Jensen Huang talks with Masayoshi Son: Japan's new AI pie, Arm's AI ambitions, and NVIDIA's new opportunities in East Asia

On November 13th, Jensen Huang and Masayoshi Son had an offline conversation in Japan, with a relaxed atmosphere, reflecting on the latter's past investments in NVIDIA and jointly discussing the development of AI in Japan. This article summarizes the past entanglements between the two and their current development directions.

At the SoftBank World Conference in 2020, Masayoshi Son and Jensen Huang engaged in a fireside chat around "What’s Next for AI." Jensen Huang, wearing his signature leather jacket, sat by the fire and talked about the significant value of bringing Arm under his wing, while Masayoshi Son did not hold back his praise, stating that Huang would achieve the same level of success as Steve Jobs in the next 10 years.

Four years later, the now 61-year-old Jensen Huang and 67-year-old Masayoshi Son sat together again, with the topic still revolving around AI, but their personal circumstances and the companies they lead, NVIDIA and SoftBank, have changed significantly. In four years, NVIDIA's massive acquisition plan for Arm fell through, yet it has become one of the companies flying highest in the AI boom. In contrast, after focusing his main efforts on Arm, Masayoshi Son experienced a downturn but finally saw a turnaround in 2023, as Arm's successful IPO greatly alleviated SoftBank's revenue pressure.

Despite their different paths, both the successful Jensen Huang and the ambitious Masayoshi Son are fully betting on AI. NVIDIA is known as the "arms dealer of the AI era," with both large enterprises and unicorns relying on its high-performance GPUs for computing power; Arm also announced its official entry into the AI chip field in July this year, planning to achieve mass production by next autumn.

Thus, the theme of this fireside chat was also closely tied to AI. Their conversation began with Jensen Huang's "compliment," lavishing praise on Masayoshi Son as "the only entrepreneur and innovator in the world who has chosen winners and collaborated with winners in every technological revolution." They then primarily exchanged views on the development of AI in Japan.

Jensen Huang introduced that Masayoshi Son was once the largest shareholder of NVIDIA, and the latter "was about to cry."

Years of Entanglement: Masayoshi Son Regrets Selling NVIDIA Shares at a Low Price

I believe everyone has heard more or less about the "love-hate entanglement" between Jensen Huang and Masayoshi Son.

In 2016, Masayoshi Son, who had invested in Yahoo and Alibaba, was at the peak of his success, acquiring Arm for $32 billion, making it the largest acquisition in European tech history at the time. It was also in that year that the so-called "investment madman" Masayoshi Son approached Jensen Huang, wanting to acquire NVIDIA. The outcome was evident, but the undeterred Masayoshi Son invested $4 billion in NVIDIA the following year, and through a roundabout strategy, SoftBank held a 4.9% stake.

At that time, media speculated that Masayoshi Son's stake was merely a "holding tactic," preparing to gradually infiltrate to become a major shareholder. However, this strategy did not succeed; instead, under revenue pressure, Masayoshi Son made a regrettable decision in 2019—liquidating his NVIDIA shares, a matter we will discuss later Looking back to 2016, while Masayoshi Son was frantically spending money, Jensen Huang began his layout—the world's first AI supercomputer DGX-1 was born. He found Elon Musk, who had not yet fallen out with OpenAI, and donated the world's first DGX-1 to the company.

Entering 2017, with Masayoshi Son's $4 billion to supplement his arsenal, Jensen Huang moved towards the first tier to compete with Google. That year, thanks to the gaming PC market and advanced AI chips, NVIDIA's performance skyrocketed, with revenue reaching $2.17 billion in the fourth quarter of fiscal year 2017, a year-on-year increase of 55%.

In 2018, the boom in cryptocurrency added fuel to NVIDIA's GPUs, leading to a temporary shortage of GPUs due to the influx of "miners" worldwide. However, as the cryptocurrency craze cooled and the stock market became volatile, NVIDIA faced an exceptionally tough year in 2019, with fourth-quarter revenue of $2.21 billion as of January 27, 2019, down 24% from $2.91 billion in the same period last year.

In this year of increased pressure for Jensen Huang, Masayoshi Son "took the money and ran."

At that time, Masayoshi Son was also struggling, focusing on Arm, but its regular business revenue continued to decline, and new businesses were burning cash with little effect. While Arm urgently needed capital, NVIDIA's stock kept falling, leading Masayoshi Son to make a "wrong" decision— in January 2019, SoftBank sold all of its NVIDIA shares. At that time, media calculated that based on NVIDIA's average stock price in the first quarter of 2019, SoftBank Group's sale was worth about $7 billion, with a profit of about $3 billion.

The timing of SoftBank's purchase and sale of NVIDIA stock, and the comparison with NVIDIA's current stock price

Interestingly, after distancing himself from NVIDIA, Masayoshi Son also lobbied Jensen Huang to take over Arm, and Old Huang offered a high price of $40 billion. However, this acquisition failed to pass regulatory scrutiny and was classified as a "vertical acquisition," meaning a merger between upstream and downstream companies in the industry chain.

Masayoshi Son in 2019 might be grateful for stopping the loss in time. Now, he openly states, "I regret selling NVIDIA stock." Just two days before he said this, NVIDIA topped the global market capitalization. Let's do some calculations: If SoftBank had not sold its NVIDIA shares, the value of its holdings would exceed $170 billion (based on NVIDIA's current stock price).

