SoftBank wants to become an AI investment leader, it is recommended to ask Nvidi

2024-06-30

Recently, the UK's AI industry has been in the news continuously. Amid the development of the UK's AI industry, a notable player is Japan's SoftBank.

Firstly, the UK AI chip unicorn Graphcore has been reported to be exploring the possibility of a capital acquisition due to facing a significant decline in revenue and layoffs. Graphcore focuses on designing chips that support artificial intelligence software and is committed to finding innovative solutions as an alternative to Nvidia's products, which has attracted the attention and investment of many investors. As of 2020, Graphcore's valuation had reached $2.8 billion, and it successfully raised $222 million in financing (once considered one of the most promising startups in the UK). However, the market valuation of the struggling Graphcore may have plummeted from a high of $2.8 billion to $500 million. Reports suggest that Graphcore is looking for new buyers, including Japan's SoftBank.

On the other hand, SoftBank led a $1.05 billion financing round for the UK AI autonomous driving startup Wayve. This is the largest financing ever obtained by a European AI startup to date. The round was led by SoftBank, with existing shareholders like Microsoft and new investors such as Nvidia following suit. Wayve did not disclose its latest valuation, but some media speculate that its latest valuation should have reached several billion dollars.

Headquartered in London, UK, and established in 2017, Wayve currently has about 300 employees. The company is dedicated to exploring AI in the automotive field. Since 2017, Wayve has applied some early results of neural network reinforcement learning to vehicles. The company deployed this system on the road for simulation and gradually expanded the scale, eventually achieving real driving in the traffic environment of central London.

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The $1.05 billion raised in this financing will be specifically used to promote the development and market promotion of Wayve's first embodied intelligent autonomous driving software for mass-produced vehicles. The software not only covers the basic L2+ advanced intelligent driving system but also aims to build a complete autonomous driving software system to achieve the goal of full autonomy.

Wayve's AV2.0 autonomous driving system has a core technical concept similar to Tesla's FSD (Full Self-Driving) system, which also adopts an advanced end-to-end model design. By replacing the perception, planning, and control links in the traditional autonomous driving architecture with neural networks, it has achieved an innovative breakthrough in the traditional technical path. Wayve's autonomous driving system does not rely on high-precision maps. It can directly output driving based solely on the original input data from sensors, processed accurately by the end-to-end model.

There are also media reports that SoftBank's Arm plans to mass-produce AI chips in 2025. However, Arm responded to this matter by saying, "Arm does not comment on any rumors and speculation." Even without an official response from Arm, Masayoshi Son's ambition for AI has already been put on the table.

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SoftBank is about to start the "AI Revolution"Not long ago, SoftBank Group announced plans to use AI semiconductors as a breakthrough to expand its business into data centers, robotics, power generation, and other industries. The investment is expected to reach a scale of up to 10 trillion yen (approximately 464.09 billion yuan).

When it comes to AI investment, since 2012, SoftBank of Japan has been acquiring shares of artificial intelligence companies around the world. In 2017, Masayoshi Son established the SoftBank Vision Fund to invest in various startups and innovative companies in the technology field. The Vision Fund has two phases, with each phase raising about 100 billion US dollars, covering investment areas such as AI, robotics, autonomous driving vehicles, biotechnology, fintech, and more.

In July 2020, SoftBank, the University of Tokyo, and Yahoo Japan (now LY Corporation) jointly established The Institute for AI and Beyond as a world-class AI research institution and began joint research activities. In March 2023, a preparatory company was established to research and develop domestic large language models (LLMs).

The first phase of the Vision Fund invested in more than 70 world-renowned companies such as ARM, Uber, DiDi, Toutiao, WeWork, and Cruise, covering various fields such as large-scale travel, fintech, and healthcare. The second phase of the Vision Fund was announced in July 2019 and has received a commitment of 108 billion US dollars. SoftBank itself plans to invest 38 billion US dollars in the fund, and other companies participating in the fund include Foxconn, Apple, Microsoft, Mizuho Bank, Standard Chartered Bank, and more (the list is still expanding). SoftBank stated that the second phase of the Vision Fund will mainly be used to invest in AI technology.

Masayoshi Son's enthusiasm for AI stems from his belief in the "singularity" theory. (The "singularity" concept was proposed by futurist Ray Kurzweil, referring to the moment when computer intelligence is compatible with human brain intelligence. According to Kurzweil's prediction, the "singularity" will arrive in 2040.)

At a forum in July 2023, Son emphasized: "(AI that surpasses human intelligence) can help us solve problems like a crystal ball predicting the future, and Japan must create a crystal ball that shines at the center." In a speech in October 2023, Son said that AI will become much more powerful than all human intelligence in the next ten years, "either use AI or be left behind by AI."

Son also invited executives of overseas partner companies to his villa for a "night talk" on the issue of investment in the AI semiconductor field.

