U.S. vs. China: Japan’s big tech investor picks a side

Summary

POLITICO Tech Podcast Summary: U.S. vs. China – Japan’s Big Tech Investor Picks a Side

Released on January 29, 2025, the latest episode of the POLITICO Tech podcast delves into the strategic maneuvers of Masayoshi Son, the influential chairman and CEO of Japan’s SoftBank. The discussion, led by host Stephen Overle and featuring guest Lionel Barber, former Financial Times editor and author of the biography Gambling Man, explores Son’s pivotal choice to align more closely with the United States amidst escalating U.S.-China tensions.

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1. Introduction to Masayoshi Son and SoftBank

The episode opens with Stephen Overle contextualizing recent events where Masayoshi Son joined President Donald Trump and other tech executives at the White House for a significant AI announcement. Unlike his more prominent U.S. counterparts, Son's influence on the global tech landscape is underscored by his ability to raise billions and invest across diverse technology sectors worldwide.

Quote:

• “Sun is a power player, raising billions of dollars and investing in tech firms around the world.” (00:32)

2. Masayoshi Son’s Alignment with President Trump

Lionel Barber provides historical context, highlighting Son’s previous interactions with Trump. Eight years prior, Son pledged $50 billion and promised the creation of 50,000 jobs—a commitment he has now doubled to $100 billion in his latest showcase at Mar-a-Lago.

Quote:

• “It's fascinating because this is a mirror image of what Masayoshi Son did with Donald Trump eight years ago when he promised $50 billion and 50,000 jobs. And you know what? He's just doubled that.” (02:39)

3. The Political Symbiosis Between Son and Trump

Barber draws parallels between Son and Trump, noting their shared identity as "comeback kids." Both figures have faced significant setbacks—Trump with his political resilience post-2020 and Son with financial challenges during the COVID-19 pandemic—but have managed to stage significant returns.

Quote:

• “They're both the comeback kids. Trump staged, frankly, one of the great political comebacks... Similarly, Masayoshi Son has been written off several times.” (03:35)

4. Shifting Allegiances: From Global Bridge to U.S.-Centric Focus

Historically, Son has been a pivotal figure bridging Eastern and Western markets, with substantial investments in both the U.S. and China, including stakes in companies like Sprint, Yahoo, and Alibaba. However, recent developments indicate a decisive tilt towards the U.S., influenced by mounting pressures from previous U.S. administrations wary of his extensive ties with Chinese enterprises.

Quote:

• “He's decided he has to choose. And frankly, he was under pressure from the previous Trump administration. So he's all in now in the data centers.” (04:34)

5. Detailed Breakdown of SoftBank’s $100 Billion Investment Plan

The conversation shifts to the specifics of Son’s ambitious investment plan. Unlike previous commitments that struggled to materialize, this new pledge is portrayed as a comprehensive strategy encompassing AI infrastructure, data centers, energy solutions, and the development of superchips intended to rival industry leaders like Nvidia.

Barber emphasizes the collaboration with key tech figures such as Sam Altman of OpenAI and Larry Ellison of Oracle, indicating a robust and multifaceted approach to U.S.-centric tech advancement.

Quote:

• “This is a more fully fledged plan, which involves energy. The super chip to rival Nvidia, the design expertise through ARM holdings that he owns 90% of.” (09:00)

6. Assessing the Viability of the $100 Billion Commitment

While Son’s previous project with Foxconn in Wisconsin, promising 13,000 jobs, fell short, Barber expresses cautious optimism about the current initiative. The involvement of high-profile partners and a strategic focus on sustainable and scalable tech infrastructure lend credibility to the endeavor, distinguishing it from past promises.

However, skepticism remains within the industry. Notably, Elon Musk has publicly questioned the feasibility of such a massive financial commitment, reflecting broader doubts about the practical execution of Son’s promises.

Quote:

• “This week he's actually said, with Sam Altman and Larry Ellison in the White House alongside President Trump, they've actually gone even further and said $500 billion. Now, I think that's a stretch.” (10:05)

7. Implications for U.S.-China Relations and Global Tech Dynamics

Son’s decisive support for the U.S. amidst rising geopolitical tensions marks a significant pivot in global tech alliances. Barber articulates that this move comes at a time when U.S.-China relations are increasingly strained, particularly in high-tech sectors like semiconductors and AI.

