A Japanese corporation has acquired British artificial intelligence (AI) chip manufacturer Graphcore, which was formerly seen as a possible competitor to industry leader Nvidia.

Softbank has not revealed the amount it paid, however it is believed to be a significant amount less than the £2 billion that the UK firm was estimated to be worth following a funding round in 2020.

The BBC was informed by Graphcore CEO Nigel Toon that it was “a tremendous endorsement of our team”.

The agreement will probably make many wonder if the UK can produce businesses strong enough to compete with the largest names in the rapidly expanding AI chip industry.

Softbank had already purchased a promising UK startup; in 2016, it controversially purchased Arm, another British chip creator.

Technology analyst Ben Barringer of Quilter Cheviot described Graphcore’s move as “another bitter blow” to the UK financial markets.

“It comes at a time when London is looking for a blockbuster tech listing to reinvigorate its reputation as a global financial centre,” he stated.

A “welcome end to the uncertainty that has faced Graphcore and its employees” was the statement made by Science Secretary Peter Kyle regarding the agreement.

He acknowledged, however, that it served as a “reminder of the important work that needs to be done” in order to establish the UK as “the best place to start and grow a business.”

Toon asserted that Graphcore “went toe to toe with the largest companies in this space with a much smaller team and much less capital” and that he thought the purchase demonstrated that UK startups could compete with big tech.

“It’s really positive for the UK, bringing new investment here to help drive the growth agenda which as we all heard recently is so important.”

He said that he would continue in his role as CEO and that Graphcore will be adding employees to its UK operations as a result of the change.

The company will still have its Bristol headquarters but will now be a subsidiary of SoftBank.

Despite not being disclosed to the public, reports claim that the transaction price is $500 million.

Regarding the amounts of money involved, Toon stated he would not “go into any of the speculation”.

He did, however, acknowledge that IT company valuations “have been up and down” generally.

“There are undoubtedly many other firms whose valuations have declined, and investors have made wise but careful choices regarding the value of investments they record on their books.

“Hopefully, as a result of this deal, we’ll see big investment and huge progress for Graphcore together with SoftBank.”

Toon and Simon Knowles created Graphcore in 2016, a company whose Colossus line of computer chips enable powerful computer processing.

But since its spectacular 2020 value, the company has suffered with declining revenues, and in 2022 it revealed that it has shuttered operations in South Korea, Japan, and Norway.

Subsequently, in 2023, prominent tech investor Sequoia Capital said that the value of their investment in the firm had been fully written down.

That was a huge letdown because Graphcore was once thought to be Nvidia’s rival in the artificial intelligence market.

Its potential competitor’s worth has increased dramatically, and for a brief while this year, it was the most valuable corporation in the world.

“This is actually good news for Graphcore and UK tech,” stated Dan Ridsdale, Edison Group’s head of technology.

“Nvidia has carved out a dominant position in Generative AI… but there are other opportunities within AI and the industry will need viable competitors.

“However, Graphcore will require a significant amount of funding; it is encouraging that Graphcore has located an investor ready to assume the risk and supply the funds necessary to include it in the mix.”

(Adapted from BBC.com)

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