SoftBank Group, led by CEO Masayoshi Son, is advancing into the artificial intelligence (AI) sector with its subsidiary ARM Holdings, which is set to develop and launch AI chips by 2025. The initiative is part of a substantial $64 billion investment aimed at establishing the company as a major player in the AI technology field.
ARM Holdings, which commands over 90% of the market share in mobile processors, is planning to set up a specialized AI chip division in the UK. The project is expected to move from the prototype phase in spring 2025 to full-scale mass production by autumn of the same year. The development and initial production costs, which will amount to hundreds of billions of yen, are to be financed jointly by ARM and SoftBank. There is a potential future plan to spin off the AI chip business under SoftBank's management once a stable mass-production system is established.
Strategic Partnerships and Market Expansion
The production of these AI chips will be contracted out to manufacturers, with SoftBank currently negotiating with Taiwan Semiconductor Manufacturing Corp (TSMC) and other potential partners to ensure adequate production capacity. This strategy is indicative of SoftBank's proactive approach to expanding production capabilities in response to the increasing demand for advanced AI chips.
Masayoshi Son envisions a future where AI surpasses human intellectual capabilities, addressing complex challenges across diverse sectors such as shipping, pharmaceuticals, finance, and manufacturing. The AI chips in development are expected to play a crucial role in processing the extensive data required for these applications.
Furthermore, ARM's move into AI chips is set to enhance its presence in the data center market, which has traditionally been dominated by Nvidia chips. With own AI chips, ARM could provide more specialized solutions and lessen its reliance on external chip suppliers like Nvidia.
Financial Outlook and Broader Implications
The AI chip market is experiencing rapid growth, estimated at $30 billion in 2023 and projected to exceed $100 billion by 2029, eventually reaching over $200 billion by 2032. As Nvidia faces challenges in meeting this growing demand, SoftBank is positioning itself to capture a substantial market share with its upcoming AI solutions.
In addition to developing AI chips, SoftBank's strategy includes expanding into data centers, robotics, and the energy sector. Plans are in place to build data centers in the U.S., Europe, Asia, and the Middle East, which will be powered by these AI chips and supported by renewable energy from new wind and solar fARMs.
SoftBank has also announced partnerships, such as a robotics joint venture with a unit of Saudi Arabia's sovereign wealth fund, and is actively engaging in mergers and acquisitions to enhance its AI capabilities.
As SoftBank prepares to announce its fiscal 2023 earnings, the market is anticipating confirmation of the company's financial recovery from a nearly 1 trillion yen loss the previous year. This financial improvement is essential as it supports the group's ability to fund its ambitious AI and technology projects.
This strategic shift marks a significant phase for SoftBank, reminiscent of its previous transitions from internet services to mobile communications, with AI chips at the forefront.
