What’s going on?
SoftBank has decided to give its Vision Fund an area of focus, setting a multibillion-dollar investment target for AI.
What does this mean?
SoftBank is preparing to put about $9 billion into AI investments. The money will come from the well-known SoftBank Vision Fund. The fund has struggled to find opportunities that match its successful track record of acquiring UK-based semiconductor design company Arm all those years ago. So now the Vision Fund is selling assets and focusing on semiconductors and high tech, where it has had success so far. SoftBank has even said it may spend more than its $9 billion target if the right deal comes through. Finding the right deal shouldn’t be hard either. SoftBank has a net worth of $180 billion, so lenders can rest assured they will get their money back.
Why should you care?
Zoom out: It’s a group effort.
SoftBank is targeting investments in sectors such as data centers and power generation because they could benefit from the rise of AI, which Arm could benefit from. But that means SoftBank will be competing with companies like Microsoft, Amazon and Google, which are pouring billions of dollars into AI-focused partnerships. Still, Japan-based SoftBank has a tailwind: Low interest rates in the country are helping to boost its investments.
interest
Lower interest rates make it cheaper for businesses to raise capital.
Source: Google Finance
Overall picture: That’s a heavy-handed approach.
Arm’s market capitalization has soared since its IPO last year, hitting a high of about $120 billion. That means SoftBank’s 90% stake in the chipmaker is worth more than the investment firm’s entire business. To keep up the momentum, SoftBank is aiming to launch Arm’s AI chips and a large-scale language model (a Japanese version of OpenAI’s ChatGPT) this year. But there’s a risk of being a small fish in a big pond. According to data from Statista Market Insights, Japan’s AI market is expected to be worth about $13 billion by 2030, about 17 times what it was last year.
Source: Statista Market Insights