The potential for further decoupling looms large, with Son’s investments signaling a broader industry trend towards favoring U.S. markets over Chinese counterparts. This strategic shift could influence future policy decisions, international trade agreements, and the competitive landscape of global technology industries.

Quote:

• “The big story in 2025 is that Masayoshi Son, who's been a bridge between east and west, has actually come down in favor of America.” (04:34)

8. Future Outlook: Continued Influence and Strategic Moves

As the episode concludes, Barber anticipates that Son’s story will continue to evolve throughout 2025, with ongoing investments and strategic decisions further shaping the tech and geopolitical arenas. The alignment with influential U.S. leaders and the substantial financial commitments underscore Son’s pivotal role in the future of global technology and policy.

Quote:

• “This story is going to roll and roll in 2025.” (15:09)

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Conclusion

The POLITICO Tech podcast episode provides an incisive analysis of Masayoshi Son’s strategic realignment towards the United States, set against the backdrop of intensifying U.S.-China tensions. Through the expertise of Lionel Barber, listeners gain a comprehensive understanding of the motivations, implications, and future trajectories of Son’s investments, highlighting the intricate interplay between technology, geopolitics, and global economic strategies.

For a deeper dive into the evolving landscape of tech and policy, subscribing to POLITICO Tech and its accompanying newsletters, Digital Future Daily and Morning Tech, is highly recommended.

Transcript

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[Stephen Overle]

Hey, welcome to POLITICO Tech. Today's Wednesday, January 29th. I'm Stephen Overle. Last week, several tech executives joined President Donald Trump at the White House for a big AI announcement. There was Sam Altman, whose company OpenAI has made him a household name Larry Ellison, the chairman of Oracle and a longtime Trump supporter. And then there was a third executive, Masayoshi Son, the chairman and CEO of the Japanese investment firm SoftBank. He may not have the same profile as his counterparts, at least in the US but on the global stage, sun is a power player, raising billions of dollars and investing in tech firms around the world. And when it comes to Trump, he's also a shrewd political player. In December, he also stood beside Trump at Mar a Lago as the president told press that SoftBank would spend $100 billion in the U.S. none of this surprises Lionel Barber. He's a former Financial Times editor who authored a biography about Son called Gambling Man. And as Lionel wrote in a recent Politico piece, son's embrace of Trump fits a pattern. Only this time, it also signals something more. On the show today, Lionel tells me more about Sun's story and why his latest embrace of Trump sends a message to both Washington and Beijing. Here's our conversation. Lionel, welcome to Politico Tech.

[Lionel Barber]

It's great to be on the show.

[Stephen Overle]

So we're just days into the second Trump administration. The president has appeared with tech leaders, including Masayoshi San, the chairman of Japanese investment firm Softbank, announcing sort of big investments and things in AI and other tech areas. What do you make of what he's promising to do here?

[Lionel Barber]

Well, it's fascinating because this is a mirror image of what Masayoshi Son did with Donald Trump eight years ago when he promised $50 billion and 50,000 jobs. And you know what? He's just doubled that. He doubled that last month in Mar a Lago. And this week he's really laid out what's been secretly planned for several years, which is a big investment in artificial intelligence AI infrastructure like data centers, energy, and superchips. So we've Saw this week the first act of a four act drama.

[Stephen Overle]

Well, I love that you said he's sort of doubling in, that it's the first act, because your book about Masayoshi San is called Gambling man. And here he is sort of doubling down. You also have written that he's a showman, which seems very similar to Trump in that regard. How much do these two men have in common, do you think?

[Lionel Barber]

You know the biggest similarities. They're both the comeback kids. Trump staged, frankly, one of the great political comebacks. Everybody was writing him off for dead in 2020. 20. 2021, after the insurrection at the Capitol. And similarly, Masayoshi Son has been written off several Times. And in 2021, in the middle of the COVID pandemic, everybody was telling me when I was beginning the biography Gambling man, that I needed to get a move on because he was gonna go bankrupt. But look, he's back and so is Donald Trump. So they're sort of two peas in a pod.

