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SoftBank’s Search for Singularity

A little hand-holding for ARM Holdings from SoftBankA little hand-holding for ARM Holdings from SoftBank
A little hand-holding for ARM Holdings from SoftBank

I first met Masayoshi Son back in 2000, when he was in Davos touting an investment he had just made in a company called “ thinks outside the box,” he said at the time. “They are going to sell you anything you want, for less than they paid for it.” It reminded me of an old joke, whose punchline was: “and make it up in volume.”

A few months later, the bubble burst, and Son’s net worth dropped by $70 billion – the largest financial loss ever recorded by any one person in history. But that hasn’t stopped him from thinking big. His early investment in Alibaba gave him the resources to build Softbank (SFTBY) into the 110th largest company on the Fortune Global 500…owning Sprint (S), among other things.

This morning he took another big jump, agreeing to buy chipmaker ARM Holdings Plc (ARMY) for a whopping $32 billion – a 40% premium over the company’s closing price on Friday and the biggest ever deal involving a European tech company. “This is one of the most important acquisitions we have ever made,” he said, “and I expect ARM to be a key pillar of SoftBank’s growth strategy going forward.”

Son has said his goal is to build Softbank into the Number One company in the world. Two years ago, he recruited Google super-executive Nikesh Arora to help him do that, and designated him as his successor. But last month, Arora abruptly departed, after Son decided he needed to delay his retirement so he could help Softbank navigate its way through the next big thing. (Read Erin Griffiths interview with Arora about his resignation here.) “I think we are about to see the biggest paradigm shift in human history,” Son told shareholders last month. “The singularity is coming. Artificial intelligence will overtake human beings not just in terms of knowledge, but in terms of intelligence. That will happen in this century.”

Son sees the ARM acquisition as giving him a major player in the Internet of Things. It also gives a British government besieged by Brexit something to crow about…even while losing control of its most important technology company. Philip Hammond, the new Chancellor, said the deal shows that “Britain has lost none of its allure to international investors. Britain is open to business…and to foreign investment.”