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SoftBank Calls Off AI Chip Partnership With Intel, Turns To TSMC

M

Maximus

Active member
SoftBank Calls Off AI Chip Partnership With Intel, Turns To TSMC
BW Online Bureau Aug 15, 2024

Intel's failure to fulfill production objectives prompts SoftBank to look into fresh options with Taiwan's TSMC as it looks to compete with Nvidia in the AI chip industry

SoftBank has cancelled plans to co-develop an artificial intelligence (AI) processor with U.S. chipmaker Intel, citing the latter's failure to achieve critical specifications. The Financial Times, in an article said that the move comes as SoftBank explores other collaborations, with Taiwan Semiconductor Manufacturing Company (TSMC) emerging as a possible choice.

According to sources familiar with the subject, the relationship ended because Intel was unable to meet SoftBank's demands for both volume and production speed. As a result, SoftBank elected to distance itself from Intel, citing the latter's recent troubles, which included extreme cost-cutting measures and layoffs revealed earlier this month.

The failed talks are a huge setback for Intel, which has been working to improve its position in the AI chip market, which is dominated by NVIDIA. SoftBank, a key participant in the digital investment area, initially approached Intel as part of its strategy to enter the competitive AI chip market. However, Intel's inability to achieve manufacturing targets resulted in the termination of negotiations.

With Intel out of the picture, SoftBank is now focused on forming a collaboration with TSMC, the world's largest contract chipmaker. TSMC's sophisticated production capabilities and proven track record make it an appealing alternative for SoftBank as it looks to build AI chips that can compete with Nvidia's offerings.

The failure of talks with Intel coincides with the company's recent decision to sell its investment in ARM Holdings. As part of a strategic restructuring aimed at reshaping its business model, Intel divested its ARM holdings. ARM, owned by SoftBank, is a major participant in chip design, and Intel's exit from ARM highlights the company's issues during these times, particularly the recent cost-cutting initiatives and organisational changes. These problems have generated concerns about Intel's capacity to remain competitive in the fast-expanding semiconductor industry.

 
Sounds like folks are confused? Maybe the FT was also talking to Pat Gelsinger ;). The way this reads is that SoftBank wanted intel to develop them a custom AI ASIC, but that they bailed for process issues and went to TSMC. Which doesn't really make sense because TSMC won't help them design an ASIC. The conflicting wording doesn't make it apparent if this was a Google IPU or Erikson 5G base station custom ASIC or a foundry relationship. Also I don't know why Softbank would be doing an AI chip and not just punting their money buying some AI startup for too much money that will be bankrupt in a few years. That is much more Masayoshi Son's speed. But who knows maybe he knows as much about chip design as Sam Altman does about building fabs and is just waiting to spread his wings.
 
nghanayem said:
Sounds like folks are confused? Maybe the FT was also talking to Pat Gelsinger ;). The way this reads is that SoftBank wanted intel to develop them a custom AI ASIC, but that they bailed for process issues and went to TSMC. Which doesn't really make sense because TSMC won't help them design an ASIC. The conflicting wording doesn't make it apparent if this was a Google IPU or Erikson 5G base station custom ASIC or a foundry relationship. Also I don't know why Softbank would be doing an AI chip and not just punting their money buying some AI startup for too much money that will be bankrupt in a few years. That is much more Masayoshi Son's speed. But who knows maybe he knows as much about chip design as Sam Altman does about building fabs and is just waiting to spread his wings.
Click to expand...

It is indeed a very strange story
 
Okay here is the Financial Times article: https://www.ft.com/content/6b7fd8a1-7f9c-427b-8467-f911f5f0d520

SoftBank discussed AI chips tie-up with Intel to rival Nvidia​

Son hopes to put Japanese group at centre of artificial intelligence boom but talks with US chipmaker failed to progress

David Keohane and Kana Inagaki in Tokyo and Michael Acton in San Francisco

11 hours ago

SoftBank held talks with Intel about producing an artificial intelligence chip to compete with Nvidia but the plan foundered after the US chipmaker struggled to meet the Japanese group’s requirements.

Negotiations to partner with Intel would have accelerated SoftBank’s efforts to combine the chip designs of its crown jewel Arm with the production expertise of its latest acquisition, Graphcore, said people familiar with the matter.

SoftBank chief executive Masayoshi Son plans to invest billions of dollars in an attempt to put the Japanese group at the centre of the AI boom by creating a rival to Nvidia’s market-leading AI chips.

His ambitious scheme, which he has pitched to Big Tech companies, encompasses chip production and software through to providing power for the data centres that would house its processors.

The talks with Intel failed in recent months, in advance of the US chipmaker’s announcement of drastic cost-cutting plans, including thousands of lay-offs, in early August, these people said. SoftBank is now focusing on discussions with Taiwan Semiconductor Manufacturing Co, the world’s largest contract chipmaker.

Using Intel’s US foundry to manufacture AI chips could have allowed SoftBank to tap into the Biden administration’s Chips Act funding to boost domestic semiconductor production.

Intel chief executive Pat Gelsinger is attempting to put the Silicon Valley company back on the leading edge of global chipmaking. After the US government in March approved Chips Act funding that will total almost $20bn in grants and loans, Intel is investing heavily in an attempt to catch up to rivals TSMC and Samsung in chip manufacturing and land major new customers for the company’s foundry business.

