Losses widen, cash needed at chip startup Graphcore, an Nvidia rival -filing

By Max A. Cherney

(Reuters) – Artificial intelligence chipmaker Graphcore said it needed to raise cash due to widening losses, according to a filing, as Nvidia (NASDAQ:)’s dominance in AI chips has chilled funding for startups looking to compete directly.

Graphcore produces AI chips called intelligence processor units (IPUs) that aim to take on Nvidia. It reported pre-tax losses widened 11% to $204.6 million, according to a filing of its 2022 financial statements filed Wednesday. Revenue declined 46% to $2.7 million.

According to a forecast the company made through 2027, Graphcore will need to raise more cash to break even, the filing said. The company is in talks with investors to raise money but has not reached an agreement.

A spokesperson for Graphcore declined to comment on its fundraising activity.

“We’re thrilled with the results that we were able to deliver in terms of performance and cost-effectiveness compared to GPUs which set us up for commercial success in coming years,” Graphcore spokesperson Iain Mackenzie said in a statement.

Nvidia’s dominance in AI has made it more difficult for startups to access capital, as investors are less willing to make large bets on companies that compete head on.

The chipmaker closed operations in Norway, Japan, and South Korea and scaled back operations in other countries, according to the filing. The company’s headcount dropped to 494, down 21% from a year earlier, the filing said.

Graphcore has raised $711.8 million at a $2.77 billion valuation, according to PitchBook data.