SoftBank Seeks $5B Loan Backed by Arm Stake, Tying Chip Giant to AI Push

SoftBank Group is in discussions to raise approximately $5 billion through a margin loan backed by its substantial stake in chip designer Arm Holdings, a move that intertwines the chip designer's stock with the Japanese conglomerate's aggressive investment strategy in artificial intelligence.

The financing plan, , allows SoftBank to unlock significant capital from its most valuable asset without immediately selling shares. SoftBank retains roughly 90% ownership of Arm following its blockbuster IPO, resulting in a relatively small number of shares available for public trading. The proceeds are expected to fuel CEO Masayoshi Son's ambitious, large-scale investments in the AI sector.

For Arm investors, the arrangement introduces a new layer of complexity and potential risk. Margin loans require the value of the collateral—in this case, Arm's stock—to stay above a certain threshold. Should Arm's share price fall significantly, it could trigger a margin call, potentially forcing SoftBank to sell a portion of its holdings to satisfy the loan's terms. Given Arm's limited public float, such a sale could exert significant downward pressure on the stock price.

This strategy is consistent with SoftBank's history of leveraging assets to fund its next wave of technology bets. The capital is seen as critical for , which reportedly includes commitments to major AI ventures. However, it also comes as some and the predictability of its future earnings, which are closely tied to the booming but volatile AI chip market.

The move underscores the symbiotic relationship between the two companies. While Arm's post-IPO success has bolstered SoftBank's finances, its stock is now more directly linked to its parent company's financial maneuvering and high-stakes pursuit of AI dominance. Investors will be closely watching for details on the loan's terms and Arm's stock performance in light of this new dynamic.