SoftBank is at it again

SoftBank is already a major player in the semiconductor space, having acquired Arm Holdings (NASDAQ: ARM) in 2016. After a deal to sell it to Nvidia (NASDAQ: NVDA) fell apart in 2020, the company eventually took it public but held onto a 90% stake. It’s been a spectacular success, with Arm shares rising 150% since its IPO. Arm supplies some circuit designs to Nvidia, but Nikkei reported earlier this year that it was planning to launch its own AI chips next year. Analysts have also speculated that SoftBank could be working on its own GPU, which a new acquisition could now help supercharge. 

UK-based chipmaker Graphcore is being acquired by SoftBank for $500 million. It’s long been working on a chip that could compete with Nvidia’s dominance of the market for GPU processors at the heart of the AI boom. With a war chest of around $46 billion in cash, SoftBank has the deep pockets needed to fund and develop the company for years to come.

“Demand for AI compute is vast and continues to grow,” Graphcore co-founder and CEO Nigel Toon said in a statement about the deal. “In SoftBank, we have a partner that can enable the Graphcore team to redefine the landscape for AI technology.” Graphcore, which makes a special kind of chip it calls an “intelligence processing unit,” has been trying for years amid numerous setbacks that have seen its valuation collapse from as much as $2.8 billion.

Nvidia remains on top for now, but SoftBank’s latest purchase is a reminder that there will always be competition nipping at the heels, especially when the market is expected to double over the next three years. Developing a new type of semiconductor is full of risk and requires both time and vast amounts of money, but the company has been slowly putting the pieces together for what could be a very real rival.