SoftBank once negotiated with Intel to cooperate in producing AI chips, joining forces to compete against NVIDIA

The cooperation between SoftBank and Intel has collapsed, but the big adventure continues.

According to media reports, SoftBank had discussions with Intel about collaborating on producing AI chips to accelerate SoftBank's chip design for its flagship company Arm, combined with the production of the recently acquired Graphcore, in order to create products that can rival Nvidia's AI chips and challenge Nvidia's dominant market position.

However, the negotiations between SoftBank and Intel did not yield results. Currently, SoftBank is actively seeking support from large US tech companies and is in talks with TSMC for cooperation.

Collapse of SoftBank and Intel Talks

SoftBank CEO Son plans to invest billions of dollars to put SoftBank at the center of the artificial intelligence boom. Utilizing Intel's US manufacturing plants to produce AI chips may enable SoftBank to access funding provided by the Biden administration's "Chip Act," which supports semiconductor production in the US.

On the other hand, Intel CEO Pat Gelsinger is trying to bring Intel back to a leading position in global chip manufacturing. In March, Intel received nearly $20 billion in funding and loans from the US government, and subsequently made significant investments to catch up with competitors TSMC and Samsung, and to win new important customers for its foundry business.

However, the negotiations between the two companies, which should have been a perfect match, failed. SoftBank turned to negotiate with TSMC, the world's largest chip manufacturer, but an agreement has not been reached yet.

Intel was a cornerstone investor in Arm's initial public offering in September last year, and this week disclosed that it sold all of its Arm shares in the second quarter of this year, raising approximately $150 million.

SoftBank attributed the failure of the negotiations to Intel, stating that Intel could not meet SoftBank's requirements for chip production volume and speed. However, SoftBank also indicated that the number of chip manufacturers capable of producing cutting-edge AI processors is limited, so negotiations between SoftBank and Intel may restart.

SoftBank's Big Adventure Continues

Son is pitching his ambitious plan to the world's largest tech companies such as Google and Meta, covering various aspects from chip production and software development to providing power for data centers.

In addition, Son still plans to design and produce an AI chip, with a prototype possibly completed within a few months. SoftBank recently acquired the struggling UK AI chip manufacturer Graphcore because the company has expertise in chip production.

It is reported that establishing a new chip production business requires a large amount of capital, and part of the funding may be raised by securing orders in advance from large tech companies.

A key focus of Son's plan is that SoftBank can help counter Nvidia's dominant market position. Earlier this year, Nvidia briefly became the world's most valuable company, and its AI chips are the most popular products in the market, supported by the widely used software platform Cuda that underpins Nvidia's dominant position.

Some investors question whether bringing Arm into the chip production field may harm SoftBank's relationship with Nvidia, a key customer of SoftBank. However, SoftBank believes that this risk is worth taking. SoftBank's latest adventure could cost as much as several billion US dollars, but the total investment amount cannot be accurately estimated at this time