SoftBank’s $7 Billion Loss Is Bad News for Arm. Here’s the Number That Matters

Softbank Group and ABB are in talks to revive a $5.4B robotics acquisition blocked by China. ABB's robotics unit generated $1.7B in revenue (9M YTD) but posted a $23M net loss. China's approval remains uncertain, with potential carve-out or alternative deals under consideration. Softbank aims to expand its AI and robotics capabilities.

SoftBank and Grab plan a US$1.85 billion investment in Malaysian AI infrastructure, with US$1 billion from SoftBank, US$750 million from Grab, and US$100 million from PETROS. The funds will develop AI computing capacity in Sarawak and Peninsular Malaysia, with Grab leading the Peninsular project. The investment is part of a multi-year program to meet rising AI demand. The agreement supports Malaysia's AI Nation 2030 plan and may create jobs in engineering and technical fields.

SoftBank reported a $7bn quarterly loss, its first in nearly two years, due to a $3.7bn write-down on US data centre projects. The loss was driven by a reassessment of power generation strategies and declines in chipmaker stocks like Intel and Arm, as well as e-commerce firm Coupang. SoftBank's Vision Fund also posted a loss of ¥81.6bn. Additionally, China blocked its $5.4bn acquisition of ABB Robotics, citing regulatory concerns.

ARM Holdings reported a 27% revenue increase to $1.44B, with adjusted EPS beating estimates, but shares fell 13% due to slower royalty growth (8%) attributed to memory pricing impacts on smartphone shipments. Licensing revenue surged 50%. Bank of America raised concerns about SoftBank's role in licensing revenue. ARM's data center chips showed strong performance in testing. Next earnings report in February will provide more insights on phone royalties and AGI CPU deliveries.

SoftBank, Grab, and PETROS agreed to invest $1.85B in AI infrastructure in Malaysia, with SoftBank contributing $1B, Grab $750M, and PETROS $100M. The projects aim to provide AI computing capacity and support Malaysia's AI Nation 2030 plan. Grab's CEO will oversee development, and SoftBank agreed to a five-year lock-up on Grab shares.

SoftBank reported a $7B net loss in Q2, reversing from a $23B profit a year ago. Losses stemmed from US data center costs, interest expenses, and a $3.7B loss on AI-related power equipment. The company has heavily invested in OpenAI ($64.6B total), data centers, and robotics, but faces delays and regulatory hurdles. Arm's share price decline also impacted earnings. Vision Funds saw gains, with SVF1 up $2.4B. SoftBank's shares are down 16% year-to-date.