SoftBank, Intel 'Had Talks on Chip Unit Before $2bn Stock Deal'

SoftBank founder Masayoshi Son discussed possible deals with Intel amid wide-ranging talks with Lip-Bu Tan, a long-time colleague, after the latter became chief executive of the US chipmaker in March.

Multiple sources said Son and Tan, a former SoftBank board member, had talks about SoftBank buying Intel’s struggling contract chipmaking business, the FT reported on Monday.

They said the talks could have led to a range of outcomes, such as the Japanese tech giant’s $2-billion investment in the US group’s shares announced on Monday. Intel’s foundry unit may offer a path to keep advanced chip capacity in the US as a balance against TSMC’s dominance in the sector and give Son a key part in SoftBank’s ambitious AI plans and interests in robotics, energy and chipmaking, it reported.

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When Lip-Bu Tan stepped down from the SoftBank Group board in 2022 – a time when the Japanese company was grappling with soured investments, his parting message offered advice on how Masayoshi Son’s conglomerate could strengthen its business.

And now, three years later, a resurgent SoftBank has made a show of support by taking a large stake in Intel as Tan, now the American company’s CEO, seeks to turn the embattled chipmaker around, Reuters said.

Tan is restructuring the storied company, which lost out to Nvidia in artificial intelligence chips and whose foundry business has been faltering.

“This is really a vote of confidence of Masa in the turnaround materialising over the coming years,” Rolf Bulk, an analyst at New Street Research, said.

“For Intel, the investment makes it more likely that SoftBank could be a potential client to Intel in the future.”

‘Worked together for decades’

Tan said in a statement: “Masa and I have worked closely together for decades, and I appreciate the confidence he has placed in Intel with this investment.”

In addition to his time on SoftBank’s board, Tan became chairman of chip startup SambaNova, which received backing from SoftBank’s Vision Fund.

“Masa is brilliant; he’s a visionary. But he still needs people to provide safeguards, give him advice, and make him even more successful,” Tan wrote in his statement on leaving the SoftBank board.

Son, 68, is known as a savvy political operator, appearing publicly with US President Donald Trump twice in the months following the presidential election.

He has close relationships with leading tech entrepreneurs such as Jensen Huang, CEO of Nvidia, in which SoftBank has a stake.

Last week Tan, 65, met with Trump, who days earlier had called on him to resign due to his ties to Chinese firms. Washington is in talks to take a 10% stake in Intel, Bloomberg has reported.

‘Buying favour with Trump’

“SoftBank’s investment helps, but it is not what is going to move the dial for Intel,” Amir Anvarzadeh of Asymmetric Advisors, said.

“It’s more to maintain this very good relationship he has with Trump,” he said.

Son is making splashy investments again after some underperforming tech bets forced a period of retrenchment, with the conglomerate pursuing a $500 billion US data centre venture with OpenAI, the maker of ChatGPT.

SoftBank has acquired a former electric vehicle factory from Foxconn in Ohio as it looks to advance its Stargate data centre project.

Arm, which is controlled by SoftBank, plans to make its own chips, and the Japanese conglomerate also acquired chipmaker Graphcore last year.

SoftBank’s shares have been on a tear, boosted by positive sentiment around its AI investments.

“The $2-billion investment should be viewed more as a strategic stake rather than a financial one,” Nori Chiou, investment director at White Oak Capital Partners, said.

“In the world of cutting-edge semiconductor manufacturing, only capital commitments in the $30 billion–$40 billion range carry true commercial weight,” he said.

Industry experts say Tan still faces a mountain to climb to turn around Intel, which has suffered from years of management missteps.

“It is Masa making a contrarian bet, but one where I think the downside risk is fairly limited,” Bulk of New Street Research, said.