SoftBank’s Masayoshi Son Aims for $100 Billion AI Chip Venture

According to a report in Bloomberg, SoftBank Group’s Masayoshi Son is embarking on a monumental endeavor in the realm of artificial intelligence (AI) chips, seeking to raise an unprecedented $100 billion for a new venture, code-named Izanagi. This initiative marks a strategic move by Son to compete with industry giants like Nvidia in the burgeoning AI chip market.

Son’s vision for Izanagi involves collaboration with Arm, the chip design company that SoftBank spun out as a public entity last year, in which it retains a substantial 90% stake. The project’s funding strategy mirrors SoftBank’s past playbook with its Vision Fund, aiming to secure $70 billion from Middle Eastern institutional investors, with SoftBank itself contributing the remaining $30 billion.

The AI chip market, currently dominated by Nvidia, presents ample opportunities for competitors, given the projected growth in demand for AI processors. OpenAI’s Sam Altman is also reportedly exploring a massive funding round of $5 trillion to $7 trillion for a separate AI chip project, highlighting the intense interest and investment in this sector.

SoftBank’s shift towards AI reflects a broader strategic pivot away from its historical focus on investments like Chinese e-commerce giant Alibaba. The company’s renewed emphasis on AI comes in the wake of a $32 billion loss in its Vision Fund, signaling a defensive and offensive move to capitalize on the AI revolution.

Arm, acquired by SoftBank in 2016 for $32 billion, has emerged as a key player in the AI chip ecosystem, with its chips in high demand for various applications, including data centers and large language models. Arm’s successful listing on Nasdaq in September 2023 further solidified its position in the market, with its shares soaring almost 50% amid rising demand for AI chips.

Son’s ambitious $100 billion venture underscores SoftBank’s commitment to becoming a major player in the AI chip industry. If successful, Izanagi would represent a significant milestone in the semiconductor market, potentially capturing a fifth of global semiconductor sales and surpassing Microsoft’s OpenAI initiative.

The news of SoftBank’s AI chip project has already had a significant impact on the company’s stock, with shares gaining 3.2% following the announcement. With over $41 billion in cash and cash equivalents as of December 31, 2023, SoftBank is well-positioned to pursue its ambitious AI chip venture, leveraging its strong financial position and strategic partnerships to drive innovation in the AI ecosystem.