Riding the Fast Track, SoftBank Deeply Binds with NVIDIA

The past cannot be chased; with Masayoshi Son's insight and vision, his regret over the misjudgment regarding NVIDIA surely did not just arise this year. We can also see that in recent years, he has increasingly begun to express his full commitment to betting on artificial intelligence in public, while the Arm that he failed to divest has become the best foothold for his grand AI blueprint In a recent interview with CNN discussing future investment directions, Masayoshi Son publicly highlighted the core position of Arm in his AI strategy for the first time. As a technology company that almost monopolizes the global mobile chip market, Arm also has a very high technology utilization rate in high-end AI and AIoT chip fields. Son revealed that Arm is transforming into an AI-centric chip company.

In addition to the chip sector, Son also expressed a strong interest in AI robotics technology. He believes that when Artificial Superintelligence (ASI) combines with robotics technology, it will give rise to remarkable innovative products, which could be one of his important investment directions in the future.

When discussing the difference between Artificial General Intelligence (AGI) and Artificial Superintelligence (ASI), Son provided a clear definition. He believes that AGI is intelligence that reaches the same level as the human brain, while ASI is a thousand times smarter than the human brain.

It is noteworthy that earlier this year, Bloomberg disclosed that Son is seeking to raise $100 billion (approximately RMB 700 billion) to establish an AI chip company. With Arm transforming into AI chips and seeking new investments externally, many media outlets speculate that this move has already challenged NVIDIA.

However, the competitive tension did not extend to this conversation; on the contrary, Jensen Huang announced a deep collaboration between NVIDIA and SoftBank Group.

According to reports, SoftBank is using the NVIDIA Blackwell platform to build Japan's most powerful artificial intelligence supercomputer, and plans to use the NVIDIA Grace Blackwell platform to construct its next supercomputer. SoftBank plans to utilize its Blackwell-driven DGX SuperPOD for generative AI development and AI-related businesses, serving universities, research institutions, and enterprises across Japan.

Additionally, SoftBank successfully trialed the world's first network combining artificial intelligence and 5G telecommunications using the NVIDIA AI Air accelerated computing platform.

Strong Subsidies, Japan Aims to Seize AI Opportunities

As mentioned earlier, during this conversation, the two did not discuss Arm and its transformation in depth; instead, they peacefully strategized for Japan's AI development.

NVIDIA's partners in Japan Japan has experienced peaks and valleys in global technological development and is now attempting to catch up using AI.

As is well known, Japan was once a leader in the semiconductor industry. In the 1980s, it surpassed the United States, becoming the number one in semiconductor market share. However, the booming development of Japan's semiconductor industry also drew dissatisfaction from some countries, particularly the United States, leading to escalating trade frictions. Ultimately, both sides signed the Japan-U.S. Semiconductor Agreement, which greatly restricted Japan's industry development. Coupled with the shift of large communication equipment and computers towards more compact and flexible personal computers, market demand changed, and Japanese companies that failed to adjust in time gradually lost their competitiveness.

With the change of times, as AI becomes the center of global technology, Japan, which once lagged behind, is gradually removing the constraints imposed by the U.S. and is attempting to rely on its past accumulation in semiconductor design and manufacturing to revitalize its chip industry and return to the main stage of international technological competition.

Recently, the Japanese government announced a plan to commit over $65 billion in financial support for its semiconductor and AI industries over the next 10 years, aiming to enhance Japan's position in global technological competition and promote economic growth through large-scale investments.

Meanwhile, NVIDIA, located across the ocean, is also a beneficiary of various measures taken by the Japanese government. Japanese companies receiving government subsidies may turn around and invest in NVIDIA.

For example, after receiving government grants, Japanese digital infrastructure service provider Sakura stated that it would strengthen its generative AI cloud service "High Firepower," planning to increase the number of GPUs equipped with "High Firepower" to five times the original plan, with about 10,000 GPUs, including the NVIDIA HGX B200.

In this discussion, Masayoshi Son candidly stated that the era of artificial intelligence is a "reset," and the Japanese government is not trying to suppress this AI revolution. Now is the time to catch up with this revolution; "we cannot miss it." Jensen Huang also believes that Japan needs to seize this opportunity, and it indeed has.

In Conclusion

Interestingly, at the end of their conversation, the two casually reviewed past acquisitions and divestitures.

Ten years ago, Masayoshi Son told Jensen Huang, "The market does not understand the value of NVIDIA; your future is incredible, and your journey of hardship will continue for a while because you are exploring the future. So, let me provide you with funds to buy NVIDIA."

Jensen Huang joked, "He wanted to lend me money to buy NVIDIA, and I now regret not accepting it."

Today, perhaps no one would dare to boast about "buying" NVIDIA. In the foreseeable future, the development potential of this company will undoubtedly drive its market value to remain high, and with SoftBank and NVIDIA having reached a partnership, will they be able to catch this fast train and inject vitality into the Japanese market? We shall wait and see.

Author: Li Baozhu, Source: HyperAI, Original Title: "Jensen Huang in Conversation with Masayoshi Son: Japan's New AI Pie, Arm's AI Ambitions, and NVIDIA's New Opportunities in East Asia"