SoftBank Fund: All you need to know about Masayoshi Son’s new $100 billion AI venture ‘Izanagi’

SoftBank Group Corporation founder Masayoshi Son is reportedly aiming to secure up to $100 billion for a new artificial intelligence (AI) chip venture, codenamed Izanagi, as per a Bloomberg report.

The initiative is intended to compete with the current leader in the AI chip space — Nvidia Corporation. and contribute to the production of essential semiconductors for AI applications, Bloomberg said citing sources.

Representatives of SoftBank and Arm have declined to comment on the matter.

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Izanagi: Aiming to Build an AI Chip Powerhouse

The project, known as Izanagi, represents Son’s significant move into the AI arena as SoftBank scales back its investments in start-ups. Son envisions establishing a company that complements chip design unit Arm Holdings Plc, to build a robust AI chip powerhouse, the report said.

SoftBank, a Japanese conglomerate, owns approximately 90 percent of the shares in the British chip designer Arm, according to the London Stock Exchange Group (LSEG).

The $100 billion total potential funding structure for Izanagi includes $30 billion from SoftBank, with an additional $70 billion potentially sourced from Middle Eastern institutions, sources told the publication.

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Implications of Success: A Major AI Investment

If successful, the Izanagi chip project could become one of the largest investments in the AI sector since the emergence of ChatGPT, surpassing Microsoft Corporation’s recent $10 billion investment in OpenAI.

Son chose the name Izanagi after the Japanese god of creation and life, incorporating the initials for artificial general intelligence (AGI).

Details regarding how the project will be funded and where the allocated funds will be directed remain unresolved, and the project may undergo further evolution. Son, known for exploring various investment ideas, is focused on strengthening Arm’s presence in the AI market and exploring next-generation chip possibilities, the report said.

SoftBank, recognized for its substantial investments in technology, has a history of making significant bets on start-ups. Despite facing challenges with plummeting valuations in the aftermath of the pandemic, SoftBank adopted a defensive strategy to navigate through the period of higher interest rates, which diminished investor risk appetite.

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Notably, SoftBank recently returned to profitability for the first time in five quarters, benefiting from an upturn in the performance of its portfolio companies.

Son is now redirecting efforts towards Arm, seeing an opportunity to create a significant company akin to the Magnificent Seven stocks. SoftBank, with ¥6.2 trillion ($41 billion) in cash and equivalents as of December 31, is well-positioned for this venture, thanks to a rebound in global equity markets.

Collaboration and Arm’s Role

While discussions with OpenAI‘s Sam Altman about semiconductor manufacturing have occurred, Izanagi is distinct from Altman’s ambitions. Son, spearheading the project directly, sought involvement from leaders in another AI company, but they declined.

Arm CEO Rene Haas, as a SoftBank board member, is advising Son on the project, emphasising the potential of AI-related investments using Arm’s chip designs.

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The Chief Financial Officer of SoftBank, Yoshimitsu Goto, stated in February 2024 that Arm would become crucial to AI, referring to the chip designer as “the core of the core” within SoftBank’s group of companies. Executives at Arm reported earlier this month that there is a robust demand for their central processors, particularly in conjunction with Nvidia’s chips for AI tasks in data centres.

Son’s unwavering enthusiasm for AGI is leading Project Izanagi, and despite past changes in direction, the billionaire remains convinced that AGI will become a reality within the next 10 years, the report added.

In October, he told a large group of Japanese enterprise clients to adopt AI or get left behind. “AGI is what every AI expert is after. But when you ask them about a detailed definition, a number, the timing, how much computing power, and how much smarter AGI is than human intelligence, most of them don’t have an answer. I have my own answer: I’m convinced AGI will be real in 10 years,” he said.

(With inputs from Bloomberg and Reuters)