Where did the $500 billion “Stargate” project come from? Softbank CFO latest response to Musk’s doubts about the company’s “lack of money”

Photo source: Visual China

Blue Whale News, February 13 (Reporter Zhu Junxi)Softbank is approaching the center of the AI table. Two years ago, SoftBank Group founder Masayoshi Son announced that he was ready to move from defensive to offensive mode, this time with artificial intelligence. At the beginning of this year, Masayoshi Son stood next to OpenAI CEO Sam Altman and Oracle Chairman Larry Ellison to jointly unveiled a $500 billion AI infrastructure project, Stargate.

At the SoftBank earnings call conference on February 12, although Masayoshi Son still did not attend, almost all questions revolved around the cooperation project between SoftBank and OpenAI. Softbank CFO Yoshihiro Goto said that many people are thinking about what Masayoshi Son is doing.“ But I believe that this quarter, we will be able to clarify and convey the message Son wants to convey.” rdquo;

From the perspective of financial data, SoftBank did not perform well in Q3 as of December 31, 2024. The net loss for the quarter reached 369.17 billion yen (approximately US$2.39 billion), far below analysts ‘expectations for a net profit of 234 billion yen, compared with a profit of 950 billion yen for the same period last year.

Vision Fund, SoftBank’s flagship investment arm, also recorded a loss of 352.75 billion yen, reversing profits in the previous two quarters. Softbank attributed this to the decline in valuations of listed companies such as South Korean e-commerce company Coupang and China’s Didi Chuxing.

On the other hand, SoftBank seems to be returning to its aggressive investment style of the past and starting to make big bets in the AI space. Stargate, which Trump calls the largest AI infrastructure project in history, is scheduled to invest US$500 billion over the next four years and immediately begin deploying US$100 billion. Masayoshi Son serves as chairman of the joint venture, SoftBank is responsible for finance, OpenAI is responsible for operations, and the initial equity investors also include Oracle and MGX.

However, once the Stargate project was officially announced, it was questioned. Elon Musk even publicly criticized that these companies actually have no money, and there is sufficient evidence that SoftBank received much less than US$10 billion.

In response, Yoshihiro Goto said in a telephone conference that he had seen Musk’s comments but did not think any emotional reaction would bring good results. He said that $500 billion is a fairly high starting figure. It is not that SoftBank will raise tens of trillions of yen through assets or cash, but that it hopes to establish and promote projects with lenders and equity investors.

According to Yoshihiro Goto, the stargate will contain multiple data centers or power projects distributed in different locations. Each project will build an independent financing structure, and the required equity ratio and threshold may vary.

SoftBank is studying this method of project financing and hopes to design financial instruments that can meet investors ‘needs and preferences. Specifically, it may include preferred shares, senior bank loans, mezzanine financing, etc. ldquo; Based on each level of financing, we will attract investors from all over the world. Some investors may pursue higher returns even if they need to take some risk, while others prefer safe but stable returns. rdquo; Yoshihiro Goto said.

He emphasized that for SoftBank, the funds needed are only the very bottom equity component. Depending on the project, the equity ratio is about 10%-20%, and is shared among four partners.& ldquo; Overall, the amount of funds will not be very large.” rdquo; Yoshihiro Goto also revealed that as of the end of December, SoftBank held a total of approximately 5 trillion yen (US$32.4 billion) in cash or cash equivalents.

Sharon Chen, a senior credit analyst at Bloomberg, previously analyzed that using this project financing model, if 10% of it is equity financing, SoftBank’s actual investment amount will shrink to 5 billion of the initial expenditure of US$100 billion in the joint venture., thus reducing the need to sell assets to raise funds. Eventually, SoftBank’s investment in Stargate may reach US$15 billion to US$20 billion, but it will be carried out over four years.

The risk SoftBank has to face is that less than a week after the official announcement of Stargate, DeepSeek tied OpenAI with low costs and set off a global storm. This huge plan has been repeatedly reviewed by investors. Yoshihiro Goto mentioned at the phone conference that Deepseek has recently attracted everyone’s attention. It is quite new and I hope to spend time observing it. He also spoke highly of his partner OpenAI, saying it would be very difficult for other companies to catch up.

Over the past six months, SoftBank and OpenAI have clearly gotten closer. According to multiple media reports, SoftBank is about to complete a US$40 billion investment in OpenAI, and part of the funds will be used to support OpenAI’s investment in Stargate. This will not only push OpenAI’s valuation to more than $300 billion, but SoftBank will also replace Microsoft as OpenAI’s largest shareholder. When asked about the financing news, Goto gave a vague response: I am reluctant to comment on these speculations. rdquo;

Regarding Musk’s $97.4 billion bid to acquire the OpenAI non-profit organization, Yoshihiro Goto also said that something like this may happen, but at present it is more like a speculation and cannot respond to how it will affect the Stargate.