SoftBank, Intel talks to produce AI chip to rival Nvidia reportedly failed

SoftBank’s (OTCPK:SFTBY) talks with Intel (NASDAQ:INTC) about manufacturing an artificial intelligence chip to compete with Nvidia (NASDAQ:NVDA) failed in recent months, people familiar with the matter told the Financial Times.

This plan was aimed at ramping up SoftBank’s (OTCPK:SFTBY) efforts to combine the chip designs of its top bet Arm Holdings (ARM) with the production expertise of its latest acquisition, British AI chipmaker Graphcore.

However, discussions collapsed as SoftBank (OTCPK:SFTBY) believed Intel (INTC) could not meet its demands for volume and speed. This happened before the chip giant announced drastic cost cuts. But sources said talks may restart as only a few chipmakers have the capabilities to manufacture cutting-edge AI processors.

SoftBank (OTCPK:SFTBY) is now said to be focused on talks with Taiwan Semiconductor Manufacturing (TSM), the world’s largest contract chipmaker. But a deal has not been reached, as TSM is reportedly struggling to meet demand from existing customers.

Intel (INTC) and SoftBank (OTCPK:SFTBY) declined to comment on the report.

SoftBank (OTCPK:SFTBY) CEO Masayoshi Son, who plans to spend billions of dollars to ensure the Japanese group keeps up in the AI race, still intends to go ahead with his plan to produce an AI chip. However, production capacity remains a major hurdle.