by fnnewz
SoftBank Group’s Masayoshi Son has made no secret of his intention to double down on the hot artificial intelligence industry. He is now raising funds for his next step in that strategy. According to a Bloomberg report, the SoftBank founder is seeking $100 billion to build a new company that would compete with companies like Nvidia in the area of artificial intelligence chips.
The new company, codenamed Izanagi, would collaborate with Arm, the chip design company that SoftBank created as a public company last year. He still owns about 90% of Arm shares as of this month.
Following some of the same rules that SoftBank used when raising its massive Vision Fund investment funds, the report says it plans to turn to Middle East-based institutional investors to raise around $70 billion of the $100 billion sum. SoftBank itself would cover the remaining $30 billion.
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 expected to continue to grow (and with much more work to be done to improve efficiency and cost), there is a clear opportunity for others to compete with alternatives, whether similar GPUs or new approaches. to GPU or a completely different processing approach.
OpenAI chief Sam Altman is also reportedly in talks with investors in the United Arab Emirates to raise between $5 and $7 billion for a new AI chip project. OpenAI’s efforts are particularly notable because the company has been leading the development of generative AI, both to power other services with its GPT models and to power its own services like ChatGPT.
All of that makes OpenAI one of the largest customers in the world right now for these chips, and makes the chips one of OpenAI’s biggest expenses. Altman reportedly met with several potential investors, chip industry experts and others around the world, including SoftBank’s Son, for the new AI chip initiative. It appears that the Izanagi project is separate from Altman’s AI chip ambition, according to the Bloomberg report.
Details of SoftBank’s new project have not been disclosed, including which companies would build the core technology and timelines.
Shift (Alibaba’s) Focus to AI
A new chip project would be in line with the company’s new focus on AI.
Historically, SoftBank has derived a large portion of its highest returns from its initial investment and stake in Chinese e-commerce titan Alibaba, which has earned it more than $70 billion over the years. But from March 2023… whensaid SoftBank CFO Yoshimitus Goto that the company was “preparing to go on the offensive with the AI revolution on the horizon” – has gradually sold part of its stake to reinvest the money in AI.
The move to AI may have been characterized as offensive based on Goto’s comment, but it was also defensive: It came about a year after SoftBank reported a loss of 32 billion dollars in the Vision Fundhis high-profile, high-risk effort to become a major player and kingmaker in the world of giant startups..
However, SoftBank, thanks in part to that remaining 90% stake in Arm, has seen a solid recovery. The Vision Fund’s returns in the latest quarter were the highest since March 2021, and Arm shares have shot up almost 50% thanks to the growing demand for AI chips. (It also helps that Nvidia, one of Arm’s customers, has a stake in the chip design company, a revelation that caused Arm’s price to spike last week.) “Arm would soon be indispensable for AI” Goto stated earlier this month.
Arm, acquired by SoftBank in 2016 for $32 billion, was listed on Nasdaq in September 2023, with IPO values 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 design and operation of large language models.
SoftBank posted its first quarterly profit for the quarter ending Dec. 31, 2023, nearly three years after four straight losses, helped by gains from its Vision Fund. SoftBank shares closed 2.8% higher on Monday after news of Son’s AI chip project broke on Saturday.
