Japan's SoftBank kills plans for Intel to make an AI chip to compete with NVIDIA, goes to TSMC

SoftBank was talking with Intel about making an AI chip that would compete with NVIDIA's dominant AI GPUs, but the plan "floundered" after Intel failed to meet the requirements of Japan's SoftBank.

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In a new report from the Financial Times, we're hearing that negotiations to partner with Intel would've rapidly accelerated SoftBank's efforts to combine the chip design of its "crown jewel" as the FT puts it: Arm. Japan's SoftBank owns Arm Holdings, so with its Arm architecture and Intel fabbing the chip with SoftBank's production expertise of its latest acquisition -- Graphcore -- according to "people familiar with the matter".

SoftBank boss Masayoshi Son plans to dump billions of dollars into putting Japan at the center of the AI boom, where the Arm owner wants to create a rival to NVIDIA's dominant AI GPUs. Son has pitched his ideas to the usual Big Tech companies, with chip production and software through to providing power for the data centers that would be powered by its chips.

But, the discussions between Japan's SoftBank and Intel "failed in recent months" in advance of Intel's recent announcements of huge cost-cutting plans, laying off 15,000+ of its global workforce, and continuing to bleed market share in consumer, laptop, and server CPU sales to competitor AMD.

SoftBank is now in discussions with TSMC to build its new AI chip, the world's largest contract semiconductor chip maker. For the United States and Intel, this move is disappointing as it would've allowed SoftBank to tap directly into the Biden administration and its CHIPS Act, with billions of dollars in grants and loans for local (US-based) semiconductor manufacturing.

The Financial Times reports that SoftBank has blamed Intel for the "collapse of the talks" according to its sources, claiming that Intel wasn't capable of meeting SoftBank's demands for volume and speed. The sources added that the discussions could start up again, because there are only a few chip manufacturers that can make bleeding-edge chips (Intel, Samsung, and TSMC).

Intel -- of course -- declined to comment on "discussions we may or may not have with customers" while SoftBank and Arm both also declined to comment on the story.