SoftBank’s Visionary Move: Izanagi Seeks $100 Billion to Challenge Nvidia in AI Chips

SoftBank Group founder Masayoshi Son is reportedly on a quest to secure a staggering $100 billion for a new venture, Izanagi, poised to compete head-to-head with Nvidia in the burgeoning artificial intelligence (AI) chip market. This ambitious endeavor marks a significant departure from SoftBank’s traditional focus on startup investments, signaling its commitment to becoming a major player in AI hardware development.

The venture’s codename, Izanagi, signifies Son’s vision of creation and life, embodying the venture’s goal to spearhead advancements in general artificial intelligence. The project’s strategy involves a strategic partnership with Arm, a chip design company that SoftBank spun off as a public entity last year, retaining approximately 90% of Arm’s shares.

Sources reveal that SoftBank plans to replicate the funding model used for its Vision Fund, aiming to raise $70 billion from Middle Eastern institutional investors, with SoftBank contributing the remaining $30 billion. However, a SoftBank spokesperson declined to comment on these developments.

Nvidia, a current dominant force in the AI chip market with its GPU chips, faces a potential challenge from SoftBank’s Izanagi. The growing demand for AI processors and the continuous quest for improved efficiency and cost-effectiveness present an opportune moment for new entrants to offer alternatives, whether through similar GPUs, novel GPU approaches, or entirely different processing methods.

Interestingly, OpenAI CEO Sam Altman is reportedly in talks with investors in the United Arab Emirates for a separate AI chip project, aiming to raise between $5 trillion and $7 trillion. OpenAI’s pivotal role in developing generative AI, including services like ChatGPT, positions it as a major consumer of AI chips, making its foray into chip development noteworthy. However, Altman’s project appears distinct from SoftBank’s Izanagi initiative.

Crucial details about Izanagi remain undisclosed, including the identity of companies involved in core technology development and the project’s timeline. SoftBank’s strategic pivot towards artificial intelligence aligns with its shift away from a focus on Alibaba, historically a significant source of returns. The move into AI, characterized as both offensive and defensive, follows a $32 billion loss in SoftBank’s Vision Fund in 2023.

Despite setbacks, SoftBank’s strategic positioning, bolstered by its 90% stake in Arm, has facilitated a remarkable recovery. The recent surge in Arm’s stock, driven by increasing demand for AI chips and a stake from Nvidia, contributed to SoftBank’s highest Vision Fund return since March 2021. Arm’s pivotal role in AI is underlined by its clientele, including tech giants like Apple, Google, Microsoft, and Amazon, all engaged in the development and utilization of large language models.

SoftBank’s successful navigation into the AI realm is evident in its first quarterly profit for the period ending December 31, 2023, after three years of consecutive losses. Son’s revelation of the Izanagi project on Saturday triggered a 2.8% increase in SoftBank shares, underscoring the market’s optimism about the company’s future in the AI chip landscape.

Source: TechCrunch