Softbank, a Japanese conglomerate, has acquired British AI chip firm Graphcore. The exact amount paid by Softbank has not been disclosed, but it is believed to be less than the £2bn valuation that Graphcore received in 2020. This acquisition raises questions about the UK’s ability to develop companies that can compete with the industry leaders in the growing AI chip market. Softbank has previously acquired other promising UK startups, including Arm, a British chip designer, in 2016. This acquisition is seen as another blow to UK financial markets, as London is seeking a blockbuster tech listing to boost its global financial center reputation.
The deal has been hailed as a “tremendous endorsement” of Graphcore’s team by Nigel Toon, the head of the company. He believes that this acquisition demonstrates that UK firms are capable of competing with big tech players, even with smaller teams and less capital. Toon expressed optimism about the deal bringing new investment to the UK and driving the growth agenda. He confirmed that he will continue to lead the company and that Graphcore plans to hire new staff in its UK offices. Despite the undisclosed sale price, reports suggest that it is around $500m (£390m).
Graphcore was founded in 2016 by Nigel Toon and Simon Knowles. The company’s Colossus series of computer chips enable powerful computer processing. However, Graphcore has faced challenges in recent years, including slowing sales and office closures in Norway, Japan, and South Korea. In 2023, Sequoia Capital, a major tech investor, wrote off the value of its stake in the company. Once seen as a potential rival to Nvidia in the AI space, Graphcore has struggled while Nvidia has seen significant growth in value.
Despite the challenges, some experts believe that the acquisition by Softbank is positive for Graphcore and UK tech. Dan Ridsdale, the head of technology at Edison Group, states that while Nvidia has a dominant position in Generative AI, there are other opportunities within AI where viable competitors are needed. Ridsdale believes that Graphcore will require substantial capital, and Softbank’s investment provides an opportunity for the company to establish itself as a competitor in the industry.
Overall, this acquisition highlights the challenges faced by UK tech firms in the global market. While it is a positive sign that UK startups are attracting investment from major players like Softbank, it also raises concerns about the UK’s ability to retain and support these companies as they grow. The government recognizes the importance of creating an environment that fosters business growth, but there is still work to be done to establish the UK as the best place for starting and growing a business. The success of Graphcore and other UK tech firms will depend on their ability to innovate, attract investment, and compete with industry leaders on a global scale.
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