According to The Information, SoftBank CEO Masayoshi Son is planning to borrow $16 billion to invest in AI, and may borrow another $8 billion next year. The following points are drawn from The Information’s reporting, and I give serious props to Juro Osawa and Cory Weinberg for their work.
SoftBank currently only has $31 billion in cash on its balance sheet as of December. Its net debt — which, despite what you think, doesn’t measure total debt but rather represents its cash minus any debt liabilities — stands at $29 billion… They plan to use the loan in question to finance part of their investment in OpenAI and their acquisition of chip design firm Ampere.
According to SoftBank’s reported assets, their holdings are worth about $219 billion (33.66 trillion yen), including stock in companies like Alibaba and ARM.
am I reading this correctly: softbank has $50 billion in debt, equal to about 25% of their total assets? is that… normal? these are genuine questions, not sure whether I’m misunderstanding something/whether this is actually usual
They made $45 billion in revenue in 2023 ($1.3 billion net), so I’m sure that is a factor.
If you owned $219,000 in stock and grossed $45,000 a year, and had $31,000 in cash, could you borrow $16,000?
I think it’s more like $188,000 in stock, $31,000 in cash, annual pay of $45,000, and you currently have a $60,000 loan. the new loan would be an additional $16,000
The debt doesnt have to be unusual, esp when the projected profits on the debt is less than the money they pay in interest on it. So somebody with actual expertise about the context in which softbank operates and the specific nature of the debt should be able to tell of it is strange or not. Doubt we have that expertise here.
Why is Microsoft canceling a Gigawatt of data center capacity while telling everybody that it didn’t have enough data centers to handle demand for its AI products? I suppose there’s one way of looking at it: that Microsoft may currently have a capacity issue, but soon won’t, meaning that further expansion is unnecessary.
This is precisely it. Internally, Microsoft’s SREs perform multiple levels of capacity planning, so that a product might individually be growing and requiring more resources over the next few months, but a department might be overall shrinking and using less capacity over the next few years. A datacenter requires at least 4yrs of construction before its capacity is available (usually more like 5yrs) which is too long of a horizon for any individual product…unless, of course, your product is ChatGPT and it requires a datacenter’s worth of resources. Even if OpenAI were siloed from Microsoft or Azure, they would still know that OpenAI is among their neediest customers and include them in planning.
Source: Scuttlebutt from other SREs, mostly. An analogous situation happened with Google’s App Engine product: App Engine’s biggest users impacted App Engine’s internal capacity planning at the product level, which impacted datacenter planning because App Engine was mostly built from one big footprint in one little Oklahoma datacenter.
Conclusion: Microsoft’s going to drop OpenAI as a customer. Oracle’s going to pick up the responsibility. Microsoft knows that there’s no money to be made here, and is eager to see how expensive that lesson will be for Oracle; Oracle is fairly new to the business of running a public cloud and likely thinks they can offer a better platform than Azure, especially when fueled by delicious Arabian oil-fund money. Folks may want to close OpenAI accounts if they don’t want Oracle billing them someday.
Obviously Oracle and OpenAI are also expecting to soak the idiot in the White House for billions and billions of taxpayer dollars.
Breaking up with Hitler to date Pinhead
Moving up in the world. At least Pinhead takes people sightseeing.
first I hear of the notion that oracle would pick up and carry that. is it your hypothesis, or also from whispernets or so?
(not doubting or whatever, just curious. Oracle seems like it’d be allergic to saltman’s nonsense but given how well he can grift maybe he sold them…)
We can read between the lines for ourselves. From OpenAI’s announcement of Stargate in January, the only equity-holder who has built datacenters is Oracle, and the only other technology partner who has built datacenters is Microsoft. They claim that OpenAI will be operationally responsible, but OpenAI doesn’t have a team dedicated to building out and staffing datacenters. In related reporting, Microsoft relaxed its exclusive rights to OpenAI’s infrastructure specifically for Oracle and Stargate. As for the motives, I’ll highlight Ed’s reporting:
The Oracle/Stargate situation was a direct result — according to reporting from The Information — of OpenAI becoming frustrated with Microsoft for not providing it with servers fast enough, including an allotment of 300,000 of NVIDIA’s GB200 chips by the end of 2025.
nod, I get what you mean. probably 70/30 (although I wish it were closer to 50/50) on whether oracle goes for it, but boy how fucking funny would it be if if were the 30 and openai was suddenly scrambling to find a home for their bullshit
haven’t really had the headpsace to read into the stargate mess whatsoever! it is funny to hear that the borderline-ouroboros is still hungry but I’m not sure if it’ll, y’know, Learn From This
Folks may want to close OpenAI accounts if they don’t want Oracle billing them someday.
geez, at least spoiler-tag a jump-scare this big
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