Graphcore is reportedly in talks over a £400 million-plus sale to global tech giants to cover mounting losses.

The Bristol-based chipmaker has failed to cash in on the artificial intelligence boom as its IPUs (intelligence processing units) have not been adopted widely enough to compete with the GPUs (graphics processing units) of rivals such as Nvidia.

IPUs are specifically designed for AI compute and claim to allow researchers to carry out entirely new types of work to drive advances in machine intelligence.

According to The Sunday Telegraph, it is now eyeing a deal with either UK firm Arm, Japan’s Softbank or the US’ OpenAI.

In October Graphcore reported a 46% drop in revenues for 2022 to $2.7m, with losses growing 11% to $204.6m. The firm, valued at $2.8 billion in its most recent funding round at the end of 2020, had $157m cash at the end of the year and said it would need to raise more funds by May. It has been forced to lay off workers and close global offices.

Graphcore has raised more than $700m from the likes of Silicon Valley venture capital giant Sequoia and Microsoft. The latter – which has heavily backed ChatGPT maker OpenAI – stopped using Graphcore’s chips in its cloud computing centres in 2020 while Graphcore’s Chinese business has closed following the introduction of updated US export restrictions in the country.

While Nvidia has seen its valuation rise to $1.8 trillion – more than both Amazon and Google parent Alphabet – Graphcore has also been omitted from government AI funding, including the new supercomputer being built in its hometown of Bristol.

Graphcore was founded in 2016 by Nigel Toon and Simon Knowles after they sold their previous semiconductor company to Nvidia.

Investment manager Baillie Gifford has more than doubled the valuation of its stake in Graphcore in recent months, as has London-listed investment fund Chrysalis, leading to speculation of a sale.

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