Softbank – Too Much, Too Fast?

On March 19th, SoftBank group had agreed to the acquisition of Ampere Computing for USD6.5mn, hoping the deal would materialise later in 2025. It plans to finance this transaction using borrowings from financial institutions, including Mizuho Bank. After SoftBank acquired Arm in 2016 and Graphcore in 2024, with Ampere, it aims to solidify its presence in AI infrastructure even further. Softbank has leveraged inorganic growth to its advantage and has strategically positioned itself in many industries, but can it continue to do so?    

Before Softbank decided to enter AI, it was a national leader in telecommunications and grew even faster with the development of the internet. Softbank introduced Japan to Yahoo and decided to enter mobile communications as well. From becoming an exclusive provider of the iPhone 3G in Japan, it later grew to acquire US-based mobile telecommunications company, Sprint, to expand its customer base beyond Japan. Finally in 2014, Softbank group made its debut into AI and robotics through introducing its first humanoid robot that could recognise human faces and emotions. 

The Appeal for Acquiring Ampere Computing 

Ampere Computing is a startup based in Santa Carla, California and founded by Renée James. Renée James was a former president in Intel and is current CEO and founder of Ampere. The company focuses on building large processors for cloud computing and AI centres.  

Ampere specialises in making Arm based processors or more specifically CPUs and as Softbank owns Arm, the expected synergies are large. Ampere’s Altra, its flagship product, has put pressure on Intel and AMD as it has accessed greater levels of efficiency using Arm’s designs. In the long term, Softbank hopes to use this and create a strong moat against formidable rivals like Nvidia. 

A wider topic to address from this is whether Softbank’s inorganic growth business model can continue to flourish with its investments in AI. Because of the uncertainty surrounding how AI is expected to grow, valuations of technological companies that do specialise in this could be highly speculative, creating a greater risk for Softbank. Its strategic partnerships in the past with Yahoo and Alibaba has been a huge contributor to its success and some may argue that it would not have been at this level without it. Whether this can continue with Arm, Graphcore and upcoming Ampere is influenced by many factors.  

One of those factors is the political influences playing a considerable role in AI infrastructure. Masayoshi Son, CEO of Softbank, had announced alongside Trump that they are planning to invest almost USD100bn in projects in the US, hoping to reap 100,000 jobs in the sector. Additionally, Son, Chat GPT’s Sam Altman and the Trump administration earlier this year announced Stargate, a project worth USD 500 billion on AI infrastructure. While the strong political forces may act as a tailwind, one might ask where this development might be without such forces and what would happen if such political forces were withdrawn.  

Critics also believe that Son could be taking substantial bets amidst the worrying current financial conditions. Son had created Vision funds, a venture capitalist fund that allowed SoftBank to take large stakes in companies that have potential to grow and outperform the market. While some companies did well, Softbank had also faced considerable losses from its vision fund. Just recently, for its third quarter in its 2024 fiscal year, it reported a $2.4bn loss. This was explained by large valuation drops in companies that were in their vision fund like Didi, a Chinese ride hailing company and South Korean Coupang group.  

This is not the first time that the vision fund faced such losses. In 2018, Softbank had taken a $7.6bn stake in Uber but in 2019, Softbank faced an unrealised loss of approximately 195.3mn Yen due to Uber reporting extreme losses in the same year.  

While Softbank possesses ambitious goals for AI infrastructure growth, and while the acquisition of Ampere could generate great synergies within the group’s business portfolio, concerns lie in whether the financial reality can match such expectations in the long term.