SoftBank has officially halted its partnership with Intel for AI chip development. According to the Financial Times, Intel lost the contract due to its inability to meet the production volume and speed requirements set by SoftBank. This setback raises questions about the problems that Intel has to overcome as it struggles with its own financial woes.
The dissolution of the partnership followed Intel’s other recent decision to cut costs by dismissing thousands of employees in early August. This could be because Intel has been facing some financial challenges recently, which may have put it in a weak position to meet SoftBank’s expectations.
SoftBank pursues new collaboration with TSMC for AI chip production
Following the unsuccessful talks with Intel, SoftBank has turned to Taiwan Semiconductor Manufacturing Co. (TSMC), the largest contract chipmaker in the world. Through its partnership with TSMC, SoftBank wants to strengthen its position in the AI chip market, which is currently led by NVIDIA.
The failure of Intel to meet the specified requirements of SoftBank in the development of its AI processor has made the Japanese conglomerate look for other options. Project Izanagi, a project to develop AI processors that can rival Nvidia’s GPUs in terms of performance, at first wanted Intel’s manufacturing capacity. However, as the report suggests, Intel failed to fulfill the required scale and speed.
TSMC negotiates with SoftBank while managing existing commitments
TSMC is still in discussion with the company, but no contracts have been signed yet. This is compounded by the fact that TSMC is already stretched to the limit in trying to meet the demands of its current clients, some of whom are big players in the industry, such as AMD and Nvidia
Project Izanagi is in line with Son’s broader AI plan to develop an end-to-end AI solution, which includes the physical components, applications, and data centers. SoftBank’s plan to develop AI processors, along with the vision of creating its own software stack.
SoftBank is aiming to set up AI data centers that use its own chips, and it plans to do so in the US, Europe, Asia, and the Middle East by 2026. Just recently, Arm, which is owned by SoftBank, said that it will come out with AI chips next year. Arm will set up an AI chip division and develop a prototype by spring 2025.
The company is reportedly in talks with contract manufacturers, including TSMC, about producing these AI chips in fall 2025. Arm’s designs are the basis of numerous chips, and it sells these designs to top companies such as Qualcomm and Nvidia.
