Softbank expands AI empire (again)

Following rumored talks in February, Japanese tech giant, Softbank, has acquired UK-based AI chip maker, Graphcore.

How much did Softbank acquire Graphcore for?

The burning question on everyone’s lips: How much did Softbank pay for Graphcore?

Unfortunately, both parties are choosing to keep the amount under wraps, with Graphcore CEO and co-founder, Nigel Toon confirming:

“We have agreed with SoftBank that we’re not going into the details of the deal”

However, if rumors are to be believed, the amount is said to be somewhere between $500 and $600M.

Details of the acquisition

Graphcore will become a ‘wholly owned subsidiary’ of Softbank but will continue to operate under the Graphcore brand, with the two co-founders remaining in their roles as CEO and CTO, and the head office staying in Bristol. No layoffs are expected as a result of the acquisition, in fact, Graphcore expects to now be able to expand its workforce, helping it scale.

The deal has passed a UK national security review and has been approved by the Competition Markets Authority (CMA), and other regulatory bodies in the US and UK, which is surprisingly fast, given talks only began in February, this year.

What is Graphcore?

Graphcore, which was founded in 2016, develops AI chips that rival those from AI chip leader, NVIDIA. Despite its high-spec AI chips and attracting significant investment from the likes of Dell and Samsung (raising nearly $700M at a unicorn valuation of $2.77B), it’s fallen on hard times, making just $2.7M in sales with $205M pre-tax losses in 2022. This was partly to do with the collapse of a landmark deal with Microsoft, and the amount of capital and resources needed to scale and compete with the major players in the industry.

“We’ve been successful in raising capital for the business — but the amount of capital we’ve had access to is tiny when compared to other major players in the space. We got to 500 people and we were competing against companies that had tens of thousands working on this stuff.”

The acquisition comes at the perfect time for Graphcore as back in October, last year, they said it would need to attract new investment capital “within months” and this will allow them to access big customers (previously a hurdle for Graphcore), more capital, and significantly add to the UK team.

Softbank will also benefit hugely from the deal, as Graphcore becomes the latest in a long line of AI-focused investments: Over the last 12 months, it’s invested over $8.9B into AI companies and commitments, in a mission to become a dominant player in AI.