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Softbank subsidiary Arm to step into AI chips development, report says

Softbank Arm

SoftBank Group’s Arm, a leader in chip design architecture, is reportedly venturing into the development of artificial intelligence chips. The company aims to launch its first AI chips next year, marking a significant step in SoftBank’s ambitious $64 billion push towards becoming an AI powerhouse, Nikkei Asia reported on Sunday.

The U.K.-based company will establish a dedicated AI chip division with the goal of building a prototype by spring 2025. Subsequently, the commencement of mass production, to be entrusted to contract manufacturers, is slated for the fall of the same year.

Arm is poised to bear the initial development costs, projected to soar into the hundreds of billions of yen. Softbank could shoulder the additional funding needs. Furthermore, there could be plans to potentially spin off the AI chip business under the SoftBank umbrella once a robust mass-production infrastructure is established. Negotiations are already underway with manufacturing giants such as Taiwan Semiconductor Manufacturing Corp. to secure adequate production capacity.

Meanwhile, this move comes as the demand for AI chips, crucial for processing massive amounts of data, is projected to experience explosive growth. SoftBank sees an opportunity to capitalize on this demand, challenging current market leader Nvidia. The Group’s financial health is projected to be strong, with a expectations of significant improvement in earnings for the recently concluded fiscal year. This financial muscle would allow the company to invest heavily in this new venture.

Softbank also plans to build data centers equipped with Arm’s homegrown AI chips in the United States, Europe, Asia and the Middle East as early as 2026, with potential expansion into power generation through wind, solar, and even next-generation fusion technology. While, the Group’s latest foray aligns with its chief executive officer Masayoshi Son’s faith in the power of AI, the success of this ambitious plan hinges on Son’s ability to navigate the inherent risks associated with it.

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