Less than 3 months after withdrawing from China, the British AI chip unicorn plans to "sell itself" for more than 3.5 billion

(图片来源:Graphcore)

Titanium Media App reported on February 18 that according to the British "Daily Telegraph", in the AI boom, Graphcore, the British AI chip company that benchmarks Nvidia, is considering selling it to foreign owners, and potential transaction objects include OpenAI, Japan's SoftBank Group and Arm and other companies.

According to the report, the value of this merger and acquisition transaction may exceed 500 million US dollars (400 million pounds, about 3.56 billion yuan).

As of press time, OpenAI, Japan's SoftBank Group and Arm have not commented. According to the report, it is unclear how far the sale talks are progressing and may take place in parallel with independent financing talks.

It is reported that Graphcore was founded in 2016 and is headquartered in Cambridge, UK. The company mainly develops an AI acceleration chip and software system called intelligent processing unit (IPU), that is, a general-purpose computing chip built for AI, including edge and terminal computing, to meet the needs of current and next-generation AI workloads.

As a result, Graphcore has become one of the most important IC (integrated circuit) design companies in the UK after Arm, and it is also one of the "Nvidia competitors" with a high voice in the AI chip track in recent years.

In 2018, Graphcore launched its first AI chip, the Colossus Mk1, and first introduced the concept of an IPU processor, which received a lot of attention from the semiconductor industry. In November 2019, Microsoft, the world's largest tech giant, signed an agreement to purchase Graphcore's processors.

In July 2020, Graphcore launched its second-generation GC200 IPU and software platform Poplar.

Hermann Hauser, the father of semiconductors in the UK and co-founder of Arm, once praised Graphcore's products, "There have only been three revolutions in the history of computing, one was the CPU in the 70s, the second was the GPU in the 90s, and Graphcore is the third revolution." ”

To date, Graphcore has raised more than $710 million from investors including Demis Hassabis, the father of AlphaGo and co-founder of DeepMind, Zoubin Ghahramani, a professor at the University of Cambridge, Greg Brockman, co-founder of OpenAI, and Chrysalis, a London-listed investment fund and BMW i Ventures, Sequoia Capital, Dell, Fidelity International, Samsung, Bosch Ventures, Microsoft and many other well-known investors and companies.

Back in 2020, Graphcore was valued at over $2.8 billion, making it the world's leading AI chip unicorn.

However, since 2023, Graphcore has been exposed to an existential crisis, significantly reducing its operations in China, and taking measures such as layoffs and the closure of international offices in an attempt to cut costs.

The first is poor revenue.

According to Graphcore's financial submissions to the UK government, revenue in FY2022 was $2.7 million, down 46% year-over-year, while losses widened 11% to $204.6 million over the same period. At the end of December of that year, Graphcore had $157 million in cash, which was no longer enough to support the business.

At the same time, with the explosion of ChatGPT, Nvidia's GPU (graphics processing unit) chips are in short supply, but Graphcore, which owns IPU chips, has lost orders from major customer Microsoft, and the UK has also excluded Graphcore from the 1 billion semiconductor subsidy.

At the beginning of 2023, the UK government announced that it would invest £1 billion to develop the local AI and semiconductor industries, and £100 million to build a local chip reserve. But Graphcore has been excluded from the £100 million fund because the tender clearly states that it's GPUs, not IPU systems.

In October last year, Graphcore disclosed that the company needed to raise capital to stay afloat and that failing to do so by May 2024 would face "significant uncertainty" as losses mounted, as losses mounted. Since then, Graphcore has not announced any funding announcements.

The second is the continued tightening of US export controls on AI semiconductors in China, which affected Graphcore's development in China, and eventually had to choose to withdraw from the Chinese market and lose 25% of its total revenue.

In October 2022 and October 2023, the Bureau of Industry and Security (BIS) of the U.S. Department of Commerce issued export controls on China's advanced semiconductors and computing equipment twice in a row, in an attempt to affect China's advanced manufacturing, and many GPU and AI chip products from NVIDIA, AMD, AND Intel can no longer be exported to china, and even the high-end gaming graphics card rtx 4090 HAS BEEN RESTRICTED.

Graphcore CEO Nigel Toon said in October last year that China is a potential growth market and that sales from China could account for "20% to 25%" of Graphcore's business revenue. When the US restricted Nvidia's sales to China, Graphcore's business in China was also restricted. It is reported that Graphcore has set up a company in China to be responsible for sales in China, and has received support from Zhongguancun and other institutions.

On 23 November 2023, Graphcore confirmed that it would lay off most of its staff in China and stop selling its products in China.

According to Bloomberg, this marks another heavy blow to AI chip companies.

A Graphcore spokesperson commented, "Unfortunately, this means that we will significantly scale back our operations in China. ”

According to Dealroom data, Graphcore has seen its headcount decrease from 620 in October 2022 to 418 as of October 2023.

In the end, Graphcore missed out on a number of key moments at the business level, and Microsoft was far from it.

A former Graphcore machine learning engineer believes that Graphcore's troubles began when it was primarily targeting start-ups, losing big customers like Microsoft, so it took them many years to really realise that they were fighting for Microsoft to support IPU processors.

Former Graphcore employees felt that the company's lack of commercial appeal, efforts to better serve its customers, and low employee salaries had led to the departure of the company's top talent. These include Jonas Olsson, former VP of Hardware at Graphcore, Ola Torudbakken, SVP of Systems, all joining Meta, while Saurabh Kulkarni, former Graphcore's former GM of North America, has joined Intel.

In addition, Graphcore faced a number of challenges and issues such as ambiguity in its business strategy, sales inventory, and changing alignment.

Less than three months after its exit from China, Graphcore is now opting to "sell".

John Peddie Research, an analyst at chip industry agency, recently wrote in a report: "Graphcore has raised more than $600 million, but to compete with companies such as Intel, Nvidia, AMD and others, they need more than twice as much capital." ”

Baillie Gifford, analyst and investment manager at Zeus Capital, said that despite Graphcore's technical advantages in AI and its huge investment, it is still struggling to "gain a foothold" in the AI chip market.

The company has previously announced that the next generation of IPU chips will be available in 2024, but now that it is under pressure to survive, it is unclear whether Graphcore will be able to provide the market with more "NVIDIA-benchmarked" AI chips.

Graphcore has disclosed that it expects to raise a new round of funding by the third quarter of 2024 or face greater operational risks.

(This article was first published on the Titanium Media App, author: Lin Zhijia)