Europe’s most valuable chip start-up attacks Nvidia


Munich Small company, big attention: TSMC rolls out the red carpet for Europe’s most valuable chip start-up. Graphcore is the launch customer of a new, pioneering production process from the world’s largest contract manufacturer in the semiconductor industry. The up-and-coming British chip designer hopes this will give him a significant advantage in attacking the industry giant Nvidia.

“It’s remarkable that we, as a young company, can work so closely with TSMC,” said Simon Knowles, co-founder and chief technology officer of Graphcore, the Handelsblatt.

Graphcore is one of the biggest hopes of the chip industry in Europe. Because Knowles and his co-founder and CEO Nigel Toon are pushing into the pinnacle of the industry: the processors. They are the brain of every computer. It is a field that Europe has so far largely left to the Americans.

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The chips especially for artificial intelligence (AI) are not only faster than those of the market leader Nvidia, claims CEO Toon. They are also ten times cheaper over their entire service life. He calls them Intelligent Processing Units, or IPUs for short.

graphic

A full-bodied, but apparently credible promise. Because TSMC is not just anyone. The contract manufacturer has the world’s most advanced production processes. Of Apple until Qualcomm all major chip companies have the Taiwanese manufacture them.

TSMC praises groundbreaking designs

Graphcore’s designs are “groundbreaking,” says Paul de Bot, TSMC’s European head. “Graphcore has fully exploited the possibility of connecting the power supply directly via our wafer-on-wafer technology in order to achieve a large increase in performance.” Instead of further shrinking the structures on the chips with enormous effort, the process becomes two Components superimposed and connected to each other. This is already common with memory chips, but not with processors, says Knowles.

So far, the roles in the processor market have been clearly divided: the US group has dominated for decades intel the business with processors for PCs and servers, the so-called central processing units, or CPUs for short. Nvidia supplies so-called graphics processors, the GPUs. They were initially intended as a supplement for CPUs, but have now established themselves as a separate category.

Originally developed for video games, GPUs are now also found in many network computers, the servers. Nvidia boss Jensen Huang also believes in a great future for GPUs in artificial intelligence. Nvidia has a market capitalization of around $330 billion, making it the most valuable semiconductor manufacturer in the world.

>> Read here: iPhone maker Foxconn is building a $20 billion chip factory in India

Toon and Knowles, meanwhile, see their chips as a superior solution. Because the components, they argue, are specially designed for AI applications such as machine learning. They want to establish the IPUs as a new, separate processor category on the market alongside CPUs and GPUs.

valuation

2.8

billion dollars

Graphcore is currently the most expensive chip start-up in Europe.

The financiers believe in a great future for Graphcore. In the most recent round of financing at the end of 2020, they valued the six-year-old company at just under $2.8 billion. This makes Graphcore the most expensive chip start-up in Europe. The company has raised $700 million so far.

“We continue to see excellent development opportunities at Graphcore,” says Ingo Ramesohl, head of RBVC, the venture capital subsidiary of Bosch. The world’s largest auto parts supplier was one of the Bristol-based company’s first financiers in 2016. The most recent industry comparison for machine learning, the so-called MLPerf, has once again proven the competitiveness of Graphcore, according to Ramesohl. Investors also include bmw, Microsoft and Samsung. The best-known financial investor is Sequoia.

Well-funded competitors

However, the competition is tough – and the competition is also lavishly equipped with capital. The start-up Sambanova collected 676 million dollars in the spring of last year and can thus draw on a total of more than one billion dollars. Investors value the Silicon Valley company at over $5 billion.

>> Read here: Chip industry slump does not bode well for the global economy

Californian competitor Groq raised $300 million in mid-April last year. The company is valued at around $1 billion. intel took over the Israeli AI chip start-up Habana three years ago for two billion dollars.

The young companies are entering a rapidly growing market. Sales of AI chips increased by more than half to almost $36 billion in 2021. According to Gartner expert Alan Priestley, around 80 start-ups worldwide are hoping for a breakthrough.

Nigel Toon (left), Simon Knowles

Pushing into the premier league of the industry with Graphcore: the processors.

(Photo: Graphcore)

Graphcore sees itself ahead of the competition: “We’re the ones who are most likely to make life difficult for Nvidia,” says Toon. “Because our systems are more powerful.” However, the difference in size is striking: Nvidia has around 22,000 employees, Graphcore a good 500.

The start-up, however, seems to be quite successful, but does not publish any financial data. According to their own statements, the British have two main customer groups: the operators of data centers and research institutions such as the Karlsruhe Institute of Technology (KIT) or the University of Oxford.

IPO as an option – but not now

Toon and Knowles have discussed an IPO several times in the past. In view of the stock market slump, that doesn’t seem realistic at the moment. The company does not need fresh money for the time being. Graphcore has more than $200 million in the bank, Toon claims.

However, a competitor may also take action. Toon knows all about it: Eleven years ago he sold his former company Icera for 435 million dollars to Nvidia of all places.

Meanwhile, TSMC is satisfied with the cooperation with Graphcore. “We look forward to working with you on further developments of this technology,” says Europe boss de Bot.

More: Why Wolfspeed is the only chip manufacturer to escape the stock market crash.



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