SoftBank's Mobile Arm Says It May Launch AI Cloud Outside the US First After Midterms

"The major developments in the US are not going to work particularly to our advantage," Junichi Miyakawa said at the company's earnings briefing in Tokyo, according to Bloomberg. He said overall global demand for AI data centres remains strong, but that if conditions in the US worsen significantly, "we may launch in other countries first."

The comments are among the first from a major AI infrastructure investor to tie expansion plans directly to last week's US midterm elections, in which Democrats won control of Congress, and to the growing local opposition to data centre construction. SoftBank Corp. had been laying the groundwork for a US neocloud business, a provider that rents out AI computing capacity, and has set an ambition of building up to 10 gigawatts of capacity in the US, Bloomberg reported.

That US venture, called SB Neo, was announced in July as a joint effort with SoftBank Group to create an AI-focused data centre operator that would draw on the parent's infrastructure and expand in phases.

Record First Half

The caution came alongside strong results. SoftBank Corp. said revenue, operating income and net income all reached records in the six months to September. Cloud and AI-related revenue rose by about 37%, or 44 billion yen, ahead of the company's 30% growth target, according to a transcript of the earnings call.

The company raised its full-year operating income forecast by 60 billion yen and its net income forecast by 50 billion yen, a figure that includes a gain from the sale of SB Energy. It plans AI-related investment of about 160 billion yen this fiscal year, most of it for its data centre in Sakai, Osaka. On the call, management said current AI cloud demand comes mainly from Japan and is mainly for model training.

Alternatives to the US

SoftBank Corp. already has options outside the US. In August its Singapore subsidiary, SB Telecom Singapore, signed a non-binding agreement with SC Zeus, the data centre arm of SC Capital Partners, and consultant Robust HPC to explore AI data centres in Malaysia, Thailand, Indonesia, Vietnam and other markets. In Japan, besides Sakai, the company operates capacity at Tomakomai in Hokkaido.

The warning lands at a sensitive moment for the SoftBank group. The parent company, which reports its own results this week, faces investor questions about its exposure to OpenAI and its debt load after last week's sell-off in AI stocks. Bloomberg also cited a Gartner analysis estimating that more than $3.5 trillion of AI infrastructure spending could be impaired by 2030.

Miyakawa did not say what would count as a significant deterioration in US conditions or which countries would be first in line if SoftBank Corp. shifts its launch plans.