SoftBank held negotiations with Intel about the production of a new AI chip to develop a competitor to Nvidia's market-leading chips. However, the project failed after Intel had difficulties meeting the requirements of the Japanese technology company, according to people familiar with the matter. The talks could have accelerated SoftBank's plans to combine the chip designs of its subsidiary Arm with the production expertise of the recently acquired company Graphcore.
SoftBank's CEO Masayoshi Son plans to invest billions of dollars to position the company as a key player in the AI sector. The goal is to create an alternative to Nvidia's dominant AI chips. Son's ambitious project, which he has presented to major technology companies, includes the production of chips, software development, and the provision of energy for data centers that will house the processors.
The discussions with Intel failed in recent months, even before the US chip manufacturer announced drastic cost-cutting measures and extensive layoffs in August. SoftBank is now focusing on negotiations with Taiwan Semiconductor Manufacturing Co. (TSMC), the world's largest contract manufacturer of chips.
A potential deal with Intel would have allowed SoftBank to benefit from the U.S. Chips Act funding to expand domestic semiconductor production. However, SoftBank blamed Intel for the failure of the talks and complained that the chipmaker was unable to deliver the required volumes and production speeds. Despite the uncertainties, there could be a resumption of talks as few manufacturers have the necessary capacity to produce advanced AI processors.
Despite the failed talks, Son continues his efforts to gain support from major technology companies like Google and Meta. These companies could help finance the project through pre-orders. Another part of Son's plan aims to break Nvidia's market dominance in the AI sector.
Critics see the risk that SoftBank's involvement in chip production could damage the relationship with Nvidia, an important Arm customer. Nevertheless, Son is determined to develop his own AI chip and, according to insiders, could present a prototype in just a few months.
The production capacity remains a crucial issue. SoftBank is in talks with TSMC but has yet to reach an agreement, as the Taiwanese manufacturer is already struggling to meet the demand from existing customers, including Nvidia. If negotiations with TSMC are successful, SoftBank may need another partner to replace the design expertise offered by Intel.
The costs for Son's latest venture could run into billions, but insiders warn against citing specific figures at this time. There have already been exploratory talks with investors from Saudi Arabia and the United Arab Emirates, but no agreement has been reached so far.
Intel, a former major investor in Arm's IPO last September, has recently announced that it sold its entire stake in the British chip designer in the second quarter of this year, bringing in about 150 million dollars. The company is currently struggling with financial difficulties and has significantly revised its total annual revenue for 2023 downward.
