SoftBank Seeks OpenAI Tie-Up as Son Plans Deal Spree after Arm IPO

SoftBank is on the hunt for deals in artificial intelligence, including a potential investment in OpenAI, after the blockbuster listing of UK chip designer Arm bolstered Masayoshi Son’s multibillion-dollar war chest.

Two people familiar with Son’s thinking said that the Japanese conglomerate’s founder and chief executive is looking to invest tens of billions in AI after completing Arm’s initial public offering.

Microsoft-backed OpenAI is one of several options SoftBank is considering for a handful of such deals. SoftBank could also look to strike a broad strategic partnership with the ChatGPT maker, these people said.

SoftBank is also looking at a range of alternatives to OpenAI, including making substantial investments in direct rivals of the ChatGPT maker, they added. The company also made a preliminary approach to buy Graphcore, a UK-based AI chipmaker, they said.

SoftBank said: “We do not comment on rumours.” OpenAI declined to comment. Graphcore denied that it received an offer from SoftBank.

Analysts say Arm’s IPO on Thursday, which raised almost $5bn in proceeds, will expand SoftBank’s war chest to as much as $65bn, including its own cash as well as using its remaining 90 per cent holding in Arm as collateral for loans.

Son, who said in June he was a “heavy user” of ChatGPT, has developed a close relationship with OpenAI’s chief executive Sam Altman. Son has described Altman as “one of the key people on Earth” and said he speaks to him almost every day. 

SoftBank’s mobile unit already has a business partnership with OpenAI to serve companies in Japan that want to deploy generative AI technology, such as chatbots. The service is based on the Azure computing platform developed by Microsoft, which is OpenAI’s exclusive cloud provider. Earlier this year, Microsoft invested $10bn in OpenAI, in a multiyear deal, according to people familiar with the matter. 

The SoftBank mobile subsidiary has also said it wants to develop its own Japanese equivalent of ChatGPT.

Son’s enthusiasm for dealmaking, according to people close to his inner circle, has rebounded strongly in recent months and culminated in the prolific tech investor saying in June he was going back into “offence mode”.

During the pandemic and through the tech downturn in 2022, Son was in a self-declared “defensive mode”, during which new dealmaking was heavily curtailed and the company set about bolstering its cash position. After concentrating on Arm for several months in the run-up to its IPO, its successful listing has freed up Son to resume dealmaking with renewed vigour, according to people familiar with his thinking.

Son holds wider ambitions to establish his Japanese technology conglomerate as a credible competitor in the field of AI, including in the chips that power the technology.

At the moment, the big winner from AI has been Nvidia. The Silicon Valley-based company’s dominance in the market for AI chips has propelled its market value to more than $1tn this year. SoftBank took a stake in the chipmaker in 2017 but sold it in 2019.

Arm made AI a key part of its growth story to investors during this month’s IPO roadshow, as it looks to diversify from its core smartphone market and expand its reach in cloud computing.

However, analysts said Arm plays a much smaller role in the creation of large language models — the technology that powers ChatGPT — than Nvidia.

September 16, 2023