Toon refrained from confirming the figures, acknowledging the fluctuating valuations in the tech sector.
