By Sam Nussey, Fanny Potkin and Anton Bridge
TOKYO (Reuters) -When Lip-Bu Tan stepped down from the SoftBank Group board in 2022 at a time when the Japanese company was grappling with soured investments, his parting message offered advice on how Masayoshi Son’s conglomerate could strengthen its business.
Three years later, a resurgent SoftBank has made a show of support by taking a $2 billion stake in Intel as Tan, now the storied American company’s CEO, seeks to turn around the embattled chipmaker.
Tan took Intel’s top job in March and is driving restructuring at the company, which lost out to Nvidia in artificial intelligence chips and whose foundry business is struggling.
“This is really a vote of confidence of Masa in the turnaround materialising over the coming years,” said Rolf Bulk, an analyst at New Street Research.
“For Intel, the investment makes it more likely that SoftBank could be a potential client to Intel in the future.”
The two men have a long-standing relationship.
“Masa and I have worked closely together for decades, and I appreciate the confidence he has placed in Intel with this investment,” Tan said in a statement.
In addition to his time on SoftBank’s board, Tan became chairman of chip startup SambaNova, which received backing from SoftBank’s Vision Fund.
“Masa is brilliant; he’s a visionary. But he still needs people to provide safeguards, give him advice, and make him even more successful,” Tan wrote in his statement on leaving the SoftBank board.
Son, 68, is known as a savvy political operator, appearing publicly with U.S. President Donald Trump twice in the months following the presidential election.
He has close relationships with leading tech entrepreneurs such as Jensen Huang, CEO of Nvidia, in which SoftBank has a stake.
Last week Tan, 65, met with Trump, who days earlier had called on him to resign due to his ties to Chinese firms. Washington is in talks to take a 10% stake in Intel, Bloomberg has reported.
“SoftBank’s investment helps but it is not what is going to move the dial for Intel,” said Amir Anvarzadeh of Asymmetric Advisors.
“It’s more to maintain this very good relationship he has with Trump,” he said.
BACK ON THE OFFENSIVE
Son is making splashy investments again after some underperforming tech bets forced a period of retrenchment, with the conglomerate pursuing a $500 billion U.S. data centre venture with OpenAI, the maker of ChatGPT.
SoftBank has acquired a former electric vehicle factory from Foxconn in Ohio as it looks to advance its Stargate data center project.
Arm, which is controlled by SoftBank, plans to make its own chips, and the Japanese conglomerate also acquired chipmaker Graphcore last year.
SoftBank’s shares have been on a tear, boosted by positive sentiment around its AI investments.
“The $2 billion investment should be viewed more as a strategic stake rather than a financial one,” said Nori Chiou, investment director at White Oak Capital Partners.
“In the world of cutting-edge semiconductor manufacturing, only capital commitments in the $30 billion–$40 billion range carry true commercial weight,” he said.
Industry experts say Tan still faces a mountain to climb to turn around Intel, which has suffered from years of management missteps.
“It is Masa making a contrarian bet but one where I think the downside risk is fairly limited,” said Bulk of New Street Research.
(Reporting by Sam Nussey and Anton Bridge in Tokyo and Fanny Potkin in Singapore; Editing by Muralikumar Anantharaman)
