Japanese conglomerate SoftBank is reportedly in talks to acquire struggling UK AI chip maker Graphcore.

According to a report from Bloomberg, the two companies have been in discussion for several months. However, while the talks have apparently advanced recently, a final deal is not expected to be reached imminently.

Graphcore IPU – Graphcore

SoftBank already owns a majority stake in Arm, having bought the British chip designer for $32 billion in 2016. It then failed to sell it to Nvidia in 2022, so instead took the company public last year. Shares in Arm have risen by almost 50 percent since the company announced earlier this year that it would be looking to further support AI applications.

It was first reported that SoftBank had a potential interest in buying Graphcore in February 2024. Around the same time, it was separately reported that SoftBank’s founder Masayoshi Son was looking to raise $100 billion to build an AI chip venture dubbed Izanagi to compete with Nvidia.

Founded in 2016, Bristol-based Graphcore makes AI accelerators called Intelligent Processing Units, or IPUs, which have been marketed as an alternative to GPUs produced by Nvidia.

However, despite the growing demand for AI processing power, it was reported earlier this year that the company was facing serious financial struggles, with Graphcore’s financial results showing that in 2022 its pre-tax losses had grown by 11 percent over the year to £161 million ($204m).

To add to the company’s troubles, in 2023, the company was also forced to pull out of China, a market previously targeted as a major growth area for the company, due to US export controls.

Earlier this year, cloud company HyperAI accused Graphcore of “absurd” behavior, including reneging on partnership deals and denying the sale of a piece of its hardware.

At its peak, Graphcore was valued at £2.1 billion ($2.8bn), having raised more than £562 million ($710m) from investors including C4 Ventures, Dell Technologies Capital, Microsoft, Samsung Catalyst Fund, and Sequoia Capital.