What’s going on here?

SoftBank set a multi-billion-dollar target for investments into AI, determined to give its Vision Fund something to focus on.

What does this mean?

SoftBank is preparing to push nearly $9 billion into AI investments. The cash will come from the famed SoftBank Vision Fund, which has struggled to find an opportunity that lives up to its successful purchase of UK-based chip designer Arm from many moons ago. So now, the Vision Fund is selling off assets to focus on what’s worked before: chips and high tech. SoftBank has even said that it could end up spending more than the $9 billion target, so long as the right deal comes along. That shouldn’t be hard to find, either. SoftBank has $180 billion in net assets, reassuring any lenders that they’ll get their money back.

Why should I care?

Zooming out: It’s a group effort.

SoftBank has pegged areas like data centers and power generation for its investments, since they have the potential to benefit from the rise of AI and come in handy for Arm. That does mean, however, that SoftBank’s pitting itself against the likes of Microsoft, Amazon, and Google, which have committed billions to AI-focused partnerships. That said, Japanese-based SoftBank has a tailwind: Japan’s low

interest

rates make it cheaper for the company to raise funds.

Source: Google Finance

The bigger picture: Talk about strong-arming.

Arm’s market value has hit the roof since going public last year, reaching the lofty heights of about $120 billion. That means SoftBank’s 90% stake in the chipmaker is worth more than the whole investment company’s business. To keep that up, SoftBank aims to launch an Arm AI chip and a large language model – a Japanese rival to OpenAI’s ChatGPT – this year. But it risks becoming a little fish in a big pond: Statista Market Insights data predicts that Japan’s AI market will be worth some $13 billion by 2030, roughly 17 times bigger than last year.

Source: Statista Market Insights