● The British graphics processing unit maker Graphcore said all of its top-line products have fallen under Washington’s new export rules this month

● The company was seen as a potential rival to Nvidia, which has poured resources into customising chips for China that fall outside evolving US restrictions

British semiconductor firm Graphcore is slashing staff in China and will no longer sell products in the country, citing Washington’s latest export restrictions on sales of advanced artificial intelligence (AI) chips as the last straw in the market for the struggling company once regarded as a potential rival to industry leader Nvidia.

The tightened regulations, announced in October, took effect this month and are aimed at restricting China’s access to high-end semiconductor technology with US inputs, focusing on data-centre chips used to train AI.

“The recently updated US export controls mean that Graphcore – in common with other AI hardware manufacturers – is no longer able to sell [intelligence processing unit (IPU)] systems in China,” a company spokesman said in a statement.

“Regrettably, this means we will be significantly scaling back business operations in China,” he added, noting that all of the company’s top-line products had fallen under the new regulations.

The spokesman did not elaborate on the number of staff that would be let go in China, where it set up its Beijing headquarters in 2019.

The development is the latest setback for Graphcore, a darling of the British chip industry that some say was on its way to taking on American industry titan Nvidia, the maker of the world’s most advanced AI graphics processing units (GPUs). Founded in 2016 in Bristol, England, the company was valued at US$2.8 billion by 2020 after a US$222 million funding round.

However, Graphcore saw its revenue fall 46 per cent in 2022, with losses of US$204.6 million for the year, according to its latest financial filing in October. The company said it needed more funding to keep operating, but has not announced any new rounds.

Graphcore CEO Nigel Toon

“Elsewhere, the need for AI computing continues to increase, and Graphcore is working with customers around the world to meet their demand for a powerful, cost-effective alternative to GPUs,” the Graphcore spokesman said on Thursday.

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