This is more than idle talk for Japan’s second-richest man. SoftBank’s recent deals include the $32 billion acquisition of ARM Holdings Plc, the chip designer that Son believes will play a key role in the development of artificial intelligence, and a $1.2 billion group-led investment in satellite startup OneWeb Ltd. The Japanese telecoms and Internet company is also in the process of creating a $100 billion Vision Fund with Saudi Arabia and other backers that would make Son one of the world’s biggest technology investors.
SoftBank Group expects to invest at least USD 25 billion over the next 5 years. SBG has concluded a non-binding memorandum of understanding (“MOU”) on October 12, 2016 with the Public Investment Fund of the Kingdom of Saudi Arabia (“PIF”), under which PIF will consider investing in the Fund and becoming the lead investment partner, with the potential investment size of up to USD 45 billion over the next five years. In addition, a few large global investors are in active dialogue to join SBG and PIF to participate in this Fund. The overall potential size of the Fund can go up to USD 100 billion.
“With the establishment of the SoftBank Vision Fund, we will be able to step up investments in technology companies globally. Over the next decade, the SoftBank Vision Fund will be the biggest investor in the technology sector. We will further accelerate the Information Revolution by contributing to its development.”
ARM, already a dominant supplier of semiconductors for mobile phones, will ship 1 trillion chips for devices including cars, TVs and even shoes in the next 20 years, Son said. He said the U.K. tech firm would be increasing its focus on chip security, after revealing video footage of ARM engineers hacking a 4x4 car, and that one ARM engineer managed to hack 1.2 million security cameras during his lunchtime.
SoftBank’s investment in OneWeb will help the Florida-based startup launch 2,000 satellites to offer high-speed global connectivity, he said.
SoftBank is aiming to close the first round of investment in its technology Vision Fund by the end of this month, people familiar with the matter have said. The initial investments will likely include $45 billion from Saudi Arabia and $25 billion from SoftBank, as well as $1 billion each from Apple Inc., Qualcomm Inc. and Oracle Corp. Chairman Larry Ellison, they said. The initial round is likely to exceed $80 billion and the timing of the closing may still change, said one of the people.
“We believe the singularity is inevitable and all businesses will be redefined as computers overtake humans in intelligence,” Son said at an earnings briefing in November.
SoftBank may announce deals within days of the fund’s first closing, one of the people said. The company has had preliminary discussions to make an investment in WeWork Cos., a New York-based startup for sharing office space, said the people, cautioning a deal may not be finalized. WeWork, with more than 140 locations around the world, was most recently valued at $16 billion.
It should be noted that Google has $14 billion in research and development budget. Google R and D funds are growing by 10% or more each year. Google is also invested into the Spacex plan to create a global satellite network. Google, Baidu, Facebook, IBM all have very large Artificial intelligence budgets. Softbank Vision fund will be large but not completely out of the range of other strong competitors.
SOURCES - Bloomberg, Softbank, Google Finance