Why is tech giant SoftBank investing over $100 billion in the US?

BANGKOK (AP) Japanese tycoon Masayoshi Son and President-elect Donald Trump have announced plans for technology and telecommunications giant SoftBank Group to invest $100 billion in projects in the United States over the next four years.

Trump said investments in building artificial intelligence infrastructure would create 100,000 jobs, double the 50,000 promised when Son pledged $50 billion in U.S. investment after Trump's 2016 victory.

Son, founder and CEO of SoftBank Group, is known for making bold choices that sometimes pay off big and sometimes not. SoftBank has invested in dozens of Silicon Valley startups, as well as major companies like semiconductor design company Arm and Chinese e-commerce giant Alibaba. The stock market recovery and the enthusiasm for AI have increased the value of its assets, but it is not certain that its investments will create as many jobs.

Who is the son Masayoshi?

Son founded SoftBank in the 1980s, growing from a telecommunications operator to renewable energy and technology companies. A leading business figure in Japan, he was an early believer in the Internet, investing billions in Silicon Valley start-ups and other technology companies.

The son comes from a modest background. While studying at the University of California, Berkeley, he invented a pocket translator that he sold for $1 million to Japanese electronics maker Sharp Corp. He made a career out of taking risks, pushing the adoption of broadband services when the Internet was still relatively new to the world. Japan. Its $20 billion purchase of U.S. mobile operator Sprint Nextel Corp. in 2012 was Japan's largest foreign acquisition at the time.

Son is philosophical about his missteps, like SoftBank's $18.5 billion investment in coworking space provider WeWork, which filed for bankruptcy protection last year. SoftBank also invested in bankrupt robot pizza manufacturing company Zume. His son is smart: spending on SoftBank-related lobbying and donations to American politicians and parties runs into the billions of dollars. And every time Trump has been elected, Son has been quick to show his support.

What is SoftBank Group?

SoftBank has benefited in recent months from rising values ​​of some investments, such as US e-commerce company Coupang, Chinese mobility provider DiDi Global and Bytedance, the Chinese developer of TikTok.

Son built his fortune on early investments in search engine Yahoo and China's Alibaba, a shrewd initial outlay of $20 million in what became an e-commerce and financial empire with a market capitalization of more than $200 billion. of dollars.

SoftBank has invested in T-Mobile, Deutsche Telekom, Microsoft, Nvidia and the ride-sharing platform Uber, among hundreds of other companies that it groups together in its Vision Funds. The Saudi sovereign wealth fund and the Abu Dhabi national fund are among the largest investors in these funds.

Among the hundreds of startups that have received investments from SoftBank are Nuro, a robotic delivery company; the Wag dog walking app; South Korean logistics company Coupang; Southeast Asian ride-hailing app Grab; and the desktop messaging app Slack.

After several difficult years, SoftBank returned to profitability in the last quarter, helped by the returns on its investments in the Vision Fund. An important factor? Royalties and licenses related to its interests in British computer chip design company Arm, whose businesses span smartphones, data centers, networking equipment, automotive, consumer electronics and AI applications .

His son relies heavily on AI

SoftBank's investor presentations have sometimes featured images of a goose labeled AI Revolution laying golden eggs.

Son said he believes artificial intelligence will surpass human intelligence within a decade, affecting every industry from transportation and pharmaceuticals to finance, manufacturing, logistics and others, and that companies and people working with AI would be the leaders in the next 10-20 years. . SoftBank's roughly 90% stake in Arm positions it well for expanding AI applications, as most mobile devices run on Arm-based processors.

Trump and Son said the $100 billion SoftBank has promised to invest will go toward building AI infrastructure, but the nature of that spending remains unclear. Whether AI will impact employment remains an open question, but much of its infrastructure relies on energy-intensive data centers that are likely to employ relatively few people once built.

What about jobs?

Even if SoftBank did invest the $50 billion it promised the last time Trump headed to the White House, it's unclear how many jobs it created.

Shutdowns during the COVID-19 pandemic have complicated things. Foxconn Technology Group, a Taiwanese company known for making Apple iPhones, received praise from Trump after announcing in 2017 that it would build a $10 billion complex employing 13,000 people in a small town just south of Milwaukee. But this investment has been considerably reduced.

SoftBank itself says it had 65,352 employees in March.

Officials in Tokyo welcomed Son's move as a gesture of goodwill at a time of widespread concern over whether Trump will impose across-the-board tariff hikes on imports from China. allies like Japan, as well as China.

Generally speaking, I believe that expanding investment through a steady accumulation of efforts between Japanese and American companies would help further strengthen economic ties between Japan and the United States. So I find this delightful, said Yoji Muto, Japan's Minister of Trade and Industry.

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Associated Press writer Mari Yamaguchi in Tokyo contributed.

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