SoftBank has blamed Intel for the collapse of the talks, these people said, claiming the chipmaker was incapable of meeting its demands for volume and speed. They also cautioned the talks could start again given the limited number of chip manufacturers with the capabilities needed to produce cutting-edge AI processors.

Intel declined to comment on “discussions we may or may not have with customers”. SoftBank and Arm declined to comment.

Undeterred by the uncertainties surrounding his production plans, Son has pitched some of the world’s biggest tech groups, including Google and Meta, as he tries to drum up support and financing for his latest venture. Some of the vast investment needed to build a new chip production business could be funded by advance orders from deep-pocketed Big Tech companies, said people familiar with his thinking.

Meta declined to comment. Google did not respond to a request for comment.

One element of Son’s pitch is that SoftBank could help counter the market power of Nvidia, which briefly became the world’s most valuable company earlier this year. Nvidia’s AI data centre chips are by far the most popular on the market, with its broad software platform, Cuda, underpinning its dominance.

Critics of Son’s plan have questioned whether moving Arm into chip production could damage its relationship with Nvidia, a key client, but the people familiar with the plan say SoftBank believes the risk is worth the reward.

Son, said the same people, still intends to design and produce an AI chip, with one ambitious estimate suggesting a prototype could be ready in a matter of months. His recent purchase of struggling UK AI chipmaker Graphcore was driven by its expertise in bringing a chip into production, they added.

However, chip production capacity remains a significant hurdle. The SoftBank boss has held talks with TSMC but has not reached an agreement, as the Taiwan-based chipmaker is struggling to meet demand from existing customers, including Nvidia, the people said. TSMC declined to comment.

One of the people familiar with the still-evolving plan suggested that if an agreement with TSMC can be reached, Son could need another partner to provide the expertise in chip design that Intel had offered.

The cost of Son’s latest venture could run into the tens of billions of dollars but people close to SoftBank cautioned that putting a figure on the total investment needed is not realistic at this stage. The chief executive has sounded out Saudi Arabian and United Arab Emirates investors about the plan but nothing has been agreed, they said.

Intel, which had been a cornerstone investor in Arm’s initial public offering last September, disclosed this week that it sold its entire stake in the UK chip designer during the second quarter of this year, raising about $150mn. The company recently suspended its dividend as it tries to conserve cash.

In April, Intel revealed a $7bn operating loss for its manufacturing business, causing shares to plunge. Reports of a design flaw in its PC chips followed. Then, during its latest results announcement earlier this month, it launched a plan to cut about 15 per cent of its workforce, amid declining revenue. Its shares shed a quarter of their value in a day, leaving its market capitalisation languishing below $100bn.
 
Just over the air on CNBC, Intel/Softbank agreement to build a superior AI chip to Nvidia fall apart. The latest word is Softbank might work with TSM to build a leading high end AI chip. Only time will tell. This happening I doubt since TSM makes not only the Nvidia AI chip, but also the AMD AI chip. Any thoughts or information on this appreciated.
 
Softbank has blamed Intel for the collapse of the talks, these people said, claiming the chipmaker was incapable of meeting its demands for volume and speed.
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This is not a good look for Intel foundry. It sounds like Intel had the opportunity to win a high-profile AI processor chip business -- but it failed. That would have been exactly the type of design win that would really have helped Intel IFS credibility for providing foundry and advanced packaging full service product development. (including IP, methodology, etc)

Fred Chen said:
Intel, which had been a cornerstone investor in Arm’s initial public offering last September, disclosed this week that it sold its entire stake in the UK chip designer during the second quarter of this year, raising about $150mn. The company recently suspended its dividend as it tries to conserve cash.
Click to expand...

It looks like this is related to the cancellation of the ARM/Graphcore/Softbank project.
 
ChrisGar said:
This is not a good look for Intel foundry. It sounds like Intel had the opportunity to win a high-profile AI processor chip business -- but it failed. That would have been exactly the type of design win that would really have helped Intel IFS credibility for providing foundry and advanced packaging full service product development. (including IP, methodology, etc)



It looks like this is related to the cancellation of the ARM/Graphcore/Softbank project.
Click to expand...
I wouldn't be hung up on the Softbank deal too much since we do not know how far talks have gone or whether Masayoshi Son was serious given its Vision fund substantial loss in 2022.
 
A better summary of this "project" would be "Once upon a time, Intel and Softbank had discussions on a AI chip. No product is planned today" This is a nothing burger unless Pat was claiming this "very preliminary discussion" as a whale signing.
 
MKWVentures said:
A better summary of this "project" would be "Once upon a time, Intel and Softbank had discussions on a AI chip. No product is planned today" This is a nothing burger unless Pat was claiming this "very preliminary discussion" as a whale signing.
Click to expand...
It does bring up the question of whether Intel can give priority to an AI chip from a foundry customer competing with a similar Intel product.
 
ChrisGar said:
It seems like Intel could not deliver on this type of product.
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Intel is shipping their Xe GPU Max, and it's in the Aurora supercomputer for the Argonne National Lab.
ChrisGar said:
There are multiple reports of Graphcore/ARM (and Softbank) project related to AI processing. I don't think this is all smoke.
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I never said GPUs or AI chips were all smoke. What I meant by my statement that being a foundry for someone else's GPU is a non-issue, is that I can't believe Intel would risk its multi-billion dollar investment in becoming a chip foundry by depriving a competitive foundry customer part of promised priority because Intel has a competing internal design. If that were ever revealed Intel would be dead as a foundry, and I think they know that.
 
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