British chip company Arm is among those rumored to be interested in buying Graphcore. Photo: BRENDAN MCDERMID/REUTERS
Buyers are rumored to include British microchip company Arm, Japanese technology conglomerate SoftBank and OpenAI, startup ChatGPT. The companies declined to comment, and the source said Arm was not involved in the discussions.
It is unclear how far any sales talks have progressed, which may be running in parallel with independent fundraising talks.
Chrysalis, a London Stock Exchange-listed investment fund with a stake in Graphcore, said in December that an unnamed company in its portfolio was in the process of being sold. Weeks later, the company more than doubled the valuation of its stake in Graphcore, which analysts at Zeus Capital said may have been linked to the sale of the company. One investor estimated that this brings Graphcore's valuation to $528 million.
Investment manager Bailey Gifford has also more than doubled the valuation of his stake in Graphcore in recent weeks.
Both investors previously took significant write-downs on their investments in Graphcore as the company struggled to gain a foothold in the AI chip market despite massive AI spending. The company has also been hit by the closure of its business in China amid US controls over the sale of artificial intelligence technology.
Bristol-based Graphcore has raised more than $700 million in funding from investors including Microsoft and Silicon Valley venture capital giant Sequoia, and At the time of its last fundraising at the end of 2020, its value was estimated at $2.8 billion.
However, the company has struggled to sell its “intelligent processors,” competitors to GPUs sold by Nvidia, which have been in huge demand during the artificial intelligence revolution and have made Nvidia one of the most valuable companies in the world.
NVIDIA's market value last year overtook Amazon and Alphabet, Google's parent company, this week, giving the company a value of $1.8 trillion.
Last year, Graphcore said its losses in 2022 rose 11% to $204.6 million, while revenue fell from $5 million to $2.7 million. The company said it had $157 million in cash at the end of the year funds and that it will need to raise more funds by May. The going concern statement on the filing said the company was in discussions with potential investors.
A subsequent re-filing to correct a clerical error showed the company previously expected to raise funds in the third quarter of 2023.< /p>
The recent boom in artificial intelligence has meant that semiconductor companies have had to spend huge amounts of money developing high-performance chips. “Graphcore has raised more than $600 million, but they'll need more than double that to compete with what Intel, Nvidia, AMD and others will spend,” David Harold, an analyst at chipmaker John Peddie Research, said in a recent report. .
The company laid off staff and closed international offices in an attempt to cut costs.
Graphcore, Baillie Gifford and Chrysalis declined to comment.
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