Report: SoftBank scrambles to find $22.5B for OpenAI before the end of the year – News

SoftBank Group Corp. needs to come up with $22.5 billion by the end of the year to make good on a commitment to its artificial intelligence partner OpenAI Group PBC.

Reuters said in an exclusive report today that SoftBank Chief Executive Masayoshi Son has a number of levers he can pull in order to get the money together, one option being to use untapped margin loans tied to the Japanese tech conglomerate’s investment in Arm Holdings Plc.

The money is needed because SoftBank, alongside Abu Dhabi-based MGX, is one of the main financiers of OpenAI’s $500 billion Stargate initiative, which aims to build dozens of data centers for AI operations across the U.S. and other friendly nations. The project was announced almost a year ago at the White House, shortly after President Donald Trump’s inauguration. Another of the project’s aims is to ensure the U.S. remains at the forefront of the race to develop “artificial general intelligence” systems that exceed the cognitive abilities of humans.

While Trump and many others have lauded the ambitious nature of OpenAI, SoftBank and other Stargate partners such as Oracle Corp., others have questioned whether they’ll be able to secure the necessary funding. Shortly after Stargate was announced, former OpenAI co-founder and Tesla Inc. CEO Elon Musk posted on X that: “They don’t actually have the money,” he wrote in response to a tweet by the AI firm.

Despite these questions, Oracle has forged ahead, embarking on a massive data center infrastructure buildout over the last year, partly on behalf of OpenAI. But it has been forced to borrow heavily to do this. Meanwhile, SoftBank has already liquidated its investment in Nvidia Corp. to get funds together for the project.

SoftBank’s investment in Stargate was partly contingent on OpenAI being able to transition to a for-profit company, and the AI startup did so in October, putting the onus on Son’s company to cough up the rest of the money it has committed to invest this year. SoftBank is not broke by any means, but Son does need to make a difficult decision about how to find the cash.

Reuters said one option involves borrowing about $11.5 billion against its stake in the British chip designer Arm. It could also leverage its $11 billion stake in T-Mobile USA Inc., or simply dip into the $27 billion cash pile it currently holds.

For now, though, it seems Son isn’t quite clear what’s the best way forward, and in the meantime he has reportedly become more averse to the company throwing its money around. According to Reuters, Son now insists on personally approving any ventures requiring more than $50 million.

For OpenAI, the funding is crucial to its future plans. The company has already obtained billions of dollars in funding to pay for the rising costs of training and running its AI models amid fierce competition from rivals such as Google LLC. OpenAI CEO Sam Altman recently told employees that the company is now in a “code red” phase, and has delayed other projects to focus on improving ChatGPT to surpass the capabilities of Google’s Gemini.

Photo: SoftBank