British chip designer Graphcore Ltd. will lay off most of its staff in China and stop sales in the country, marking another setback for a startup once hailed as a potential rival to Nvidia Corp.
The company confirmed the decision, citing recent U.S. export controls restricting the sale of technology to China. "Unfortunately, this means we will significantly scale back our operations in China," a spokesperson said in an email.
The company declined to disclose the number of employees affected.
Founded in 2016, Graphcore specializes in designing semiconductors that support artificial intelligence software. Investors poured money into the startup as they looked for viable alternatives to NVIDIA, whose equipment was in high demand. In 2020, Graphcore raised US$222 million at a valuation of US$2.8 billion, making it one of the most promising startups in the UK.
But the Bristol, U.K.-based company has been "living tight", with revenue falling 46% in 2022 and losses widening 11% to $204.6 million, according to the company's most recent filing. In October, the company disclosed that it needed to raise capital to maintain operations. Since then, Graphcore has not announced any financing news.
The Sunday Times reported earlier this year that venture capital firm Sequoia, one of Graphcore's most prominent backers, had written down the value of its stake in the startup to zero.
Graphcore CEO Nigel Toon has previously pointed to China as a potential growth market, especially since trade war restrictions have hindered NVIDIA's ability to sell products to China. At the Bloomberg Technology Conference in London in October, Toon said sales from China accounted for "20% to 25%" of his company's business.
"Elsewhere, demand for artificial intelligence computing continues to increase, and Graphcore is working with customers around the world to meet their needs for powerful, cost-effective GPU alternatives," a Graphcore spokesperson said, referring to powerful graphics chips made by NVIDIA and other companies.
The main focus of U.S. export controls is to limit China's access to high-end chips and other equipment used for artificial intelligence.