Bristol microchip firm bought by Japanese giant in £400m deal

Bristol  microchip company Graphcore has been acquired by Japan’s SoftBank in a deal rumoured to be worth around £400m.

Rumours of the deal have been circulating for months but protracted negotiations and regulatory approvals have meant neither company has confirmed anything until now.

Graphcore has committed to keeping its head office in Bristol and there are plans to hire more staff.

Softbank has been keen to get into the AI sector with interest in the technology accelerating in recent years.

Graphcore co-founder and CEO Nigel Toon has refused to reveal details of the deal.

He said: “We have agreed with SoftBank that we’re not going into the details of the deal; whether anything comes out in the future, we’ll see.”

The company was founded in 2016 and employs just under 500 staff.

Toon has been critical of UK pension funds claiming they are failing British savers by refusing to back high-growth businesses such as Gtaphcore.

His company has become the latest high-tech firm to sell to an overseas buyer.

Toon said UK pension funds “tend to focus on cost rather than growth” which has become a problem for long-term value of people’s retirement savings.

The deal is the second Softbank has acquired one of Britain’s leading microchip companies following its acquisition of Arm in 2016.

Graphcore had raised hundreds of millions of dollars from overseas investors but struggled to compete against Silicon Valley firm Nvidia.

Mr Toon said: “We have about £4.6 trillion of capital managed in London as a result of pension funds and insurance. A tiny, tiny percentage of that goes into private companies today.

“I think there’s a huge opportunity here. Our pension funds tend to focus on cost, rather than on growth and performance. And that creates its own issues in terms of ‘what’s the future value of your pension going forward?’ And how do we expose some appropriate portion to the high-growth opportunities that some of these scale-up opportunities represent.

“I think there’s a massive opportunity to do that, but there’s a lot of structural things still, I think that needs to be fixed.”

Mr Toon said the majority of the money invested in Graphcore, from firms such as Microsoft, the venture capital fund Sequoia and the giant Ontario Teachers’ Pension Plan, came from overseas.

“With the advent and the acceleration of AI, what’s going to be critical is the foundation layers — not just the models but all the infrastructure around it, including on the semiconductor and systems side,” said Vikas Parekh, the SoftBank executive who led the investment.

“The profit pools will grow longer term, and we expect that lots of players will develop solutions and participate in that pool.”