- SoftBank looks set to get a slice of OpenAI.
- Reports suggest the Japanese conglomerate will invest $500 million into the ChatGPT maker.
- For SoftBank, the investment will form just one part of a much wider AI strategy.
If everything goes to plan, OpenAI will end the week as a $150 billion giant at the center of the AI industry. It will also end the week with another reputation: a new piece in the grand puzzle being solved by Masayoshi Son.
The billionaire founder of Japanese conglomerate SoftBank looks set to add Sam Altman's startup to his sprawling portfolio following reports that his company will make a massive $500 million bet on the ChatGPT maker.
The funding, part of a $6.5 billion investment round, which Bloomberg reported on Wednesday had closed, will cap a new era for Sam Altman's company. It follows a tumultuous few months in which a string of high-profile departures has brought its status as Silicon Valley's hottest AI startup into question.
But for its new expected backer from Tokyo, the funding is about something much bigger.
Son, a technology evangelist who has made and lost billions of dollars since founding SoftBank as a software distribution business in 1981, talked up the advancement of AI as his life's mission long before ChatGPT arrived in late 2022. He doubled down on this sentiment at his company's annual meeting in June, telling shareholders that "this is what I was born to do."
So, while a $500 million bet will give SoftBank a stake in one of Silicon Valley's buzziest companies, it is worth considering how it fits into the AI picture of tech's widest-eyed visionary.
Masayoshi Son's AI vision is ambitious
To understand Son's grand AI ambitions, it's worth first zooming out to see how SoftBank currently maps out AI investment opportunities.
In a presentation to investors this year, seen by Business Insider, SoftBank divided its interests in AI into three distinct layers. First, there's the application layer involving "the consumer 'super apps' used every day," like ChatGPT. Then, there's the infrastructure layer, which is all about tools to gather and analyze data. Finally, there's a hardware layer, which includes chips, data centers, and robotics.
In OpenAI, SoftBank looks like it'll finally have a major investment in a foundation model AI company — a company building the large language models sitting behind consumer-facing apps like ChatGPT and Microsoft Copilot. Think of it as floating somewhere between layers one and two.
SoftBank has made a previous effort to get ahead with investments in the first two layers through its first Vision Fund, a $100 billion investment vehicle launched in 2016 with backing from Middle Eastern sovereign wealth funds, and its second Vision Fund launched in 2019.
The second fund, set to back OpenAI, invested in AI search engine startup Perplexity at a $3 billion valuation in June. Judging by Son's previous comments, the hundreds of companies backed by the funds will eventually find a way to complement one another. That hasn't gone completely to plan.
Performance across the funds has wavered. As of June, Vision Fund 1's gains were $21.7 billion, while Vision Fund 2 losses totaled $22.9 billion. Most of the investments also came before the generative AI boom that started after ChatGPT's launch, meaning billions of dollars of investment has gone to companies not exactly tailored to the tech of the moment.
So it's become clear that Son's focus has fallen on the other part of his AI investment stack.
In September 2023, Son took a big step forward in the hardware layer by successfully relisting Arm. The chip designer, which SoftBank bought for $32 billion in 2016, has positioned itself as a key player in the AI space, helping it reach a market capitalization of over $142 billion.
It explains in part why, in February, a report emerged suggesting Son had been busy courting investors in the Middle East to raise up to $100 billion for a venture that would help him go even bigger on chips.
According to Bloomberg, the SoftBank founder has codenamed the secretive project Izanagi — the deity of creation in Japanese mythology. He reportedly picked that name, in part, because it contains the initials for artificial general intelligence, or AGI, a form of AI that could rival human intelligence or even surpass it.
What such a chip venture would look like is unclear. Son could look to compete on chip design by building a venture to rival Nvidia, the $2.9 trillion chip giant that his company lost huge gains on after dumping its near 5% stake back in 2019. The venture could also support plans for Arm, which SoftBank retains a 90% stake in, to get into its own AI-specialized chip venture in 2025, per Nikkei.
In July, the company acquired Nvidia rival Graphcore in a deal that the startup's CEO Nigel Toon said would make it "part of the delivery behind a very grand vision."
Alternatively, he could be looking at getting into the manufacturing and data center arena. A report from The Wall Street Journal in February suggested OpenAI's Altman had met with Son and others to discuss ambitious plans to build new chip manufacturing plants, data centers, and more to support AI's advancement.
Of course, like OpenAI, Son's ultimate ambition in AI is to realize AGI.
In a new book on Son, former Financial Times editor and author Lionel Barber recalls a two-hour conversation he had with the SoftBank founder in late 2023 at the company's Tokyo headquarters. According to Barber, Son said he'd like to be remembered as "one of the foundation stones of AGI."
"I may not be the full story of AGI, but one of the foundation stones of AGI," Son is reported to have said. "AGI is the only thing I care about."
But while OpenAI races to build models that might inch humanity closer to AGI, it's clear that Son wants to get his hands on all the pieces needed to help it achieve that goal.