Graphcore’s Bow IPU “puts them back in the game”
The company is operating in what is often a “winner-takes-all” market, with Nvidia currently the leader who can “outspend everybody else put together”. Additionally, over the last decade, systems companies and OEMs have started creating silicon in-house instead of relying on merchants, with the expert describing this as a secular trend.
Graphcore has a strong team with Nigel Toon as CEO and Simon Knowles as senior architect, but the company has also underestimated the importance of software – an area where Nvidia has a strong moat, according to the expert. “That has probably been one of the hardest things for any new player, Graphcore included.”
However, Graphcore has some “very interesting” projects on its roster, namely its wafer-on-wafer Bow IPU, which the specialist described as “quite remarkable”. We heard Graphcore’s wafer-on-wafer approach could lead to a 40% improvement in performance over its previous generation – but while it claims a 10x total cost of ownership advantage, this is probably closer to a 3x total cost of ownership advantage, we were told.
In terms of regional opportunities, the expert emphasied that geopolitics is “hugely important within the silicon industry – many people are underestimating just how significant”. This extends beyond short-term company impact to the long-term shape of the entire industry, they said.
The expert believes Europe is where the opportunity for expansion and success is greatest for the company, saying there are some AI companies “but very few and none with the scale or sophistication of Graphcore”. The UK’s announcement that it is rejoining the Horizon Europe scheme has also increased Europe’s attractiveness.
Overall, the specialist is considerably more optimistic about the company’s future today versus two years ago, noting a 6/10 chance the company will survive versus 2/10 respectively.
The information used in compiling this document has been obtained by Third Bridge from experts participating in Forum Interviews. Third Bridge does not warrant the accuracy of the information and has not independently verified it. It should not be regarded as a trade recommendation or form the basis of any investment decision.
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