[Stephen Overle]

I'm curious to get a little bit of a better picture of this man. Masayoshi Son raises a lot of money in the Middle east, and he's historically invested in both the US And China, which you've written sort of puts him in many ways at the intersection of different geopolitical tensions.

[Lionel Barber]

Yeah, he's a great middleman. And he was in this period of borderless finance, hyper globalization. He had huge assets and businesses in America. He bought Sprint, remember the telecoms carrier. He invested in Yahoo. He also invested in Alibaba in China. And I think the big story in 2025 is that Masayoshi Son, who's been a bridge between east and west, has actually come down in favor of America. He's decided he has to choose. And frankly, he was under pressure from the previous Trump administration. They didn't like some of his exposure to China. So he's all in now in the data centers. He's in the great state of Texas where that data center's gonna be putting. And this is where he's creating all the jobs he's all in.

[Stephen Overle]

What is it that makes you think that? Is it these latest investments that sort of signal he's really all in on the US and what are the consequences of picking the US Over China?

[Lionel Barber]

This is where he's putting his investments. Remember, he's still got legacy investments in companies like Bite to Dance, which is, you know, the owner of TikTok.

[Stephen Overle]

Right.

[Lionel Barber]

Let's not forget that, though he sold down his stake in Alibaba, he still has Some investments in Didi, for example, the Chinese Uber. But when it comes to new stuff, the robotics, the general energy, which is a very big factor, you know, because these data centers that are running LLMs and large language models, they are huge consumers of energy. That's where he's putting his focus right now.

[Stephen Overle]

You mentioned sort of these latest investments, echoing 2016 when he made some big promises to invest money and create jobs in the US and I want you to take me back to 2016 because there was a meeting that he had with Trump very shortly after his election. Tell me about that meeting.

[Lionel Barber]

Well, it was fascinating. It was organized in December 2016 by Sheldon Adelson, who is the Las Vegas now deceased. But then the Las Vegas gambling casino, billionaire, big Republican donor, and Steve Schwarzman, the private equity billionaire, co founder of Blackstone and Wall Street. And Masayoshi Son got the meeting. He was trying to fix a merger between T Mobile and Sprint, and the Obama administration had sort of stalled on that to the FCC. Anyway, Massa gets into the meeting, announces his $50 billion investment pledge, and Trump goes bananas. He loves it. He loves every minute of it. He thinks there's jobs, what state it's going. He doesn't really care. Can we tweet it out in real time? This is according to the account that was given to me. And then, right, not really long after the meeting starts, Trump goes off into the bathroom to fix his tie for the press cameras down at Trump Tower. And then, literally, he shows Masayoshi Son how to comb your hair for the cameras. The only problem is that Masayoshi Son doesn't have a lot of hair. He's half bald. So that's a bit of a comic interlude to actually a very a serious story.

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[Stephen Overle]

You know, I covered the Foxconn plans to invest and build a manufacturing plant in Wisconsin and create 13,000 jobs. This was sort of part of that initial promise Masayoshi Son made. Trump made a big show of it. But most of that money and most of those jobs Never materialized. And so to what extent did Masayoshi Son follow through on his promises? The last time I checked through this.

[Lionel Barber]

Before writing the piece for Politico, and I did the research for the book Gambling man, and the way they describe it is, yes, if you add up the previous investment in Sprint and other stuff through the. What was the SoftBank Vision Fund, that's the $98.6 billion amount of money that he raised, largely from the Middle East. You can actually get to 50 billion. Now, the 50,000 jobs, I think they're construction workers, not necessarily jobs that endured. So at a specific point in time, they say 50,000. They did make it. And then, of course, there was the COVID pandemic, and people had layoffs. I think this time is different. I think it's a much more fully fledged plan, which involves energy. The super chip to rival Nvidia, the design expertise through ARM holdings that he owns 90% of. This is a more fully fledged plant with partners like Sam Altman of OpenAI and of course, Oracle's Larry Ellison.

[Stephen Overle]

Right. Who is a confidant and longtime supporter of President Trump. So it sounds like then, you know, these latest promises are maybe even more trustworthy or more solid than the last time around. Is that what you're saying?

