Softbank betting big on computer chips

Softbank, the great Japan based holding company (not a bank), has agreed to buy Ampere Computing, an important chipmaker based in California.

According to a report from Reuters, this is an all-cash transaction, for $6.5 billion on the barrelhead.

Now: I would not have you draw the conclusion, "the smart money is getting into chips, maybe I too ought to be getting into chips!" Softbank hasn't always been all that 'smart' in its use of money, I'm afraid.

Softbank was, for example, a big investor in WeWork, the company that gave some excitement and Silicon Valley gloss to the idea of shared working spaces. The business plan was simple: enter into long-term leases for a lot of office space, and rent it at for shorter terms and higher rent.

WeWork looked good in the period 2010-2019. It was a private company and could keep most of its cards close to its vest. Then it decided that there was money to be made in an IPO. But a public offering requires compliance with a lot of SEC disclosure rules and the market didn't like what it saw when those books opened.

The IPO was a bust. But SoftBank put more money into it, and ran into the buzz-saw of Covid, when a heck of a lot of office work became remote. Its landlords still wanted its money and it no longer had tenants.

So (getting back to semiconductors) the WeWork experience seems to have taught Softbank to stick with REAL hi-tech companies, not companies that just want to throw a techie veneer on an old and lame business model.

I'm not sure if that is change enough for me to sign onto the idea that Softbank is the smart money. Or even the adult in the room.

Good look with Ampere, though, guys.

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