SoftBank Group’s Masayoshi Son has made no secret of his intent to double down on red-hot artificial intelligence industry. Now, he’s fundraising for his next move in that strategy. According to a report in Bloomberg, the SoftBank founder is seeking $100 billion to build a new venture that would compete with the likes of Nvidia in the area of AI chips.
Code-named Izanagi, the new venture would collaborate with Arm, the chip design company that SoftBank spun out as a public company last year. It still owns about 90% of the Arm’s stock as of this month.
Following some of the same playbook that SoftBank used when pulling together its outsized Vision Fund investment funds, the report said that it plans to tap Middle East-based institutional investors for about $70 billion of the $100 billion sum. SoftBank itself would foot the remaining $30 billion itself.
When contacted by TechCrunch for a response to the report, a SoftBank spokesperson declined to comment.
Nvidia currently dominates the AI chip market with its GPU chips. But with the need for AI processors projected only to grow — and with a lot more work to be done to improve efficiency and cost — there’s a clear opening for others to compete with alternatives, whether they are like-for-like GPUs, new approaches to GPUs or an entirely different processing approach altogether.
OpenAI chief Sam Altman is reportedly also in talks with investors in the United Arab Emirates to raise an eye-watering $5 trillion to $7 trillion for a new AI chip project. OpenAI’s efforts are particularly notable because the company has been leading the charge in generative AI development, both to power other services with its GPT models, and to power its own services like ChatGPT.
All that makes OpenAI one of the biggest customers in the world right now for these chips, and makes chips one of OpenAI’s biggest expenses. Altman has reportedly met with a number of potential investors, chip industry experts and others across the globe, including SoftBank’s Son, for the new AI chip initiative. It appears that the Izanagi project is separate from Altman’s AI chip ambition, the Bloomberg report said.
The details of the SoftBank’s new project have not been disclosed, including which companies would build the core technology and timelines.
Shift focus (from Alibaba) to AI
A new chip project would be line with the company’s new focus on AI.
SoftBank has historically made a huge part of its strongest returns from its early investment and stake in Chinese e-commerce titan Alibaba, which has yielded it more than $70 billion over the years. But since March 2023 — when, SoftBank chief financial officer Yoshimitus Goto said that the company was “getting ready to go on the offensive with the AI revolution on the horizon” — it’s been gradually selling off parts of its stake to reinvest the money into AI.
The move into AI may have been characterized as offensive going by Goto’s comment, but it was also defensive: it came about a year after SoftBank reported a $32 billion loss in the Vision Fund, its high-profile, high-stakes effort to become a major player and kingmaker in the world of juggernaut startups.
Yet SoftBank, thanks in part to that 90% remaining stake in Arm, has seen a solid recovery. Returns for the Vision Fund in the last quarter were the highest since the March 2021, and Arm’s shares have soared almost 50% thanks to rising demand for AI chips. (It helps too that Nvidia, one of Arm’s customers, has a stake in the chip design firm, a disclosure that led to a spike in Arm’s price last week.) “Arm would soon be indispensable to AI,” Goto claimed earlier this month.
Arm, acquired by SoftBank in 2016 for $32 billion, listed on Nasdaq in September 2023, with the IPO valuing the British chip design company at $54.5 billion.
Arm’s customers, in addition to Nvidia, include smartphone makers and chip designers, including Apple, Google, Microsoft, and Amazon in the designing and operation of large language models.
SoftBank posted its first quarterly profit for the quarter that ended December 31, 2023, nearly three years after four straight losses, helped by gains at its Vision Fund. Shares of SoftBank closed 2.8% higher on Monday after Son’s AI chip project news broke on Saturday.
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