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In most recent news, the Japan-based mobile unit of SoftBank Corporation has set up a new AI-focused entity, with a specific focus on building generative AI products similar to OpenAI’s ChatGPT. CEO Junichi Miyakawa addressed the team during an earnings briefing, choosing about 1,000 people for building a Japanese version of ChatGPT similar technology.
“We are dead positive on ChatGPT,” said Miyakawa, as he mentioned that most of the meetings talk about building such technology. He said that the founder of SoftBank, Masayoshi Son, has been gathering engineers to hop onto this “revolutionary technology”. This move has also raised the stocks of Japanese AI companies.
Son has been one of the biggest proponents of AI, even before OpenAI or Google were, for the past six years. He had said in 2019 that, “AI will completely change the way humans live within 30 years.” Looks like we are closer than ever to that reality.
But the firm had been relatively silent for the last year when every single company was investing in AI and AI startups. SoftBank Vision Fund invested $3.1 billion in 2022, which is miniscule compared to $44 billion in 2021. Softbank Vision Fund was started in 2017 with a total of $100 billion in the bank.
Unfortunately, the Softbank Vision Fund has reported a loss of $32 billion in the year ended in March 2023. Over the past year, SoftBank has been exiting from a lot of investments to raise cash, which includes pulling out of AliBaba, the China-based big-tech firm, which is also building generative AI capabilities.
“Total defence” to “cautious offence”
Interestingly, the company is now switching gears and has decided to increase investments in AI startups again even after reporting a total loss of $32 billion through their SoftBank Vision Fund. One of the major losses includes the investment in an AI startup named SenseTime, through which the firm was hoping to develop generative AI capabilities.
One of the firm’s own robotics arm, SoftBank Robotics, has been one of the industry leaders when it comes to service robots, and is increasingly expanding. Last month, the company announced its new Robot integrator strategy to develop better robots. The month before that, the parent company SoftBank group had also announced plans to acquire the remaining portion of the already invested AI and robotics company Berkshire Grey, to integrate more AI into their own robots.
But on the flip side, the company had failed in the robotics field before. Pepper, one of the first humanoid robots developed by SoftBank was stopped from production in 2021 as it never caught up as a commercial product. Maybe this time the company would make a better one.
To get the new firepower to invest in startups, SoftBank has decided to cash out almost the entirety of its stake in Alibaba. This means over 23 years, AliBaba has returned the investment of $54 million into $72 billion. Seems like the loss through the vision fund is now recovered and the company can start afresh.
At the same time, SoftBank had also been funding its AI chatbot dream through AliBaba. To that note, AliBaba had also planned to launch its own AI chatbot, Tongyi Qianwen to rival ChatGPT. Seems like the firm now is steering away from investing in Chinese companies, to invest in Japan, while also building its own language model technology.
Now, “We are getting ready to go on the offensive with the AI revolution on the horizon,” said SoftBank Chief Financial Officer Yoshimitsu Goto. “The time for AI has come.”
Is There Competition?
Luckily, Prime Minister Fumio Kishida initiated discussions in the Japanese government’s strategy council for the first time to build frameworks for the development of generative AI starting next month. “AI has the potential to change our economic society positively, but it also has risks, so it’s important to deal with both appropriately,” said Prime Minister Kishida.
In the same meeting, one of the participants said that it is important for Japanese companies to build their own language models to not fall behind in business. This is because amid the hype around generative AI, a lot of Japanese companies would have to forcefully adopt language models from U.S. companies and use them for businesses.
Here is where OpenAI stepped in. Exactly a month ago, Sam Altman had made a visit to Japan to speak to the Prime Minister Fumio Kishida about expanding OpenAI’s office in Japan while also discussing the merits and the risks of such models. To this, Hirozkazu Matsuno, the chief cabinet secretary, has said that the country is evaluating the possibilities of introducing OpenAI’s technology in the country.
Similar to Softbank’s vision of a Japanese version of ChatGPT, Altman told reporters that he, “hopes to build something great for Japanese people, make the models better for Japanese language and culture.” Taro Kono, responsible for Japan’s digital transformation in the cabinet, also expressed optimism about AI technologies in the government while also talking about the potential downfalls it may entail.
SoftBank investing in AI startups is like rising from the ashes. But apart from the investments, its bid to develop language models for Japanese language with the government’s push towards it as well, would be the perfect combination for the company.
While everyone was hopping onto the race, SoftBank remained quiet. It is one of the only big investors in the world that stayed away from OpenAI. Looks like they had it all planned out, but hopefully they are not too late.
It is quite possible that this rush by the firm, and the Japanese government as well, was triggered by Altman’s expansionist vision in Japan. But who knows, instead of a competition, this might be a first step towards a partnership that will only help SoftBank in the end.
