SoftBank Group’s Masayoshi Son is very open about his plan to invest more in the booming artificial intelligence sector. He is currently seeking money for his next move in that plan. The creator of SoftBank is reportedly looking for $100 billion to launch a new company that would take on companies like Nvidia in the AI chip market. Bloomberg reported this information.
Arm, the semiconductor design firm that SoftBank separated and went public last year, would work alongside the new business, code-named Izanagi. As of this month, it still possesses almost 90% of the Arm’s shares.
Following some of the same strategies that SoftBank employed to assemble its massive Vision Fund investment funds, the article stated that it intends to source roughly $70 billion of the $100 billion total from institutional investors in the Middle East. SoftBank would pay the final $30 billion on its own.
SoftBank declined to comment when TechCrunch approached them for a response to the allegation.
Nvidia presently controls the AI chip industry with its GPU chips. However, since the demand for AI processors is only expected to increase, much work must be done to reduce costs and increase efficiency. There is a clear path for competitors to enter the market with alternatives, whether they take the form of entirely different processing approaches, new GPU approaches, or like-for-like GPUs.
Sam Altman, the CEO of OpenAI, is allegedly in talks with investors in the United Arab Emirates to finance an astonishing $5 trillion to $7 trillion for a new AI chip project. OpenAI’s achievements are especially noteworthy cause it has been at the forefront of generative AI development, both for its services like ChatGPT and to power other services with GPT models.
Because of everything said above, OpenAI is currently one of the largest global consumers of these chips and experiences significant costs related to chips. Altman reportedly spoke with several possible investors, specialists in the semiconductor industry, and others worldwide, including SoftBank’s Son for the new AI chip industry. The Bloomberg story said Altman’s AI chip goal seemed unrelated to the Izanagi project.
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The businesses that would develop the basic technology and the timeliness of SoftBank’s new project are among the facts that have yet to be made public.
Focus on AI from Alibaba
The company’s new focus on AI would be consistent with a new chip project. SoftBank’s early investment and ownership in Alibaba, the dominant Chinese e-commerce company, has historically contributed significantly to the company’s highest returns, yielding over $70 billion in profits over time. But since SoftBank Chief Financial Officer Yoshimitus Goto stated in March 2023 that the business was “getting ready to go on the offensive with the AI revolution on the horizon,” the company has been progressively selling off portions of its investment to reinvest the proceeds into AI.
In light of Goto’s remarks, the AI move may have been seen as awful. It was also defensive because it occurred about a year after SoftBank revealed a $32 billion loss in the Vision Fund, its high-profile, high-stakes industry, to emerge as a dominant force in the world of unicorn startups.
However, SoftBank has experienced a strong comeback partly because of its 90% remaining investment in Arm. The most significant returns for the Vision Fund since March 2021 were recorded in the most recent quarter. The growing demand for AI processors has caused Arm’s shares to rise by about 50%. It also helps that Arm’s customer, Nvidia, owns stock in the chip design company. Arm’s price surged last week due to this announcement. Goto announced earlier this month that “arm would soon be essential to AI.”
In September 2023, Arm, a British chip design company that SoftBank had purchased for $32 billion in 2016, went public on Nasdaq, valuing the business at $54.5 billion.
In addition to Nvidia, Arm’s clients in constructing and managing massive language models include semiconductor designers and smartphone manufacturers, such as Apple, Google, Microsoft, and Amazon.
Progress at its Vision Fund helped SoftBank earn its first quarterly profit for the quarter that concluded on December 31, 2023, nearly three years after it had experienced four straight losses. A report of Son’s AI chip project surfaced on Saturday. SoftBank shares closed 2.8% higher on Monday.
