SoftBank is currently engaged in discussions to invest between $15 billion and $25 billion in OpenAI, a move that would position it as the largest financial backer of the company that created ChatGPT. This partnership includes a significant new initiative in artificial intelligence infrastructure.
Recently announced, SoftBank and OpenAI plan to collaborate on a massive data center project called Stargate, with an anticipated investment of $100 billion, which could expand to as much as $500 billion over the next four years.
Reports suggest SoftBank could inject between $15 billion and $25 billion directly into OpenAI, in addition to a commitment exceeding $15 billion for the Stargate project. This investment indicates that SoftBank’s overall contribution to OpenAI could exceed $40 billion. The negotiations are ongoing, with the investment amount still being subject to change.
In exchange, OpenAI is expected to contribute around $15 billion to the Stargate initiative. SoftBank’s investment in OpenAI may potentially cover its portion of the commitment to the Stargate project.
This potential deal is seen as a strategic move by SoftBank founder Masayoshi Son, aiming to strengthen ties with OpenAI and its CEO Sam Altman, as he seeks a leadership role in the AI sector. If SoftBank invests $15 billion or more, it will become OpenAI’s largest individual investor, surpassing Microsoft’s initial investment in 2019.
Concerns have been raised by notable figures in tech, including Elon Musk, regarding the feasibility of funding the vast expenses associated with Stargate. However, projects of this scale have been endorsed by senior executives and the board at OpenAI.
Son has been pursuing a closer relationship with Altman over the years, as he aspires to be a pivotal player in advancing artificial intelligence, with ambitions of achieving ‘superintelligence’ that exceeds human cognitive capabilities.
Son’s interests in AI encompass various technologies from energy generation to robotics, and he remains confident in the potential of Arm, a UK-based semiconductor designer, to develop its own AI chips.
SoftBank’s potential financial engagement in Stargate and OpenAI has been under discussion for an extended period. If finalized, a $40 billion investment would rank among Son’s largest, surpassing the $16 billion placed in the troubled office-sharing company WeWork.
OpenAI has raised approximately $20 billion over several funding rounds, with significant backing from Microsoft leading to a valuation of $157 billion in 2024. SoftBank acquired a $2 billion stake in OpenAI the previous year.
Additionally, Altman is exploring options to reduce OpenAI’s reliance on Microsoft for computing resources, including developing proprietary chips and partnering with other cloud service providers. As part of the Stargate agreement, Microsoft has agreed to forfeit its position as OpenAI’s exclusive cloud service provider.
It is projected that about 20% of Stargate’s overall funding will come from equity, with the remainder sourced through loans secured against its assets and revenues—an approach typical for large infrastructure projects.
OpenAI’s board is also engaged in intricate negotiations to transition to a for-profit entity, a strategy aimed at enabling the company to attract tens of billions more in investor capital.
Both SoftBank and OpenAI have opted not to comment on these developments.
photo credit: www.ft.com
