SoftBank races to line up $22.5B for OpenAI by year-end • The Register
Japanese tech investment giant SoftBank needs to secure $22.5 billion before the end of the year to make good on its commitments to AI partner OpenAI.
According to Reuters, there are several levers SoftBank CEO Masayoshi Son could pull in order to put the funding package together, including calling on untapped margin loans tied to its stake in British chip design firm Arm Holdings.
SoftBank is one of OpenAI’s principal financiers in its $500 billion Stargate datacenter initiative announced during a White House appearance nearly a year ago alongside Oracle and Abu Dhabi-based investment firm MGX.
The ambitious infrastructure development aims to dot the US and other nations with enough GPU bit barns to fuel the development of OpenAI’s next-gen models and further the advancement of Artificial General Intelligence (AGI), AI superintelligence, or whatever Altman is calling it these days.
Whether OpenAI and its partners could actually deliver on plans to invest up to $500 billion, or even line up the initial $100 billion they said would kick off the project, has been a point of contention over the past year. Not long after the initiative was announced, former OpenAI co-founder and xAI CEO Elon Musk questioned whether any of them actually had the money required to make good on Stargate’s claims.
Oracle has pushed ahead with a massive infrastructure buildout on OpenAI’s behalf, borrowing heavily to do it. SoftBank, meanwhile, has liquidated its stake in Nvidia to fund the venture, but at least part of SoftBank’s investment in Stargate was contingent on the AI startup’s transition to a for-profit entity.
OpenAI cleared that hurdle in October, putting the ball back in SoftBank’s court to make good on the arrangement. According to Reuters, SoftBank has a couple of avenues by which to raise the funds. SoftBank could borrow about $11.5 billion in capital against its stake in Arm Holdings. The company also holds a four percent stake in T-Mobile worth about $11 billion, as well as about $27 billion in cash it could call upon to settle the agreement as of the end of September.
With the clock ticking, Son has reportedly become rather picky about where SoftBank puts its money. According to the report, he is now personally reviewing any funding over $50 million.
OpenAI is going to need that funding sooner rather than later. CEO Sam Altman has managed to talk his partners, including Oracle and Crusoe, into plowing hundreds of billions of dollars into a datacenter packed with the latest in AMD and Nvidia hardware. The first of the datacenters, Stargate’s flagship facility in Abilene, Texas, became partially operational earlier this year, which means Oracle is going to expect payments from OpenAI for its services before long. ®
