Masa Son is pledging a substantial financial commitment to Trump's U.S.A. – Tread cautiously before getting too excited.
Masa Son is pledging a substantial financial commitment to Trump's U.S.A. – Tread cautiously before getting too excited.
FYI: On Monday, business magnate Masayoshi Son, coming from Japan, joined forces with Trump to declare a $100 billion investment in American projects over the subsequent 4 years. Their objective is to generate 100,000 new employment opportunities in burgeoning technologies, such as AI development. (What investment in 2024 isn't connected to AI these days?) This substantial investment will stem from Son's SoftBank Group, not a bank, but rather a global tech investment conglomerate with extensive reach.
This isn't an unprecedented move on the part of presidents, attempting to boost national morale through deals with tech companies. However, history has shown that such arrangements usually culminate in grandiose presentations, yet minimal actual value.
Allow me to refer you to the well-known case of Trump and Taiwanese manufacturer Foxconn. In 2017, they proposed a $10 billion electronics factory in Wisconsin, aiming to create 13,000 new jobs. However, the company eventually scaled back its plans for the facility and the high-tech products it was intended to produce. In 2021, Foxconn announced an investment of just $672 million, resulting in fewer than 1,500 job openings.
Foxconn has acknowledged investing $1 billion into the state and maintaining a significant manufacturing site for data servers, employing more than 1,000 individuals. Yet, the facility that Trump once hailed as the catalyst for the revival of American manufacturing has eventually evolved into a future Microsoft data hub, aiming to enhance the skills of its employees and collaborators in AI.
SoftBank is not unfamiliar with this pattern. Prior to Trump's first term, the Japanese conglomerate committed to a $50 billion investment, promising the creation of 50,000 new jobs. Included in the investment was a satellite startup called OneWeb, regarded as a potential rival to Elon Musk's Starlink.
SoftBank did invest approximately $75 billion in US companies through its venture capital arm, the Vision Fund, according to CNN's research. Yet, the company never specified how many of those jobs it actually created, and how many were resultant of new investments.
A SoftBank spokesperson previously told CNN that discussions with the OneWeb startup had been ongoing for an extended period. (OneWeb eventually downsized its workforce and filed for bankruptcy in 2020. It was later acquired by a French satellite operator.)
Yet another instance of overhype: During Barack Obama's first month in office in 2009, he assured Caterpillar employees that his nearly $800 billion economic stimulus plan could save some of their jobs, having only recently announced plans for massive layoffs. However, Caterpillar's leadership proceeded with thousands of layoffs, stating that the stimulus wouldn't make its impact swiftly enough.
Not every collaboration between a high-profile CEO and a president has ended in failure. In 2017, Intel's then-CEO Brian Krzanich promised from the Oval Office to invest $7 billion in restarting construction on a semiconductor factory in Arizona, which had been idled. The factory was eventually opened in October 2020.
However, good intentions often clash with economic realities.
Son, who made a fortune backing Yahoo and Alibaba in the 1990s, is well-acquainted with these difficulties, especially recently. The SoftBank Vision Fund, his venture capital project initiated in 2017, has earned a reputation for backing major flops, such as the bankrupt co-working space company WeWork. SoftBank also lost a billion dollars on Wirecard, the German payments company at the heart of an international fraud investigation, just before the company collapsed.
The Takeaway: Son's investment strategy may not always be accurate, but Monday's announcement was not typical. The return on investment lies in making Trump happy. Son is simply one of many billionaires who have been battling for Trump's favor and attention. Others, like Amazon founder Jeff Bezos, Meta CEO Mark Zuckerberg, and OpenAI boss Sam Altman, have contributed $1 million each to the president-elect's inaugural fund.
They aspire to claim a spot on Trump's "nice" list, or at least avoid landing on the "naughty" list as long as possible.
CNN’s Kayla Tausche contributed to this report.
This investment from Masayoshi Son and Trump is aimed at boosting business opportunities in technologies like AI, aiming to create 100,000 new jobs. SoftBank's investment strategy, as seen in past collaborations, has not always yielded accurate returns, but the current announcement seems to prioritize pleasing Trump over financial success.