The struggling British semiconductor company Graphcore, once considered a potential competitor to market leader Nvidia, is downsizing its workforce in China and discontinuing product sales in the region. This decision is attributed to the recent export restrictions imposed by Washington on advanced artificial intelligence (AI) chips, which have significantly impacted the company’s operations.
The more stringent regulations, effective since October, aim to restrict China’s access to high-end transistor technology sourced from the US, specifically targeting data-center cards utilized for AI applications.
An official from Graphcore mentioned that the company is now unable to distribute intelligence control system (IPU) technologies in China due to the updated US export controls, a situation mirrored by other AI hardware manufacturers. Consequently, Graphcore is compelled to scale back its business activities in China, affecting all of its flagship products.
Although the exact number of employees facing layoffs in China, where Graphcore established its Beijing office in 2019, remains undisclosed, this development marks another setback for the once-promising British chip company. Despite being valued at US\(2.8 billion in 2020 following a US\)222 million financing round, Graphcore reported a 46% revenue decline in 2022, with a loss of US$204.6 million for the year, according to its latest financial filing from October. The company indicated the necessity for additional funding to sustain its operations.
Recognizing the growing global demand for a robust and cost-effective alternative to GPUs, Graphcore aims to collaborate with clients worldwide to address this need, as stated by a company representative.
The escalating US trade restrictions on devices to China have adversely impacted nearly every advanced device manufacturer, with a particular focus on AI technologies. Nvidia, a key player in the industry, is compelled to tailor its A800 and H800 GPUs exclusively for the Chinese market in response to the recent sanctions. While Nvidia plans to develop new AI components tailored for Chinese consumers, the process is expected to be time-consuming to ensure compliance with import regulations and client specifications.
Local tech giants such as Tencent Holdings and Alibaba Group Holding have expressed concerns about the implications of these regulations on their cloud computing operations. Alibaba recently halted its cloud unit’s planned public listing due to these restrictions. Nvidia anticipates a substantial decline in sales to China and other countries affected by US restrictions, which previously accounted for 20 to 25 percent of its data-center revenue.
Despite the challenges faced by Nvidia in China, private chip manufacturers have benefited from the situation, with reports indicating that Baidu purchased Huawei Technologies’ 910B Ascend AI chips for US$61 million in August. This shift towards domestic suppliers is influenced by the restrictions imposed on international tech companies, presenting new opportunities for alternative chip providers.
