Graphcore -– founded in 2016 by Simon Knowles and Nigel Toon -– specialises in the development of advanced intelligence processing units (IPU) for machine learning and AI applications. It has been considered among the most promising UK startup, becoming a unicorn in November 2017 and hitting a valuation of $2.8 billion in 2020. This saw it raise over $600 million in funding from investors, including Sequoia Capital, Microsoft, BMW, Dell Technologies, and Samsung Electronics. However, the past year has seen it hit with a multitude of setbacks.

In 2021, the company’s revenues yielded results of just £4.5 million against its $2 billion valuation, causing companies like Baillie Gifford to decrease its investment with the company; its lucrative deal to supply Microsoft with processors for its Cloud computing platform was scrapped last year, with Graphcore’s value crashing by $1 billion as a result, and the company was also part of the wave of tech titans cutting employees due to economic headwinds.

The move signals a blow to the UK tech scene as the company, once poised as a UK rival to Nvidia, sees its investors search for countries offering better incentives for chip makers. Since the invasion of Ukraine and a cooling of Western relations with China, many governments have been expanding subsidies in order to shore up domestic production.

The US have implemented the CHIPS for America Act, which has allocated roughly $280bn to boost domestic research and manufacturing of its semiconductors and secure its supply. Equally, the EU announced plans to allocate €43bn to boost R&D for semiconductors, with a goal of producing 20% of the world's semiconductors by 2030. Yet, the UK has repeatedly been slammed by industry experts and its own lawmakers for its continuous delays in publishing its strategy for semiconductors.

Toon had previously called on the UK Government to use Graphcore’s chips in its plans to build an exascale supercomputer to avoid “heading towards a world of tech colonisation” by US companies and “lose some of our tech sovereignty”.  Graphcore's investors had reportedly been pressing the company to consider a move to America and take advantage of generous US semiconductor subsidies.

Yet the company also signalled it is still committed to staying in the UK for the time being, offering 3,000 of its AI processors in a data centre in South Wales for an AI system. In the open letter to UK Prime Minister Rishi Sunak, it also called for dedicated funding for AI datacentre technology using local technology to avoid being undercut by its larger US rivals.

The company had embarked on selling its second-gen IPU to China and Singapore following the flurry of financial woes it had experienced, a tactic it would have struggled to do in any capacity if it were in the US amid its export ban on chips to China.

Yet the recent retreat of investors from the company likely signal a more difficult time ahead for what once was dubbed the UK’s most promising startup.