SoftBank Group, led by Masayoshi Son, is reportedly in discussions to spearhead a funding round of up to $40 billion for OpenAI, the creator of ChatGPT, at a valuation of $300 billion, according to a Reuters report. This funding news emerges as a new Chinese AI startup, DeepSeek, has surpassed ChatGPT to become the top free app in U.S. app stores, challenging the perception of American dominance in the global AI landscape.
Despite the attention garnered by DeepSeek’s cost-effective AI models, SoftBank has assessed OpenAI’s value at $260 billion ahead of the funding round, a significant increase from its previous valuation of $150 billion just months prior. The investment is expected to be structured as convertible notes, akin to OpenAI’s last funding round, and will hinge on the restructuring of OpenAI’s business to eliminate control of its non-profit division.
Of the proposed $40 billion investment, between $15 billion and $25 billion may be allocated to support OpenAI’s involvement in Stargate, a collaborative venture with SoftBank and Oracle aimed at investing up to $500 billion to ensure the U.S. maintains its competitive edge over China and other adversaries in the AI sector. An earlier report from the Wall Street Journal indicated that OpenAI and SoftBank were negotiating a $40 billion funding round at a valuation of $340 billion.
In light of DeepSeek’s recent claim that it spent only $5.6 million on an older Nvidia H800 processor to train its V3 language model, there has been heightened scrutiny regarding the expenditures of U.S. AI companies. In contrast, firms like Microsoft and Meta have disclosed spending of $80 billion and $65 billion, respectively, on AI infrastructure this year alone. During a recent earnings call, Microsoft’s Satya Nadella and Meta’s Mark Zuckerberg defended their companies’ substantial AI investments, emphasizing their importance for remaining competitive in the AI field.