SoftBank launches SB Neo to provide AI cloud services and computing power across America

SoftBank enters the rent-a-GPU race as America looks for support for AI training

Japanese giant needs to find some use for that 10 GW US server farm it is building SoftBank is set to get into the neocloud business in America, providing resources to hyperscalers and other customers seeking a platform on which to carry out their AI training. The Japan-based tech investment giant says it will establish a new company called SB Neo, Inc to operate its neocloud business in the US, and expects to start operations in fiscal 2027 (ending March 31, 2028). In actual fact, ownership of the nascent biz will be split, with 51 percent in the hands of SoftBank Corp, while 49 percent is owned by SoftBank Group Corp. SB Neo will be a consolidated subsidiary of SoftBank Corp, which is itself 40 percent owned by SoftBank Group Corp. All perfectly clear? Neocloud operators, or rent-a-GPU providers, sprang up to take advantage of the huge demand for compute resources using GPU accelerators. They are effectively specialized niche cloud platforms focused on AI services. But a report from blue chip consultants McKinsey & Company last year warned that the business model for neoclouds is fragile because it is inherently commoditized; there is limited differentiation in renting out access to specific hardware. Perhaps SoftBank knows something that McKinsey doesn't. SoftBank Corp says it has been providing a beta version of its GPU cloud service powered by "Infrinia AI Cloud OS," a software stack for AI bit barns, in Japan since May, and intends to use the expertise and insights gained via this initiative to drive its US operations. Infrinia AI Cloud OS is SoftBank's software stack designed by the firm's own Infrinia development team, which supports Kubernetes-as-a-Service (KaaS) in a multi-tenant environment, and Inference-as-a-Service (InfaaS) to provide large language model (LLM) inference capabilities via APIs. SoftBank chief Masayoshi Son said in a supplied remark: "The SoftBank Group will work together to deploy world-class AI infrastructure and drive the AI revolution." The company also disclosed that it plans to proceed with the construction of gigawatt-scale AI datacenters in Japan as soon as preparations are in place. How much all this is costing wasn't revealed, but elsewhere it was reported that SoftBank Group has reengaged with lenders to secure a $10 billion loan backed by its stake in OpenAI. Lenders were wary of such a transaction at first, but according to Reuters, the Japanese firm is now offering to guarantee repayment of the loan, giving banks recourse if the OpenAI shares pledged as collateral lose value. Masayoshi Son also reportedly told SoftBank shareholders recently that any talk of a bubble is "an insult to AI," and that "I think it's blasphemy against AI if you say it's a bubble." So we won't mention that OpenAI CEO Sam Altman himself admitted that we're in the midst of an AI bubble. ®

SoftBank unveils plans to enter the U.S. neocloud business with SB Neo

SoftBank unveils plans to enter the U.S. neocloud business with SB Neo Japanese technology conglomerate Softbank Group Corp. and its telecommunications subsidiary SoftBank Corp. are planning to launch a new neocloud business in the U.S. that will rent access to artificial intelligence chips to hyperscalers and other businesses in need of compute resources. The company said it's going to establish a new entity called SB Neo Inc., which will operate as a neocloud business when it begins operations in fiscal 2027 next March, according to a press release. Ownership of the necloud business will be split, with SoftBank Corp. having a 51% stake, while SoftBank Group Corp. will get 49%. SB Neo will then operate as a consolidated subsidiary of SoftBank Corp., which itself is a subsidiary of SoftBank Group Corp. Neoclouds are a relatively new and fast-growing segment within the cloud computing infrastructure business, which focus on renting access to graphics processing units and other AI accelerators. They sprang up to take advantage of the massive demand for GPUs. They're essentially niche cloud platforms that are laser-focused on providing AI services. However, there are questions about the financial stability of neoclouds. A report last year by McKinsey & Co. warned that the business model of most neoclouds is extremely fragile because of its commoditized nature, with operators only able to offer limited differentiation based on the specific hardware they can offer. Whether or not SoftBank knows something that McKinsey doesn't isn't clear. SoftBank Corp. says it has been running a beta operation of its GPU cloud service in Japan since April. It's powered by a software stack called Infrinia AI Cloud OS, which is a software stack for AI data centers. The company says it wants to apply the expertise it has gained from running this business on a much bigger scale in the U.S. Infrinia AI Cloud OS was developed by SoftBank Corp.'s Infrinia development team and supports Kubernetes-as-a-service in multi-tenant environments and inference-as-a-service capabilities for large language models. In a prepared remark, SoftBank Chief Executive Masayoshi Son said "The SoftBank Group will work together to deploy world-class AI infrastructure and drive the AI revolution." A report in the Japan Times says SB Neo will eventually supply around 10 gigawatts of AI compute capacity to U.S. customers by 2030 for scaling AI model training and inference workloads. In doing this, SoftBank Group hopes to triple or even quadruple its annual operating income to between $18.5 billion and $25 billion, according to people familiar with its plans. SB Neo may have a ready-made customer in the AI giant OpenAI Group Corp., which has benefited massively from SoftBank's largesse in recent years. The technology group has invested a staggering $65 billion into the ChatGPT maker, and that's likely to ensure it has enough influence to sway OpenAI CEO Sam Altman into buying into its neocloud vision. However, SB Neo will still face a lot of competition from neocloud rivals such as CoreWeave Inc., as well as traditional public cloud operators like Amazon Web Services Inc., Microsoft Corp. and Google Cloud, which also sell access to GPUs and their own specialized AI chips. Meta Platforms Inc. also has plans to enter the neocloud business. However, Junichi Miyakawa, the head of SoftBank Corp., told the Japan Times that SB Neo has an advantage thanks to its ability to secure source of energy from gas-fired plants. SoftBank also revealed that it's planning to push ahead with its plans to construct a number of new gigawatt-scale data centers in Japan later in the year. One thing it did not talk about, though, was how it intends to finance all of these plans. However, Bloomberg reported separately that SoftBank has reengaged with lenders in an effort to secure a $10 billion loan that's backed by its stake in OpenAI. Lenders were initially less than enthusiastic about such a transaction at first, but the company is said to be offering to guarantee repayment of the loan, which could give them some recourse if the shares in OpenAI pledged as collateral lose their value. Son has been one of the most vocal proponents of AI, and recently told shareholders that talk of the industry being in a bubble is an "insult to AI." He added that he thinks it's "blasphemy against AI if you say it's a bubble." His comments came after Altman last year stated that he does think the AI industry is in a bubble.

