SoftBank unveils plans to enter the U.S. neocloud business with SB Neo
Japanese technology conglomerate Softbank Group Corp. and its telecommunications subsidiary SoftBank Corp. are planning to launch a new neocloud business in the U.S. that will rent access to artificial intelligence chips to hyperscalers and other businesses in need of compute resources.
The company said it’s going to establish a new entity called SB Neo Inc., which will operate as a neocloud business when it begins operations in fiscal 2027 next March, according to a press release. Ownership of the necloud business will be split, with SoftBank Corp. having a 51% stake, while SoftBank Group Corp. will get 49%. SB Neo will then operate as a consolidated subsidiary of SoftBank Corp., which itself is a subsidiary of SoftBank Group Corp.
Neoclouds are a relatively new and fast-growing segment within the cloud computing infrastructure business, which focus on renting access to graphics processing units and other AI accelerators. They sprang up to take advantage of the massive demand for GPUs. They’re essentially niche cloud platforms that are laser-focused on providing AI services.
However, there are questions about the financial stability of neoclouds. A report last year by McKinsey & Co. warned that the business model of most neoclouds is extremely fragile because of its commoditized nature, with operators only able to offer limited differentiation based on the specific hardware they can offer. Whether or not SoftBank knows something that McKinsey doesn’t isn’t clear.
