SoftBank Nears Acquisition of Graphcore, Reports Say

The possibility of a purchase was raised back in February, sparking discussions about SoftBank and OpenAI potentially acquiring the struggling Graphcore. While talks have progressed, the financial terms have not been finalized, according to a recent report. Graphcore, once valued as a "unicorn" at over a billion dollars after raising significant venture capital, has faced challenges in competing against market leader Nvidia. As a result, its valuations have reportedly dropped to a few hundred million dollars, leaving the company in need of additional funding to sustain its operations.

If SoftBank proceeds with the acquisition, it would position the UK-based Graphcore as a sibling company to ARM Holdings plc, a company in which SoftBank holds a majority shareholding. While ARM is publicly listed, the potential acquisition raises questions about whether SoftBank would operate Graphcore separately or integrate it into the successful ARM ecosystem.

Founded in 2016, Graphcore introduced a novel processor known as the IPU, specifically designed to handle artificial intelligence workloads. In a Series E funding round in 2020, the company raised over US$200 million, valuing Graphcore at more than $2.7 billion. Despite its innovative technology, Graphcore has faced challenges in the competitive AI market, particularly against Nvidia, as reflected in its financial performance.

In its financial results for the year ending December 31, 2022, Graphcore reported a significant loss before tax of over US$200 million, with annual revenue declining to US$2.7 million from the previous year's US$5.0 million. The company's operations were further impacted in 2023 by restrictions on AI technology sales to China imposed by the US government. Forecasts for 2023 indicated a need for additional funding in the third quarter, prompting discussions about potential fundraising or a trade sale.

Graphcore's CEO, Nigel Toon, has been actively involved in promoting AI through various initiatives, including authoring a book on the subject. Toon's engagements include scheduled appearances at book festivals in 2024, highlighting the company's commitment to advancing AI technology and its applications.