British-based semiconductor company Graphcore has confirmed to Bloomberg that it is scaling back its operations in China due to increasing regulatory control from the US. 

A spokesperson for the company confirmed the news but would not divulge the number of employees affected by this decision. 

At Bloomberg’s October technology conference, Graphcore’s CEO Nigel Toon stated that China accounted for around 25% of the company’s sales. 

“Elsewhere, the need for AI compute continues to increase and Graphcore is working with customers around the world to meet their demand for a powerful, cost-effective alternative to GPUs,” a spokesperson from the company said to Bloomberg, implying that Graphcore would increase its presence elsewhere. 

The US has been issuing regulatory controls in relation to China’s semiconductor industry ever since passing the CHIPS and Science Act in August 2022. 

On 10 August 2023, the Biden administration signed an order which banned all US investment towards Chinese sensitive technologies, citing national security fears. 

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By GlobalData

“The development of more sophisticated weapons systems, the breaking of cryptographic codes, and other applications that could provide these countries with military advantages,” was the main reason behind this order. 

“The US regards China’s efforts to become a dominant player in advanced technologies as a national security problem,” GlobalData’s 2023 report into AI reads, “China possesses several advantages in AI compared to the US, including a large pool of software engineers and vast repositories of citizens’ data that are accessible to the government.” 

US investment and import curbs are not the only hurdles faced by Graphcore. 

Last valued at $2.5bn after its 2020 funding round, Graphcore once rivalled industry leader NVIDIA. Despite this, Toon’s attempts to appeal to the UK government for funding have largely been unsuccessful. 

On 6 October 2023, Wired reported that Graphcore had internal documents which stated that it desperately needed new funding raised by May 2024 in order to survive.  

A spokesperson for Graphcore declined Wired’s request for comment. 

The global semiconductor industry is now worth $600bn, having achieved a compound annual growth rate of 8.3% between 2017 and 2022.