SoftBank Is Said in Talks to Buy Troubled AI Chip Firm Graphcore
(Bloomberg) — SoftBank Group Corp. is in talks to acquire Graphcore Ltd., a struggling British semiconductor startup once valued at $2.8 billion, according to people familiar with the deals.
The two companies have held discussions over several months but entered into more advanced deal talks recently, said the people, who asked not to be identified discussing private matters. Financial terms haven’t yet been decided and the talks could still unravel, they said. A final agreement isn’t imminent, one person said.
The talks come amid a surge in sales for SoftBank, thanks largely to its majority stake in another UK-based chip designer, Arm Holdings Plc. On Feb. 7, Arm reported a strong outlook for its expansion beyond smartphones into more artificial intelligence applications. Arm shares have soared by about 40% since.
SoftBank didn’t immediately respond to requests for comment. A representative for Graphcore declined to comment.
Graphcore works on a different type of chip technology than Arm. Formed in Bristol in 2016, the company develops designs for large “intelligence processing units,” meant to help with AI software processing inside data centers. The startup touted its product as a rival to Nvidia Corp.’s high-end graphics chips, and secured high-profile investors including Samsung Electronics Co., Bosch and Sequoia Capital. A 2020 financing round valued Graphcore at $2.8 billion.
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But Graphcore has since struggled to get traction and suffered from slowing hardware sales. Graphcore reported just $2.7 million in revenue for 2022, a 46% drop from the prior year, according to its latest financial report. Pretax losses widened to $204.6 million. The company said in the filing that it had closed operations in Norway, Japan and Korea and that it would reduce headcount in other markets. It also said that it needed to raise more capital to remain a “going concern.”
The Graphcore talks come as Son is seeking to pool some $100 billion to bankroll an AI chip venture, Bloomberg News reported in February. After SoftBank paused its rapid-fire tech investing in 2022, the Japanese giant signaled a return to dealmaking late last year with several bets on AI and autonomy. Chairman Masayoshi Son has described this as a strategy centered around Arm’s business.
The Financial Times reported in September that SoftBank had made a preliminary offer to buy Graphcore, which the startup denied.
–With assistance from Min Jeong Lee and Jane Lanhee Lee.
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