AI is a big cake, and SoftBank is not the only one eyeing it. In the past year, as AI has become the hottest topic in the technology field, NVIDIA, which has become a hotshot in the field, is also laying out in the AI field.

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NVIDIA's Absolute Competitiveness in the AI FieldNVIDIA's advantages in the AI field come from two aspects: the first is the well-known computing power, and the other is relatively low-key, which is that NVIDIA has invested in many AI-related fields. NVIDIA mainly invests in three ways: first, through NVIDIA's corporate investment department, in 2023, the department has announced 14 investments, including investments in chip optics company Ayar Labs, cloud vendor CoreWeave, open-source model library company Hugging Face, etc.; second, it is led by Siddeek, who once served as a SoftBank investment expert, and the venture capital department NVentures invests, mainly in the direction of "AI+ field"; third, through NVIDIA's startup acceleration program to provide support to startups and help them connect with venture capital.

In terms of computing power, NVIDIA's competitiveness needs no further explanation. In the Top500 products of supercomputing in June 2024, NVIDIA's products were used in 171 supercomputing devices. In the current explosion of the large model market, the consensus in the industry is that whoever gets NVIDIA gets the world.

Being both the financier behind AI companies and the upstream supplier that AI companies rely on for survival, NVIDIA is becoming the "invisible king" of the AI market.

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SoftBank VS NVIDIA: Who can be named the "Singularity" moment

Before comparing the potential of the two companies in the AI track, an interesting fact is that SoftBank was once a shareholder of NVIDIA, but at the beginning of 2019, Masayoshi Son sold about 5% of NVIDIA's shares at a price of about $3.6 billion. And now when looking at NVIDIA's AI investment actions, you can also see the names of former employees of SoftBank.

Although Masayoshi Son does not have the advantage of Huang Renxun in computing hardware, he is not necessarily without a chance. One of SoftBank's trump cards in hardware is ARM. Once upon a time, NVIDIA also tried to acquire ARM, but was forced to terminate due to opposition from many companies. Subsequently, ARM chose to go public in the United States.

ARM accounts for nearly half of SoftBank Group's total assets. Although it has gone public, SoftBank still holds 90% of the shares of this chip design company. ARM's designs are widely used in smartphone chips and are increasingly applied in the AI field. ARM's net profit in the three months ending in March increased significantly, and the surge in revenue was partly due to increased demand for chips related to AI and data centers. Thanks to investors' large purchases of ARM shares, although SoftBank has been losing money for three consecutive years, as of March 31, 2024, SoftBank's net asset value reached $183.6 billion, an increase of $48 billion from three months earlier.

On February 17, 2024, foreign media reported that Masayoshi Son wanted to raise $100 billion for AI chip companies to compete with NVIDIA. The report said that Masayoshi Son is seeking up to $100 billion in funding for a chip company. The project is directly led by Masayoshi Son and named after the Japanese god of creation and life, "Izanagi," because Izanagi contains the initials of general artificial intelligence (AGI). Insiders revealed that Masayoshi Son hopes this company will complement ARM. At that time, foreign media said that the plan Masayoshi Son was considering was that SoftBank would provide $30 billion, and the other $70 billion might come from institutions in the Middle East. Insiders said that although Masayoshi Son and Open AI founder Sam Altman had negotiated on cooperation and financing in the field of semiconductor manufacturing, Izanagi is currently independent of Altman's AI chip project.In April 2024, Japanese media reported that SoftBank Group planned to establish a new division within ARM, with SoftBank Group holding about 90% of the shares. The development funds are expected to reach several hundred billion yen, and production will be entrusted to contract manufacturers such as TSMC. Negotiations have been conducted with TSMC and others, and production quotas have been determined. The core content of this division is to develop and produce AI chips that can efficiently process large amounts of data.

So far, the details of how SoftBank's AI projects will be financed or where the funds will be used have not been clarified, and the project may further develop. In summary, Masayoshi Son is constantly considering various investment concepts and strategies to enhance Arm's influence in the artificial intelligence market and has been exploring different types of next-generation chips.

Masayoshi Son also has a more "indirect" strategy: SoftBank plans to build data centers using self-developed semiconductors in Europe, America, Asia, and the Middle East after 2026. Data centers require a large amount of electricity, and the demand for power generation is increasing. Therefore, SoftBank Group will also enter the power generation field. While trying to utilize new generation technologies such as nuclear fusion power generation, plans to build power generation infrastructure mainly based on renewable energy are being made. SoftBank's Chief Financial Officer, Yoshiteru Hoshino, said that SoftBank hopes ARM and other companies invested by SoftBank can create a new AI ecosystem.

Perhaps at present, SoftBank and NVIDIA cannot be called "rivals" in the AI battlefield. On the road of AI investment, there will be more and more companions, who will walk in the front? The journey of Masayoshi Son and Huang Renxun is still ongoing.

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