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SoftBank held talks with Intel about producing a synthetic intelligence chip to compete with Nvidia. However, the plan failed since the US chipmaker couldn’t meet the Japanese company's requirements.
Negotiations for a partnership with Intel, which haven’t been previously reported, have accelerated SoftBank's efforts to mix the chip designs of its crown jewel Arm with the manufacturing expertise of its recent acquisition Graphcore, making a competitor to Nvidia's market-leading AI chips, people acquainted with the matter said.
SoftBank CEO Masayoshi Son wants to take a position billions of dollars to place the Japanese company at the middle of the AI boom. His ambitious plan, which he presented to the foremost technology firms, includes the production of chips and software in addition to the ability supply of the information centers through which the processors will likely be housed.
Talks with Intel broke down in recent months, just before the U.S. chipmaker announced drastic cost-cutting plans in early August, including hundreds of layoffs, these people said. SoftBank is now specializing in talks with Taiwan Semiconductor Manufacturing Co, the world's largest contract chipmaker.
By using Intel's U.S. foundry to supply AI chips, SoftBank could have potentially used funds from the Biden administration's Chips Act to spice up domestic semiconductor production.
Intel CEO Pat Gelsinger is attempting to bring the Silicon Valley company back to the forefront of world chip manufacturing. After receiving nearly $20 billion in funding and loans from the U.S. government in March, Intel is investing heavily in an try to meet up with rivals TSMC and Samsung in chip manufacturing and to win essential recent customers for the corporate's foundry business.
SoftBank blamed Intel for the breakdown of talks, these people said, due to the chipmaker's inability to fulfill its demands for volume and speed. They also warned that talks could resume because few chipmakers have the capability needed to make cutting-edge AI processors.
Intel declined to comment on “discussions we may or may not have with customers.” SoftBank and Arm declined to comment.
Undeterred by the uncertainties surrounding his production plans, Son has been lobbying a few of the world's biggest technology firms, including Google and Meta, for support and funding for his latest project. Some of the large investment needed to construct a brand new chip manufacturing business could possibly be financed by pre-orders from deep-pocketed Big Tech firms, people acquainted with his pondering say.
Meta declined to comment. Google didn’t reply to a request for comment.
One aspect of Son's argument is that SoftBank could help counter the market power of Nvidia, which briefly became the world's most dear company earlier this 12 months. Nvidia's AI data center chips are by far the most well-liked in the marketplace, and its broad software platform, Cuda, underpins its dominance.
Critics of Son's plan query whether expanding chip production to Arm could damage its relationship with Nvidia, a key customer, but people acquainted with the plans say SoftBank believes the danger is well worth the reward.
Son, the identical people said, still plans to develop and manufacture an AI chip. One ambitious estimate suggests a prototype could possibly be ready in a matter of months. His recent purchase of struggling British AI chipmaker Graphcore was on account of its expertise in making a chip, they added.
Chip production capability, nonetheless, stays a big hurdle. The SoftBank chief has held talks with TSMC but has failed to succeed in an agreement because the Taiwanese chipmaker struggles to fulfill demand from its existing customers, including Nvidia, the people said. TSMC declined to comment.
One of the people acquainted with the evolving plan said that if Son reaches an agreement with TSMC, he might need one other partner who could bring the chip design expertise offered by Intel.
The cost of Son's latest project could possibly be within the tens of billions of dollars, but SoftBank officials warned that it was not realistic to place a complete investment figure on it at this stage. The CEO had consulted investors from Saudi Arabia and the United Arab Emirates concerning the plan, but no agreement had been reached, they said.
Intel, which was a key investor in Arm's IPO last September, announced this week that it sold its entire stake within the British chip designer within the second quarter of this 12 months, raising about $150 million. The company recently suspended its dividend to conserve money.
In April, Intel announced a $7 billion operating loss for its manufacturing business, causing its stock to plunge. This was followed by reports of a design flaw in its PC chips. Then, when it announced its latest results earlier this month, the corporate announced a plan to chop about 15 percent of its workforce amid falling sales. Shares lost 1 / 4 of their value in at some point, and the corporate's market capitalization fell below $100 billion.
