Graphcore Seeks Funding Amidst Widening Losses in AI Chip Market

Graphcore, the AI chipmaker, has announced its need to raise additional funds due to increasing losses in the highly competitive AI chip market. The company’s filing revealed that pre-tax losses had widened by 11% to $204.6 million, while revenue declined by 46% to $2.7 million in 2022. Graphcore’s intelligence processor units (IPUs) are designed to challenge Nvidia’s dominance in the AI chip sector.

The filing also stated that Graphcore is forecasting the need for more cash to break even by 2027. However, securing funding has become challenging for startups directly competing with Nvidia, as investors are hesitant to make significant investments in such ventures. This situation has prompted Graphcore to engage in discussions with potential investors, although no agreement has been reached thus far.

Graphcore spokesperson Iain Mackenzie expressed optimism about the company’s future, highlighting the performance and cost-effectiveness of their AI chips compared to GPUs. Despite the financial challenges, Graphcore remains confident that their technology will lead to commercial success in the coming years.

In response to the competitive landscape, Graphcore has made strategic decisions to streamline operations. The company closed operations in Norway, Japan, and South Korea, while scaling back operations in other countries. As a result, the headcount has decreased by 21% to 494 employees compared to the previous year.

Graphcore has already raised $711.8 million at a valuation of $2.77 billion, according to PitchBook data. The company’s ongoing efforts to secure additional funding will be crucial in sustaining its growth and enabling it to compete effectively with industry giants like Nvidia.

While the AI chip market remains challenging, Graphcore’s determination to innovate and its commitment to delivering high-performance solutions position the company well for future success. With ongoing discussions with potential investors, Graphcore aims to secure the necessary funding to continue its growth trajectory and establish itself as a key player in the AI chip industry.