SoftBank eyed Intel's chipmaking unit amid $2bn investment

SoftBank’s billionaire founder, Masayoshi Son, recently engaged in high-level discussions with Intel’s chief executive, Lip-Bu Tan, regarding the potential acquisition of Intel’s struggling contract chipmaking division. These confidential talks unfolded in the weeks leading up to SoftBank’s public announcement of a $2 billion investment in Intel shares, signaling a deeper strategic interest beyond a mere financial stake.

Sources familiar with the discussions indicate that Son and Tan have been meeting since Tan’s appointment in March, exploring various pathways, including joint ventures with third parties or a minority investment similar to the one revealed this week. Despite the recent share purchase, some suggest this initial investment does not preclude a larger deal for Intel’s so-called foundry business in the future. Both SoftBank and Intel have declined to comment on the specifics of these negotiations.

Intel’s ambitious move in 2021, under former CEO Pat Gelsinger, to open its advanced chip manufacturing facilities to external customers has largely failed to attract significant business, despite billions invested in new fabrication plants. This costly endeavor, coupled with Intel’s broader financial challenges, has prompted Lip-Bu Tan to issue warnings that the company might withdraw from the most cutting-edge chip production processes, unable to compete effectively with industry leader Taiwan Semiconductor Manufacturing Company (TSMC).

Adding another layer of complexity, the US government has also been exploring the possibility of taking a stake in Intel. Insiders suggest that such a move by Washington would significantly bolster the case for further SoftBank investment. The sentiment among those familiar with the talks is that no single entity is willing to shoulder the immense risk and investment required for Intel’s fabrication plans alone, particularly given that Intel often remains its own primary customer.

For SoftBank’s Masayoshi Son, acquiring Intel’s chipmaking arm aligns perfectly with his expansive vision for a comprehensive artificial intelligence infrastructure, encompassing robotics, energy, and chip production. Son, who already holds significant stakes in AI pioneers like OpenAI and Nvidia, is also the driving force behind the colossal $500 billion Stargate data center project. Furthermore, SoftBank-owned Arm, a powerhouse in semiconductor design, recently confirmed it is exploring the development of its own chips. A previous attempt by SoftBank and Intel last year to collaborate on an AI chip faltered when Intel struggled to meet SoftBank’s demanding specifications.

The political dimension of these discussions is equally compelling. Masayoshi Son maintains a close personal relationship with US President Donald Trump, frequently visiting the US every two weeks. Trump and Son famously appeared together in January to announce the Stargate project. Maintaining advanced chip manufacturing capacity within the US is a key priority for the Trump administration, eager to counterbalance TSMC’s global dominance, much of which is concentrated in Taiwan. Interestingly, President Trump’s view of Lip-Bu Tan has shifted dramatically in recent weeks, from publicly calling for his resignation to praising his “success and rise” following a recent meeting.

This strategic interplay between corporate ambition and national security finds a potential precedent in the US Defense Department’s July decision to become the largest shareholder in American rare earths producer MP Materials. The Pentagon’s $400 million investment aimed to bolster domestic supply chains and reduce reliance on China for critical minerals, a model that could be applied to unlock further investment from SoftBank in Intel’s vital chip operations. While SoftBank’s shares saw a modest decline of approximately 2 percent in Tokyo on Tuesday, they have surged more than 75 percent year-to-date, fueled by investor confidence in the conglomerate’s strategy of monetizing its portfolio companies and the soaring valuation of its OpenAI stake.