SoftBank joins OpenAI and Oracle in the AI charter unveiled by Trump
(Bloomberg) — SoftBank Group Corp., OpenAI and Oracle Corp. are forming a $100 billion joint venture to finance artificial intelligence infrastructure, an effort unveiled with President Donald Trump aimed at accelerating the development of the emerging technology.
“We are starting to have tremendous investments coming into our country at levels that no one has ever seen before,” Trump said at the White House on Tuesday.
The president was joined by SoftBank’s Masayoshi Son, OpenAI’s Sam Altman, and Oracle’s Larry Ellison. Sun, who will be head of the project, said the joint venture will deploy $100 billion “immediately” and aims to increase the amount to “at least” $500 billion to build new OpenAI infrastructure, including data centers and physical campuses.
SoftBank said initial equity will come from SoftBank, OpenAI, Oracle and Abu Dhabi government investor MGX, as construction of the first computing system begins in Texas. While SoftBank and OpenAI are the lead partners in the project, SoftBank will be responsible for financing and OpenAI will oversee operations, she added. It added that Arm Holdings Plc, Microsoft Corp and Nvidia Corp will provide the technology, along with Oracle and OpenAI.
Trump has signaled a broad approach to ensuring US leadership in artificial intelligence, with pledges to stimulate private sector investment by speeding up the permitting process and easing other regulations. These efforts will be directed by technology industry leaders who have joined his administration, including incoming AI crypto czar David Sachs and Elon Musk, who has emerged as one of the president’s closest advisers.
SoftBank shares jumped 9.7% in Tokyo on Wednesday, their biggest intraday rise since August, joining rises in Nvidia, Oracle and Arm. More than 400 stocks in the S&P 500 rose during US trading on Tuesday, with the index rising nearly 1%, amid expectations that Trump will unveil a new push to invest in artificial intelligence.
The president said he would use emergency declarations and executive actions to help facilitate construction projects, including through easier access to energy. During their remarks, Trump and the executives highlighted potential applications of artificial intelligence in health and other areas that would fuel American economic growth.
“AI holds incredible promise for all of us, and for every American,” Ellison said.
However, the actual scope of the new commitments remained unclear.
Son visited Mar-a-Lago just last month to announce that SoftBank would spend $100 billion during the next presidential term, and Tuesday’s announcement was drawn from those efforts, according to a person familiar with the matter. Some of the data centers being considered for the project were already under construction, and OpenAI had already broadly outlined plans to invest in AI infrastructure, Ellison said.
Two weeks before taking office, Trump announced a $20 billion investment from Dubai-based billionaire Hussain Sajwani to create new data centers across the United States. On Monday, shortly after being sworn in, he rescinded Joe Biden’s artificial intelligence barriers and signed a series of measures to boost energy development in the United States to meet the surge in energy demand from data centers.
But doubts remain about whether the initiative – which the companies have dubbed “Stargate” – actually represents a significant increase over previous plans. Son’s announcement last month raised questions about where SoftBank will get capital to fund its initiative. Bloomberg previously reported that SoftBank may tap expanders in a venture financing plan and cash in tens of billions of dollars to hundreds of billions of dollars. The Japanese technology investor had 3.8 trillion yen ($25 billion) in cash and cash equivalents on its balance sheet at the end of September.
Kirk Beaudry, an analyst at Astris Consulting, said SoftBank may need to pay between $25 billion and $30 billion for its stake in this particular project. “We expect they will be able to attract limited partners (most likely funds from the Middle East as they did with the Vision Fund) while asset sales are very likely to be on the agenda,” he said in a note to investors. “SoftBank can afford it.”
In the longer term, this could lead to calls for higher yields on future SoftBank bond issues – a key source of funding – due to increasing pressure on Japanese investor finances, said Takashi Fujiwara, head of fixed income and chief executive officer. Fund Manager at Resona Asset Management Company
Since winning a second term, Trump has ingratiated himself with Silicon Valley, where prominent executives, including Musk, Mark Zuckerberg, Jeff Bezos, Tim Cook and Sundar Pichai, joined him at the US Capitol for his swearing-in ceremony on Monday.
OpenAI’s Altman has spent months trying to form a global alliance between government and industry leaders to support boosting the supply of chips, power and data center capacity to support AI development. The company also alerted the Biden administration to the need for massive data centers that use as much energy as entire cities.
SoftBank previously invested in OpenAI’s recent fundraising round. Sarah Friar, OpenAI’s chief financial officer, told Bloomberg News last month that she was attracted to SoftBank because the company has “access to a lot of capital” and is willing to invest that money, including “in areas like energy and data centers.”
In an interview on Fox News late Tuesday, Ellison noted that the Stargate has been in the works “for a long time.” Construction is already underway on the first such data centers in Texas, and they will be turned over to Altman — and presumably OpenAI — “to start training their next model,” Ellison said.
“Obviously the size of this investment is huge,” Altman said. “And what I think this says about the potential progress of technology, at least what we all think it is, is huge.”
Cloud infrastructure providers such as Microsoft and Amazon.com Inc. and Oracle to expand computing capacity by creating new data centers. Oracle has already committed billions of dollars to building new data centers, and the company is expected to double its capital expenditures this fiscal year to more than $14 billion, due in large part to these projects.
– With assistance from Jackie Davalos, Rachel Metz, Min-Jeong Lee, and Takahiko Hyuga.
(Updates with post reaction, background and analyst comments)
Say Job City in Pakistan for today latest jobs opportunities in private and Govt departments. View all new Government careers collected from daily. sayjobcity.com
