U.K. U.K. After earning $222 million, chipmaker Graphcore won $2.8 billion.

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The British business threatens competitors like Nvidia with artificial intelligence chips.

The British manufacturer of artificial intelligence chips, Graphcore, has secured $222 million (£164 million) from investors, valuing it at $2.8 billion.

The Ontario Teachers’ Pension Plan and investors including Fidelity International and Schroders led the Bristol-based company’s new funding round. Also involved in the round were established Graphcore investors, including Baillie Gifford and Draper Esprit.

As the company aims to reaffirm its role in the fast-growing artificial intelligence market, the $2.8 billion valuation further catapults Graphcore to the ranks of the most profitable private tech companies in the U.K. With voice recognition and driverless cars among the possible target markets for its technology, the company has $440 million in cash and is looking to grow.

In 2018, when it raised $200 million for a $1.8 billion valuation, the firm first reached the coveted “unicorn” status, a $1 billion valuation.

Graphcore has raised over $710 million from investors, including automaker BMW, tech companies Microsoft and Samsung, and famous Silicon Valley venture capital company Sequoia Capital, since its official establishment in 2016.

Graphcore is still in the early stages of its launch.

It made only $10 million in sales in 2019, the most recent year for which financial statements are available, and lost $96 million as it spent heavily on hiring new workers at sites in Norway, the U.S., China and Taiwan
In late 2013, its CEO Nigel Toon and its Chief Technology Officer Simon Knowles, both of whom were previously directors at Icera, a company that manufactures 3G mobile network infrastructure chips, first announced plans for Graphcore.

In 2011, Icera was sold to U.S. chipmaker Nvidia.

The technology of Graphcore, which the company calls “intelligence processing units,” is designed to manage machine learning’s power-hungry demands, with the hope that its usage will expand rapidly across high-tech industries. The Colussus chip from Graphcore is named after an early computer designed during World War II at the codebreaking center in Bletchley Park.

The firm hopes to differentiate itself from competitors, including Nvidia, that make graphics processing units (GPUs). Toon said the company’s technology “dramatically outperforms older processors like GPUs.”

The investment round of Graphcore underscores the intense competition in the semiconductor industry, where U.S. firms compete with rivals backed by the Chinese state.

In September, Nvidia agreed to a $40 billion deal to buy U.K.-based chip designer Arm, aiming to target artificial intelligence as well. However, it was highly controversial to acquire a British firm, although one owned by Japan’s Softbank. In an interview with the Financial Times, Graphcore’s Toon said that the takeover was “bad for competition,” “bad for the market overall” and “bad for the UK.”

Toon said the next fundraising move for Graphcore is likely to be an IPO, but added that this is unlikely in 2021.

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