SoftBank plans to offer AI-tailored cloud services in U.S. from next fiscal year

SoftBank Group and its telecom unit will start renting artificial intelligence computing resources to U.S. companies next fiscal year in a bid to capitalize on the company's growing pipeline of data center projects. The two companies will set up SB Neo this month, ahead of plans to offer AI chips and cloud services to big companies including hyperscalers, the companies said in a statement Thursday. The "neocloud," or AI-tailored-cloud, venture plans to ramp up its computing resources to eventually supply data center capacity at a scale of 10 gigawatts by around 2030 for large-scale AI model training and inference, according to Junichi Miyakawa, head of the telecom unit. Supplying neocloud operations in the U.S. could easily triple or quadruple mobile carrier operator SoftBank Corp.'s annual operating income to the tune of ¥3 trillion to ¥4 trillion ($18.5 billion to $25 billion), according to people familiar with the company's plans. The new business, 51% owned by mobile carrier operator SoftBank and 49% by its parent group, has the potential to generate profit "on a different order of magnitude," Miyakawa said in an interview. "We see this launch in the U.S. as a second founding for our company." Japan's third-largest mobile carrier played a foundational role for SoftBank Group, helping Masayoshi Son finance his early successes in venture capital. In recent years, the billionaire's focus has centered around artificial intelligence hardware and data centers, part of an ambition to capitalize on insatiable demand for computing power and set the stage for AI's proliferation throughout society. Neoclouds -- a new category of small infrastructure providers that lease out AI-focused computing power -- have emerged to address soaring demand for access to computing capacity. Companies like CoreWeave and Nebius Group are quickly renting the specialized chips their customers need to train and run AI models. SoftBank's neocloud operations may have a ready customer in OpenAI, in which the parent company has committed to investing a total that will reach about $65 billion by October. The field has grown increasingly crowded, however. In addition to dedicated neocloud service providers, industry leaders like Amazon Web Services, Microsoft Azure and Google Cloud also sell access to AI computing power. Meta Platforms is also developing plans for a similar foray. SoftBank has an edge in its ability to secure sources of power, mainly from gas-fired plants, Miyakawa said. SoftBank envisages a $500 billion data center-focused project in Ohio, among the largest in the world at 10GW of capacity. At home, SoftBank's telecom unit is building data center campuses in Hokkaido and in the city of Sakai in Osaka Prefecture.

SoftBank to Form New Company for U.S. AI Cloud Business

SoftBank is starting a new U.S. venture to rent out the computing power needed to build and run artificial-intelligence models, aiming to capitalize on strong American demand for AI computing resources. Tentatively named SB Neo, the new company enters the so-called "neocloud" market, joining newer companies that rent out specialized computing power, likely including high-performance graphics-processing chips, to businesses building AI systems. The initiative combines the forces of investment giant SoftBank Group Corp., which will hold a 49% stake, and its telecommunications arm, SoftBank Corp., which will retain a controlling 51% share, the companies said Thursday. Slated for establishment in July 2026, the new company aims to offer cloud computing services to major U.S. enterprises, including hyperscalers, starting in the fiscal year ending March 2028. The announcement didn't specify which companies. SB Neo will draw on SoftBank Group's 10-gigawatt-scale energy and AI infrastructure already under development in the U.S., and expand capacity in phases. In Japan, the telecom arm has been running a beta version of its GPU cloud service since May, which it will leverage to support the U.S. rollout. Junichi Miyakawa, president of SoftBank Corp., said the U.S. expansion aligns with the group's steady progress toward securing 10 gigawatts of power in the U.S. He added that the company also plans to construct gigawatt-scale AI data centers in Japan once preparations are complete.