[Lionel Barber]

I think they were fairly solid. You were right to call them out on Foxconn. The jobs didn't quite come through. Unless you include maybe the construction workers. I think this time. Well, it's a suspiciously rounded figure, isn't it? 100,000 and 100 billion. What's interesting is that this week he's actually said, with Sam Altman and Larry Ellison in the White House alongside President Trump, they've actually gone even further and said $500 billion. Now, I think that's a stretch. They're hoping to get to 100. And then, to coin a political phrase, back when I was covering George Bush the first, you know, they're counting on the big mo. You get 100 billion and then you can borrow more against it.

[Stephen Overle]

Right. Well, you're not the only one sort of questioning if that's a stretch. I'm sure you saw that Elon Musk weighed in and said that he doesn't think they actually have the money.

[Lionel Barber]

Well, he's got skin in the game. And he, you know, this is a rival he can't stand. As President Trump said, he can't stand Sam Altman. He thinks he's a hypocrite. And he was tweeting, what suddenly, by the way, the greatest conversion since Paul of Tarsus or Saul of Tarsus that, you know, Sam Altman now thinks that he, you know, he didn't realize the full greatness of Donald Trump. And, you know, oh, I fell victim to political correctness. Oh, please, give me a break.

[Stephen Overle]

Right. It was, you know, I have to appreciate the candor of Trump's response that he just said, you know, basically, Elon Musk hates Sam Altman and I hate some people too. You know, that's just sort of the way these guys work.

[Lionel Barber]

Yeah, it was a good answer, wasn't it?

[Stephen Overle]

You were saying earlier how now SoftBank and Masayoshi San have really chosen the US over China. Obviously, the next four years are going to be potentially tense for US China relations. Although Trump has said he wants to work with Xi Jinping. How different of a landscape will this be to navigate compared to, you know, 2016, 2017?

[Lionel Barber]

I think it's a world away because, yes, Trump did introduce tariffs against China, but you didn't have kind of across the board confrontation. And also you have now the bigger national security concerns around high technology and semiconductors. You have a kind of decoupling. Not completely. You don't want to exaggerate that because clearly on finance and Wall Street's investments in China and the financial services industry, there isn't decoupling. The question for me is, will Trump, how big is Trump going to go on tariffs? And we don't know yet. I mean, he's threatened up to 100%, but interestingly, at the beginning, he's focused more on Mexico and Canada, which tells me that he's really trying to get at China, circumventing the tariffs by offshoring their manufacturing operations and things on the bordering countries, particularly Mexico.

[Stephen Overle]

Is Masayoshi san taking a big risk or a big gamble since he's the gambling man, by picking the US Over China?

[Lionel Barber]

No, I don't think so. I'm big on the US I have to say right now, if you look at the market capitalizations of companies, I mean, you're talking trillions of dollars. You're talking Microsoft, you're talking Google, even Meta and Amazon. And you do have cheap energy. I mean, the place that really is hurting right now is Europe. And interestingly, I'm told on good authority that Masayoshison is not interested. He's really interested in AI, but he wants to get in, took a stake in Sam Altman's OpenAI. He's got a stake, I believe, in Anthropic, the other AI big entity. But when it came to Mistral, the French. He said he wasn't interested. So, no, I think America, whatever you think about the politics right now, the economy is pretty hot, right? By the way, I want to say one thing about China. You know, you ask about risk. I mean, actually, right now, I spent a week in China late last year. The economy is really hurting. They've tried stimulus packages. I mean, compared to where America is in the cycle and China, I think you put your money on America, at least in the short term.

[Stephen Overle]

Well, Lionel, I appreciate you being here on Politico Tech.

[Lionel Barber]

It's been great to join you. I've had fun, too.

[Stephen Overle]

We'll have to have you back. I don't think Masayoshi san is going anywhere anytime soon.

[Lionel Barber]

No, this story is going to roll and roll in 2025.

[Stephen Overle]

That's all for today's Politico Tech. If you enjoy Politico Tech, be sure to subscribe. And for more tech news, subscribe to our newsletters, Digital Future Daily and Morning Tech. Our managing producer is Annie Reiss. I'm Stephen Overlea. See you back here tomorrow.