SoftBank acquires AI chip designer Graphcore

SoftBank Group, the Japanese investment firm that controls CPU designer Arm Holdings, among many properties, has made a second significant acquisition of a semiconductor company: AI-focused chip developer Graphcore.

Under the terms of the deal, the Bristol, U.K.-based Graphcore will become a wholly owned subsidiary of SoftBank, keep its name, and continue creating “high-skilled jobs spanning a range of disciplines,” according to the companies. As Graphcore is a privately held firm, financial terms of the deal were not disclosed.

Graphcore is one of several startups (it was formed in 2016) looking to cash in on the exceptionally lucrative AI market. It has secured funding from a number of investors, including Microsoft and Dell.

Graphcore’s product line is called Bow, a family of Intelligence Processing Units (IPUs) specifically engineered for AI processing. The startup spent a couple of years pushing its IPUs, which it said were competitive with Nvidia products. However, the company has struggled in the past, with reports of layoffs as well as the closing its China office.

“This is a tremendous endorsement of our team and their ability to build truly transformative AI technologies at scale, as well as a great outcome for our company,” said Graphcore co-founder and CEO Nigel Toon in a statement.

The deal could represent quite a turnaround for SoftBank, which tried to get out of the CPU business and sell off Arm to Nvidia for $40 billion, but the acquisition met stiff resistance in the UK. After the Nvidia-Arm deal went bust, SoftBank took the company public in September of last year while retaining a majority of Arm’s shares. That has proven lucrative; Arm’s stock price has risen by 185% since the IPO.

Now it seems like Softbank wants to be in the chip business, and this might work, said Kevin Krewell, principal analyst with Tirias Reseach. “Graphcore was one of the earliest AI startups and brought a unique approach to AI accelerators. Unfortunately, they could not keep pace and their design did not offer enough advantages over Nvidia,” he said.

“That said, the Softbank acquisition gives the team a chance to build a new design with the learnings from the previous designs. It gives Softbank an experienced team of engineers as well. Perhaps Softbank believes there’s an opportunity for the Graphcore team to work with Arm on a new AI architecture,” Krewell added.