British AI Chip Pioneer Graphcore Acquired by SoftBank

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In a significant development for the UK tech sector, pioneering artificial intelligence (AI) chip designer Graphcore has been acquired by Japanese conglomerate SoftBank. The deal, announced today, marks a new chapter for the Bristol-based company once hailed as a potential rival to industry leader Nvidia.

While the exact purchase price remains undisclosed, industry analysts estimate it to be around $500 million (£390 million), a considerable decrease from Graphcore’s peak valuation of £2 billion in 2020. This valuation drop reflects the challenging market conditions faced by many tech companies in recent years.

Graphcore, founded in 2016 by Nigel Toon and Simon Knowles, made waves in the AI chip industry with its Colossus series processors, designed for high-performance computing tasks. Despite initial promise, the company faced headwinds in recent years, closing offices in Norway, Japan, and South Korea in 2022 amid slowing sales. nvidia withdraws from acquiring arm

Nigel Toon, who will remain at the helm of Graphcore, views the acquisition positively. Speaking to the BBC, he called it “a tremendous endorsement of our team” and emphasized the deal’s potential to drive growth and new hiring in the UK. Graphcore will continue to be headquartered in Bristol, operating as a SoftBank subsidiary.

The sale has sparked discussions about the UK’s ability to nurture and retain homegrown tech talent capable of competing on a global scale. Ben Barringer, a technology analyst at Quilter Cheviot, described the acquisition as “another bitter blow” to UK financial markets, particularly as London seeks to bolster its reputation as a global financial center.

Science Secretary Peter Kyle acknowledged the deal as a “welcome end to the uncertainty” for Graphcore and its employees, but also recognized it as a “reminder of the important work that needs to be done” to make the UK an ideal environment for starting and growing businesses.

This isn’t SoftBank’s first foray into acquiring promising UK tech firms. In 2016, the conglomerate controversially purchased another British chip designer, Arm, in a high-profile deal.

Despite the challenges, Toon remains optimistic about the UK tech scene. He asserted that Graphcore’s journey demonstrates how UK firms can compete with tech giants, stating they went “toe to toe with the largest companies in this space with a much smaller team with much less capital.”

The acquisition comes at a time when the AI chip market is booming, largely dominated by Nvidia, which briefly held the title of the world’s most valuable company earlier this year. While Graphcore may have fallen short of its initial promise to rival Nvidia, industry experts see potential in its new partnership with SoftBank.

Dan Ridsdale, head of technology at Edison Group, views the deal as “good news for UK tech and Graphcore.” He notes that while Nvidia has established dominance in generative AI, other opportunities exist within the AI space, and the industry needs viable competitors. Ridsdale adds that Graphcore will require substantial capital to compete, making SoftBank’s willingness to invest a positive development.

As the AI chip market continues to evolve rapidly, all eyes will be on Graphcore to see how it leverages this new partnership to innovate and potentially challenge the industry status quo. The acquisition not only represents a new chapter for Graphcore but also highlights the ongoing importance of investment and support in the UK’s tech ecosystem.

SORCE : BBC

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