Key Takeaways:
SoftBank is betting its telecom arm can become a $25 billion profit engine by renting AI computing power to US enterprises.
SoftBank Group Corp. and its telecom unit are forming a joint venture to rent AI computing power to US companies, aiming to transform the Japanese mobile carrier into a major player in the cloud infrastructure market.
"We see this launch in the US as a second founding for our company," Junichi Miyakawa, president of SoftBank Corp., said in an interview. The new business has the potential to generate profit "on a different order of magnitude," he added.
The venture, tentatively named SB Neo and owned 51% by SoftBank Corp. and 49% by SoftBank Group, will begin offering AI chips and cloud services to hyperscalers and large US enterprises in the fiscal year ending March 2028. The company targets 10 gigawatts of data center capacity by around 2030, drawing on SoftBank Group's 10GW-scale energy and AI infrastructure already under development in the US.
Supplying neocloud operations in the US could triple or quadruple SoftBank Corp.'s annual operating income to ¥3 trillion to ¥4 trillion ($18.5 billion to $25 billion), according to people familiar with the company's plans. That would transform a business that has long served as a cash cow for Masayoshi Son's venture empire into a growth engine for the AI era.
SoftBank's entry into the neocloud market — a category of specialized infrastructure providers that lease high-performance graphics processing chips to AI builders — comes as demand for computing power outstrips supply. The field has grown increasingly crowded. CoreWeave and Nebius Group have already carved out positions, while Amazon Web Services, Microsoft Azure and Google Cloud sell access to AI computing resources. Meta Platforms is also developing plans for a similar foray.
Power as a Moat
Miyakawa identified power procurement as SoftBank's key differentiator. The company has secured access to gas-fired power plants to supply its data centers, a critical advantage as utilities struggle to meet surging electricity demand from AI infrastructure. SoftBank envisages a $500 billion data center project in Ohio — among the largest in the world at 10GW of capacity — and is building data center campuses in Hokkaido and Sakai, Japan.
The venture may have a ready anchor customer in OpenAI. SoftBank Group has committed to investing a total of about $65 billion in the AI company by October, creating a deep financial link that could translate into computing power contracts.
SoftBank Corp. shares trade at roughly 15 times forward earnings, a discount to US hyperscalers that reflects its legacy telecom profile. If the neocloud business delivers on the ¥3 trillion to ¥4 trillion profit target, the valuation gap could narrow significantly. For SoftBank Group, the venture provides a captive infrastructure platform for its broader AI ambitions, which include the $65 billion OpenAI commitment and the Ohio data center project.
This article is for informational purposes only and does not constitute investment advice.
