SoftBank abandons AI chip partnership with Intel and shifts focus to TSMC

The development underscores the intense competition in the AI chip market, highlighting Intel’s struggles and TSMC’s significant role in the industry.
High AI chip exposure benefits ASML and ASM International, though they face stock valuation corrections.

SoftBank has abandoned its plan to develop an AI chip in partnership with Intel, according to a report by the Financial Times. The Japanese tech investor had intended to collaborate with Intel to challenge Nvidia, but the deal fell through after Intel failed to meet SoftBank’s requirements, as reported by sources familiar with the situation. SoftBank attributed the breakdown of negotiations to Intel’s inability to deliver on speed and production volume demands.

As a result, SoftBank has shifted its focus to discussions with Taiwan Semiconductor Manufacturing Co (TSMC), the world’s largest contract chipmaker. The report noted that the collapse of talks occurred before Intel’s significant cost-cutting measures, including massive layoffs in early August.

Why does this matter?

These events highlight the intensifying competition in the AI chip market, where companies like Nvidia currently dominate. SoftBank’s decision to abandon its partnership with Intel and shift focus to TSMC underscores the challenges Intel faces in keeping pace with AI-driven innovations. The move also signals potential shifts in global chip production dynamics, with TSMC further solidifying its role as a key player. Additionally, it reflects the broader implications of Intel’s internal struggles, such as meeting demand and cost-cutting, on its competitiveness in critical emerging technologies like AI.