SoftBank Group’s founder, Masayoshi Son, is embarking on an audacious mission to raise $100 billion for a groundbreaking AI chip venture, codenamed Izanagi, challenging Nvidia’s supremacy in the artificial intelligence chip market, according to a Bloomberg report.
Izanagi’s Strategic Partnership with Arm
The venture will strategically partner with Arm, the chip design company spun off by SoftBank last year. SoftBank retains approximately 90% ownership of Arm’s shares as of this month. Drawing parallels with SoftBank’s Vision Fund strategy, Izanagi aims to secure $70 billion from Middle Eastern institutional investors, with SoftBank injecting an additional $30 billion into the venture.
While SoftBank declined to comment on the report, the move underscores the company’s shift away from extensive startup investments towards a strategic focus on AI hardware, aligning with its CFO’s earlier statement about gearing up for the AI revolution.
Nvidia’s Dominance and the Growing AI Chip Market
Nvidia currently dominates the AI chip market with its GPU chips. However, with the escalating demand for AI processors and the ongoing pursuit of enhanced efficiency and cost-effectiveness, opportunities arise for competitors offering alternative GPU solutions or entirely novel approaches to processing.
OpenAI, led by CEO Sam Altman, is reportedly in talks to raise $5 trillion to $7 trillion for a distinct AI chip project in the United Arab Emirates. OpenAI’s pivotal role in advancing generative AI, exemplified by models like GPT, positions the company as one of the largest consumers of these chips, signaling a competitive landscape in the making.
SoftBank’s Offensive Move into AI
SoftBank’s strategic shift into AI is part of its broader offensive move into the field. Historically reliant on substantial returns from its investments in Alibaba, SoftBank has been gradually divesting its stake in the e-commerce giant since March 2023. This move came in response to a $32 billion loss in the Vision Fund, SoftBank’s ambitious foray into the startup world.
Despite setbacks, SoftBank’s recovery, fueled by a 90% stake in Arm, has been remarkable. Arm’s recent IPO on the Nasdaq, valuing the British chip developer at $64 billion, has contributed to SoftBank’s resurgence. Arm’s clientele includes tech giants such as Apple, Google, Microsoft, and Amazon, further solidifying its role in the AI chip landscape.
SoftBank’s Financial Resurgence and Future Prospects
SoftBank, after posting its first quarterly profit in nearly three years, remains optimistic about the future. The Vision Fund’s robust returns in the latest quarter, coupled with a nearly 50% surge in Arm’s stock due to the surging demand for AI chips, has positioned SoftBank for continued success in the evolving AI-driven technological landscape. As Masayoshi Son’s AI chip project comes to light, the tech world eagerly awaits the unfolding of SoftBank’s strategic offensive in the realm of artificial intelligence.
Source: TechCrunch
