Japanese SoftBank reportedly discussed collaborating with Intel to produce artificial intelligence (AI) chips to compete against Nvidia, but negotiations have currently broken down.
According to multiple anonymous sources cited by major foreign media on the 14th (local time), SoftBank, led by Chairman Masayoshi Son, held talks with Intel regarding the matter, but Intel failed to meet SoftBank's demands, the reports said.
SoftBank holds a 90% stake in semiconductor design company Arm. Last month, it acquired UK semiconductor startup Graphcore. The plan was to create synergy through a partnership with Intel and develop AI chips to rival Nvidia.
There has been criticism that if Arm enters semiconductor manufacturing, it could damage its relationship with Nvidia, a key customer. However, sources said SoftBank believes this level of risk is worth taking.
If SoftBank produces AI chips using Intel’s U.S. foundry (semiconductor contract manufacturing) facilities, it could also utilize U.S. government subsidies under the semiconductor law. However, negotiations between the two sides have collapsed over the past few months. SoftBank blamed Intel for being unable to supply chips at the scale and speed they desired.
Subsequently, Intel’s stock plunged after it reported second-quarter earnings on the 1st that fell short of market expectations. The company is currently undergoing major restructuring, including cutting 15% of its workforce to reduce costs. It also sold 1.18 million shares of its Arm stake in the second quarter.
SoftBank is now focusing its negotiations on Taiwan’s TSMC, the world’s largest foundry, instead of Intel. However, sources said no agreement has been reached as TSMC is also struggling to fulfill orders from existing customers, including Nvidia.
Furthermore, even if SoftBank reaches an agreement with TSMC, it will need to find additional partners to secure semiconductor design expertise currently held by Intel.
Sources noted that given the limited number of companies capable of producing advanced AI chips, there is still a possibility that negotiations between Intel and SoftBank could resume.
Chairman Son plans to spend billions of dollars to make SoftBank a central player in the AI boom, investing in chip production, software, and power supply for data centers.
He is reportedly trying to secure part of the investment funds by contacting big tech companies such as Google and Meta to receive pre-orders.
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