SoftBank in talks to invest $25B in OpenAI
What's the story
Japanese multinational conglomerate, SoftBank, is said to be in advanced talks to invest as much as $25 billion in OpenAI. According to the Financial Times, the investment could be part of a larger partnership, where SoftBank would invest over $40 billion into AI initiatives with the ChatGPT creator. If it goes through, SoftBank would become OpenAI's largest single investor, ahead of Microsoft's total investment of around $13 billion.
Investment breakdown
SoftBank and OpenAI's joint venture in Stargate project
The investment talks come after both companies recently announced a joint investment of $100 billion in Stargate, a US-based data center project for OpenAI. The project could potentially draw up to $500 billion over the next four years. As part of the proposed investment plan, SoftBank would invest between $15 billion and $25 billion directly into OpenAI, in addition to its already committed $15 billion toward Stargate.
Funding details
SoftBank's equity investment could cover OpenAI's infrastructure commitment
OpenAI is also expected to invest around $15 billion in the Stargate project. SoftBank's equity investment could possibly cover this infrastructure commitment from OpenAI. According to the Financial Times, around 20% of Stargate's funding is expected to be equity, with the rest financed through debt against assets and cash flow. The deal comes amid market uncertainties after Chinese firm DeepSeek launched its affordable R1 "reasoning" model, raising questions over the need for huge investments in expensive AI hardware.
Allegations
OpenAI accuses DeepSeek of using its proprietary models
OpenAI has accused DeepSeek of using its proprietary models to train the R1 and other models via a technique called "distillation." This allows developers to achieve similar performance with smaller models at a fraction of the cost. OpenAI insists that this would violate its terms of service, which clearly prohibits the use of outputs to develop competing models.
Strategic shift
SoftBank's investment could reduce OpenAI's reliance on Microsoft
Though the deal with SoftBank is still in the works, it would mark SoftBank founder Masayoshi Son's biggest bet since pouring $16 billion into WeWork. It could also reduce OpenAI's dependence on Microsoft for computing power. Notably, Microsoft recently agreed to give up its position as OpenAI's sole cloud provider.