SoftBank’s Masayoshi Son reportedly seeking $100 billion to build new AI chip company

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SoftBank Group’s Masayoshi Son has made no secret of his intention to redouble his efforts in the hot sector of artificial intelligence. Now he’s raising money for his next step in this strategy. According to a report from BloombergSoftBank founder is seeking $100 billion to create a new company that would compete with companies like Nvidia in AI chips.

Named Izanagi, the new company would collaborate with Arm, the chip design company that SoftBank spun off as a public company last year. It is still owns approximately 90% of Arm’s shares starting this month.

Following part of the playbook SoftBank used when putting together its supersized Vision Fund, the report said it plans to tap Middle East-based institutional investors for about $70 billion of the sum. of 100 billion dollars. SoftBank would itself assume the remaining $30 billion.

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 only set to grow – and with much more work to be done to improve efficiency and costs – there is a clear opening for others to compete with alternatives, whether it’s about similar GPUs, new approaches. to GPUs or a completely different processing approach.

Sam Altman, head of OpenAI would also be in talks with investors in the UAE to raise a whopping $5-7 trillion for a new AI chip project. OpenAI’s efforts are particularly noteworthy because the company has been at the forefront of developing generative AI, both to power other services with its GPT models and to power its own services like ChatGPT.

All of this makes OpenAI one of the world’s largest customers for these chips, and makes the chips one of OpenAI’s largest expenses. Altman has reportedly met with a number of 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 were not disclosed, including which companies would build the core technology and the timeline.

Shifting the focus (from Alibaba) to AI

A new chip project would align with the company’s new focus on AI.

SoftBank has historically achieved much of its highest returns through its early investments and stake in Chinese e-commerce titan Alibaba, which has earned it more than $70 billion over the years. But since March 2023 — Whensaid SoftBank CFO Yoshimitus Goto. that the company was “preparing to go on the offensive with the AI ​​revolution on the horizon” – he gradually sold part of his 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 in the Vision Fundits wide-ranging, high-stakes effort to become a major player and kingmaker in the world of giant startups.

Yet SoftBank, thanks in part to the remaining 90% in Arm, has seen a solid recovery. The Vision Fund’s returns last quarter were the highest since March 2021, and Arm’s shares rose almost 50% thanks to the growing demand for AI chips. (this also helps Nvidia, one of Arm’s customers, has a stake in the chip design company, a disclosure that led to a surge in Arm’s price last week.) “Arm would soon be essential to AI” Goto claimed it earlier this month.

Arm, acquired by SoftBank in 2016 for $32 billion, listed on Nasdaq in September 2023, with IPO values ​​British chip design company at $54.5 billion.

Arm’s customers, besides Nvidia, include smartphone makers and chip designers, including Apple, Google, Microsoft and Amazon in the design and operation of large language models.

SoftBank reported its first quarterly profit for the quarter ended December 31, 2023, almost three years after four consecutive losses, helped by gains in its Vision Fund. SoftBank shares closed 2.8% higher on Monday following Son’s AI chip project announcement on Saturday.

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