SoftBank Group’s founder, Masayoshi Son, is actively seeking a monumental $100 billion in funding for his latest venture, Izanagi. According to a recent Bloomberg report, this audacious project aims to challenge Nvidia’s dominance in the realm of artificial intelligence (AI) chips, signaling a strategic shift for the Japanese conglomerate.
Izanagi will join forces with Arm, a chip design company that SoftBank recently spun off as a public entity, retaining approximately 90% ownership. The collaboration with Arm underscores SoftBank’s commitment to leveraging its expertise in chip development for the burgeoning field of AI.
The funding strategy mirrors SoftBank’s successful playbook with the Vision Fund, as it plans to secure $70 billion from Middle Eastern institutional investors, with SoftBank injecting the remaining $30 billion. However, SoftBank declined to comment on this report when approached by TechCrunch, maintaining an air of secrecy around Izanagi’s financial structure.
Nvidia presently reigns supreme in the AI chip market, particularly with its GPU chips. However, the expanding demand for AI processors coupled with the perpetual quest for enhanced efficiency and cost-effectiveness presents a ripe opportunity for competitors. SoftBank, with its ambitious Izanagi project, aims to position itself as a formidable contender in this landscape.
Simultaneously, OpenAI CEO Sam Altman is reportedly in talks with investors in the United Arab Emirates, aiming to secure a staggering $5 trillion to $7 trillion for a distinct AI chip initiative. OpenAI’s focus on generative AI, powering services like ChatGPT, positions it as a significant player in the AI chip consumer market.
While details of Izanagi remain undisclosed, including core technology developers and project timelines, it appears distinct from Altman’s venture. This proliferation of AI chip initiatives highlights the global race to harness the transformative power of artificial intelligence.
SoftBank’s strategic pivot towards AI marks a shift from its historical reliance on returns from investments in Chinese e-commerce giant Alibaba. The company’s Chief Financial Officer, Yoshimitsu Goto, signaled this change in direction in March 2023, describing it as a proactive response to the impending AI revolution.
The move into AI, both offensive and defensive in nature, follows a challenging period marked by a $32 billion loss in SoftBank’s high-profile Vision Fund. Despite this setback, SoftBank’s recovery has been remarkable, driven in part by its 90% stake in Arm. The recent surge in Arm’s stock, fueled by growing demand for AI chips, has contributed to SoftBank’s impressive financial turnaround.
Arm, acquired by SoftBank in 2016 for $32 billion, went public on the Nasdaq exchange in September 2023, with a valuation of $64 billion. Its clientele includes tech giants such as Apple, Google, Microsoft, and Amazon, emphasizing its pivotal role in the AI ecosystem.
As Masayoshi Son unveils his grand vision for Izanagi, SoftBank’s foray into the AI chip domain becomes a pivotal chapter in the company’s evolution. With the AI revolution on the horizon, the success of Izanagi could redefine the dynamics of the AI chip industry and solidify SoftBank’s position as a leading player in this transformative era.
