Graphcore, the UK maker of chips designed for use in artificial intelligence, has raised $222m (£164m) from investors, valuing the company at $2.8bn. The Bristol-based company’s latest round of funding was led by the Ontario Teachers’ Pension Plan as well as investors including Fidelity International and Schroders. Existing Graphcore investors, including Baillie Gifford and Draper Esprit, also joined the round. The $2.8bn valuation propels Graphcore further up the ranks of the UK’s most valuable private tech companies as it seeks to confirm its position in the fast-growing artificial intelligence industry. The company has $440m in cash as it seeks to expand, with voice recognition and driverless cars among the potential target markets for its technology. The company first achieved the coveted “unicorn” status, a valuation above $1bn, in 2018, when it raised $200m for a valuation of $1.8bn. Since its official founding in 2016, Graphcore has raised more than $710m from investors, including the carmaker BMW, the tech companies Microsoft and Samsung, and the prominent Silicon Valley venture capital business Sequoia Capital. Graphcore is still in early its early startup phase. In 2019, the most recent year for which accounts are available, it made only $10m in revenue, losing $96m as it spent heavily on recruiting new staff in sites in Norway, the US, China and Taiwan Plans for Graphcore were first started in late 2013 by its chief executive, Nigel Toon, and its chief technology officer, Simon Knowles, both of whom were previously directors at Icera, a business making chips for 3G mobile network infrastructure. Icera was sold to the US chipmaker Nvidia in 2011. Graphcore’s technology, which it calls “intelligence processing units”, is designed to handle the power-hungry requirements of machine learning, in the expectation that its use will grow rapidly across high-tech industries. Graphcore’s Colussus chip was named after an early computer built during the second world war at Bletchley Park, the codebreaking centre. The company hopes to differentiate itself from rivals making graphics processing units (GPUs), including Nvidia. Toon said the company’s technology “dramatically outperforms legacy processors such as GPUs”. Graphcore’s investment round underlines the intense rivalry in the semiconductor industry, with US companies vying with competitors backed by the Chinese state. Nvidia in September agreed a $40bn deal to buy the UK-based chip designer Arm, partly in the hopes of targeting artificial intelligence. However, the takeover of a British company – albeit one that was owned by Japan’s Softbank – was deeply controversial. Graphcore’s Toon said the takeover was “bad for competition”, “bad for the market overall” and “bad for Britain”, in an interview with the Financial Times. Toon said Graphcore’s next fundraising step would probably be an initial public offering, but added that this would be unlikely during 2021.