SoftBank of Japan, Which Sold Vision Fund Assets, Invests in AI and Semiconductors

Japan's SoftBank Group, led by Chairman Masayoshi Son, is cashing out a significant portion of its Vision Fund assets to invest in artificial intelligence (AI) and semiconductors. This move is seen as a shift in investment strategy from the venture capital deals it once focused on to AI and semiconductors.

[Image source=Reuters Yonhap News]

Bloomberg reported on the 10th, citing documents from the U.S. Securities and Exchange Commission (SEC), that the Vision Fund's portfolio of U.S. publicly traded companies has decreased by about $29 billion (approximately 39.7 trillion KRW) since the end of 2021.

This decline is due to the Vision Fund selling stakes in companies such as Coupang, DoorDash, and Grab Holdings, as well as a drop in the stock prices of these companies. The figure does not include the amount from last year's resale of semiconductor design company Arm Holdings' shares back to SoftBank. The number of shares held also sharply decreased from 2.3 billion in 2022 to 1.2 billion in 2024.

Sources explained that Chairman Son is selling assets from the existing Vision Fund portfolio in preparation for entering the AI and related hardware sectors. The report stated, "This signals that Chairman Son is moving away from the venture capital investments he once obsessed over and shifting to strategic investments in semiconductors and AI," adding, "The Vision Fund, once a kingmaker of tech companies, has laid off more than 100 employees, and new investments have slowed to a pace that has become a shadow of its former self."

Currently, most investments led by Chairman Son are made through holding companies, bypassing the Vision Fund. Although Son hinted at the possibility of launching Vision Funds every 2 to 3 years, insiders say there is no longer talk of a second fund release, let alone a fourth. As of now, only Vision Fund 1 and 2 have been launched.

Most of the remaining staff at the Vision Fund after the layoffs are in management positions. The equity capital markets team is reportedly focused on monetizing a significant portion of the Vision Fund's stakes while minimizing market disruption. They also play a role in determining the appropriate timing for asset sales through block trades in the secondary market.

The background for Chairman Son's change in investment strategy is attributed to Arm's success. Arm's market value soared to $106 billion after its listing on the New York Stock Exchange last year. SoftBank's 90% stake in Arm has become worth more than the total asset value of SoftBank itself.

Bloomberg noted, "Seven years after the launch of the Vision Fund, SoftBank has seen little success in its efforts to concentrate tens of billions of dollars from Saudi and Abu Dhabi sovereign wealth funds into emerging IT companies," pointing out that "a series of blowups including WeWork, Katerra, and Zoom Pizza have damaged Chairman Son's reputation." Ultimately, it is explained that Son, having failed to find success in traditional venture capital investments, was inspired by Arm's success and changed his investment strategy entirely.

Currently, Chairman Son is planning a project to support semiconductor venture companies with $100 billion to compete with Nvidia and to supply semiconductors for AI service development. Reports have also emerged that SoftBank is negotiating to acquire the UK semiconductor startup Graphcore. Earlier this week, SoftBank also led a funding round for the UK autonomous driving startup Wayve.

Kirk Boodry, an analyst at Astris Advisory, evaluated, "The increase in cash reserves may indicate a deeper transition to generative AI."

The SEC documents did not reflect sales or bankruptcies of unlisted companies invested in by SoftBank. The Vision Fund has invested in hundreds of startups, most of which remain private, the report added. Companies like View and Invitae are cited as representative failed portfolios of the Vision Fund this year. Analyst Boodry said, "The Vision Fund influenced startup valuations in 2020-2021," adding, "That era will not return."

This content was produced with the assistance of AI translation services.