SoftBank Halts Switch Acquisition, Puts Brakes on Stargate Initiative

SoftBank Group has reportedly halted negotiations to acquire Switch, a US data center operator. This development is expected to inevitably disrupt Chairman Masayoshi Son’s ambitious artificial intelligence (AI) infrastructure project, known as "Stargate."

Yonhap News Agency

On January 26, Bloomberg reported, citing sources familiar with the matter, that SoftBank recently suspended talks regarding the acquisition of Switch.

Chairman Son had been pursuing the acquisition of Switch for several months, with the deal estimated at around $50 billion. This acquisition was considered a central pillar of the Stargate project, which is being pursued at a total scale of $500 billion.

However, earlier this month, Chairman Son decided not to proceed with a full acquisition. It was also reported that the official announcement, originally scheduled for January, has been withdrawn.

There were reportedly concerns within SoftBank itself regarding the deal. In addition to the size of the contract, there were practical burdens associated with directly operating a data center campus stretching from Las Vegas to Atlanta.

Nevertheless, it is known that SoftBank and Switch are continuing discussions on alternative options, such as partial investment or a strategic partnership. Earlier this month, SoftBank signed an agreement to acquire DigitalBridge Group, an investment company listed on the New York Stock Exchange, for $3 billion. DigitalBridge is the largest shareholder of Switch.

If the deal had gone through, it would have been one of the largest acquisitions in SoftBank’s history. Bloomberg also explained that it could have provided significant momentum for the Stargate project, which aims to build data centers in the United States.

Chairman Son has previously stated his intention to expand his influence in the AI supremacy race through this project. To that end, he pledged to immediately invest $100 billion in collaboration with OpenAI, Oracle, and Abu Dhabi’s sovereign wealth fund MGX.

Bloomberg noted that while the possibility of resuming full acquisition talks is low, there is still room for a collaborative model to be explored in the medium to long term, considering Chairman Son’s strong interest. In the past, Chairman Son successfully acquired British semiconductor design company Arm in 2016 after monitoring it for several years.

Meanwhile, Bloomberg reported that neither SoftBank, Switch, nor DigitalBridge have commented on the suspension of the acquisition.

This content was produced with the assistance of AI translation services.