Graphcore raises $222 million to tackle Nvidia with AI chips

Graphcore founders Simon Knowles and Nigel Toon


LONDON – UK-based chipmaker Graphcore announced Tuesday that it has made a $ 222 million investment to compete against US rivals Nvidia and Intel.

Graphcore said it will use the funds to support its global expansion and accelerate the development of its Intelligence Processing Units (IPUs), which are specifically designed to power artificial intelligence software. The company has shipped tens of thousands of its chips to customers such as Microsoft and Dell.

The Series E funding round, which took place less than a year after Graphcore’s extension of the previous round by $ 150 million, valued the company at $ 2.77 billion, compared to $ 1.5 billion in 2018.

Graphcore CEO and co-founder Nigel Toon told CNBC in July, “We’re now at the point where we’re not really looking for venture investors. We’re more interested in companies that are long-term investors and owners.” of the stock maybe in the public markets if we ever get to that point. “

At the time, Toon said the IPO was “ideally what we’d like to do,” but insisted, “There’s still a lot of water to go under the bridge before we get to that point.”

The total investment in Graphcore is now $ 710 million and the four-year company has $ 440 million in cash.

The final round of funding was led by the Ontario Teachers’ Pension Plan Board, while other new investors included private equity investor Baillie Gifford, venture capital investor Draper Esprit, and funds managed by Fidelity International and Schroders.

Toon said in a statement on Tuesday, “The support of such distinguished institutional investors says something very powerful about how the markets see Graphcore now. The trust they have in us is based on the expertise we have in building our products and services have proven our business. “

He added, “We have developed technology that significantly outperforms legacy processors like GPUs, powerful software tools tailored to the needs of AI developers, and a global distributor that brings our products to market.”

Serial chip entrepreneurs

Graphcore was founded in Bristol, England in June 2016 by Toon and Simon Knowles, who sold their former chip company Icera to Nvidia for $ 435 million in 2011. The couple first came up with Graphcore in a small pub called Marlborough Tavern in Bath in January 2012.

Today the company employs around 450 people in Bristol, Cambridge, London, Beijing, Oslo, Palo Alto, Seattle and Hsinchu in Taiwan. The number is expected to rise to 600 by the end of 2021.

But the rapid growth has not come cheap. According to an annual report filed in the UK’s Companies House, the company posted a 2019 pre-tax loss of $ 95.9 million on sales of $ 10.1 million.

Santa Clara heavyweights, Intel and Nvidia, are two of the obvious frontrunners in the AI ​​chip market because of their chip manufacturing expertise. The companies have not disclosed how many of their AI-optimized chips have been sold. According to the market data website Statistica, more than a trillion computer chips are expected to be shipped in 2020. In 2019, Intel’s share of the total chip market was 15.7%. Intel has been the market leader every year since 2008, with the exception of 2017, when Samsung took first place.

Graphcore’s Toon criticized Nvidia’s plan to buy SoftBank’s UK chip designer arm for $ 40 billion, saying it was bad for competition.

“We believe Nvidia’s proposed acquisition of Arm is anti-competitive,” he said. “There is a danger that other companies will be closed or restricted from accessing the cutting-edge CPU processor designs that are so important to the entire technology world, from data centers to mobile devices to automobiles and all kinds of embedded devices.”

Google, Amazon and Apple are also working on their own AI chips.

Sequoia supports Nvidia and Graphcore

Previous investors in Graphcore include companies like Microsoft and BMW iVentures, as well as venture companies like London-based Atomico and Silicon Valley Sequoia, who have also supported Nvidia.

Last month, Sequoia partner Matt Miller told CNBC: Graphcore “are in that position where people always come up to them to give them more money. So you don’t need funding. You’re well funded for the next few years, but You definitely have people trying to invest in the company. “

He added, “I don’t think you have to take on Nvidia because the market is so big. Taking on Nvidia is like doing this big job. It’s a huge company with billions in revenues and incredible teams doing all kinds of wonderful things Doing things. I think that Graphcore has the potential to be a very strong player in the AI ​​microprocessor market. A lot of cloud vendors are still making great strides and a lot of people want to be diversified. They don’t want to be Everything in one chip. “

Graphcore launched its second generation IPU earlier this year despite the coronavirus pandemic bothering it.

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