According to insiders, SoftBank Group is in talks to acquire Graphcore, a struggling British artificial intelligence (AI) semiconductor startup with a valuation of up to $2.8 billion.
Anonymous sources said that the two companies have been in discussions for several months, but have recently entered deeper transaction negotiations. They stated that the financial terms have not yet been determined and negotiations may still break down. A person stated that the final agreement will not be reached soon.
This negotiation comes as SoftBank's revenue surged, mainly due to SoftBank's majority stake in UK chip design company Arm. In February this year, Arm announced its strong prospects for expanding from smartphones to more artificial intelligence applications. Since then, Arm's stock price has surged by about 40%.
Graphcore uses a different type of chip technology than Arm. The company was founded in Bristol in 2016 and is committed to developing the design of large "intelligent processing units" aimed at assisting artificial intelligence software processing within data centers. This startup promotes its products as a competitor to Nvidia's high-end graphics chips and has gained the favor of well-known investors such as Samsung Electronics, Bosch, and Sequoia Capital. The new round of financing in 2020 valued Graphcore at $2.8 billion.
But since then, Graphcore has struggled to gain attention and has been affected by a slowdown in hardware sales. According to its latest financial report, Graphcore's revenue for 2022 was only $2.7 million, a decrease of 46% from the previous year; The pre tax loss expanded to $204.6 million. The company stated in the document that it has closed its operations in Norway, Japan, and South Korea and will reduce the number of employees in other markets. In November 2023, Graphcore confirmed the dismissal of most employees in China and the cessation of sales in China, citing the escalation of US export controls on China. The company also stated that it needs to raise more funds to maintain its "going concern".
The Graphcore meeting coincides with Sun Zhengyi seeking to raise approximately $100 billion to fund an artificial intelligence chip company. After suspending its rapid technology investment in 2022, SoftBank made multiple bets on artificial intelligence and automation at the end of last year, hinting that it would continue trading. SoftBank Chairman Sun Zhengyi described this as a strategy around Arm's business.
Last September, there were reports that SoftBank had made a preliminary offer to acquire Graphcore, but it was rejected by the startup company.
