SoftBank has cancelled plans to co-develop an artificial intelligence (AI) processor with U.S. chipmaker Intel, citing the latter's failure to achieve critical specifications. The Financial Times, in an article said that the move comes as SoftBank explores other collaborations, with Taiwan Semiconductor Manufacturing Company (TSMC) emerging as a possible choice.
According to sources familiar with the subject, the relationship ended because Intel was unable to meet SoftBank's demands for both volume and production speed. As a result, SoftBank elected to distance itself from Intel, citing the latter's recent troubles, which included extreme cost-cutting measures and layoffs revealed earlier this month.
The failed talks are a huge setback for Intel, which has been working to improve its position in the AI chip market, which is dominated by NVIDIA. SoftBank, a key participant in the digital investment area, initially approached Intel as part of its strategy to enter the competitive AI chip market. However, Intel's inability to achieve manufacturing targets resulted in the termination of negotiations.
With Intel out of the picture, SoftBank is now focused on forming a collaboration with TSMC, the world's largest contract chipmaker. TSMC's sophisticated production capabilities and proven track record make it an appealing alternative for SoftBank as it looks to build AI chips that can compete with Nvidia's offerings.
The failure of talks with Intel coincides with the company's recent decision to sell its investment in ARM Holdings. As part of a strategic restructuring aimed at reshaping its business model, Intel divested its ARM holdings. ARM, owned by SoftBank, is a major participant in chip design, and Intel's exit from ARM highlights the company's issues during these times, particularly the recent cost-cutting initiatives and organisational changes. These problems have generated concerns about Intel's capacity to remain competitive in the fast-expanding semiconductor industry.
