(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 matter.
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The two companies have had discussions for several months but recently began more advanced negotiations, said the people, who asked not to be identified discussing private matters. Financial terms have not yet been decided and negotiations could still fail, they said. A final deal is not imminent, one person said.
The talks come amid rising sales at SoftBank, largely thanks to its majority stake in another U.K.-based chip designer, Arm Holdings Plc. On February 7, Arm announced strong prospects for expansion beyond smartphones into more artificial intelligence applications. Since then, Arm’s shares have soared about 40%.
SoftBank did not immediately respond to requests for comment. A representative for Graphcore declined to comment.
Graphcore runs on a different type of chip technology than Arm. Established in Bristol in 2016, the company develops designs for large “intelligence processing units”, intended to facilitate the processing of AI software in data centers. The startup pitched its product as a rival to Nvidia Corp.’s high-end graphics chips. and has attracted high-profile investors including Samsung Electronics Co., Bosch and Sequoia Capital. A 2020 funding round valued Graphcore at $2.8 billion.
But Graphcore has since struggled to gain traction and suffered from slowing hardware sales. Graphcore reported just $2.7 million in revenue for 2022, a 46% drop from the previous year, according to its latest financial report. Pre-tax losses widened to $204.6 million. The company said in its filing that it had closed operations in Norway, Japan and Korea and would reduce its workforce in other markets. It also said it needed to raise more capital to remain a “going concern.”
The Graphcore talks come as Son seeks to raise some $100 billion to fund an AI chip company, Bloomberg News reported in February. After SoftBank suspended rapid technology investments in 2022, the Japanese giant signaled a return to trading late last year with several bets on AI and autonomy. President Masayoshi Son described this as a strategy focused on Arm’s activities.
The Financial Times reported in September that SoftBank made a preliminary offer to buy Graphcore, which the startup rejected.
–With help from Min Jeong Lee and Jane Lanhee Lee.
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