SoftBank shares surge on AI hope and sign of Stargate progress
The Tokyo-based company is the unnamed buyer of Foxconn Technology Group's electric vehicle plant in Ohio and plans to incorporate the facility into its $500 billion Stargate data center project with OpenAI and Oracle.
That's spurring optimism that SoftBank may be able to kick-start the stalled Stargate endeavor and benefit from a rush to build AI hardware in the U.S. Its stock is up for the fifth straight day and on track to close at a record.
SoftBank has been gradually cashing in on some of its Vision Fund bets in recent years. SoftBank's stock also received a boost after a report emerged that the Japanese company has picked investment banks for a possible initial public offering for Japanese payments app operator PayPay. PayPay was originally set up through a venture with former Vision Fund portfolio company Paytm.
Last week, Foxconn's flagship unit Hon Hai Precision Industry said it had agreed to sell the EV plant to a buyer it referred to as Crescent Dune for $375 million without identifying the company behind the entity.
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His national security adviser ... wait ... never mind. Policy hasn't matched the tough talk, however. Trump has ignored Congress and refused to ban the social media app TikTok even though it reportedly poses a national security threat. Last month, his administration reportedly blocked Taiwan President Lai Ching-te from transiting the U.S., forcing postponement of his planned trip to Latin America. Taiwan's defense minister was denied meetings at the Pentagon, again reportedly after complaints from Beijing. Export controls that banned the export of Nvidia's H20 chip to China were reversed and language that warned against the use of Huawei's chips was softened. This behavior is consistent with that of the first Trump administration. Then, Trump intervened to lift sanctions against ZTE, a Chinese telecommunications company, at Chinese leader Xi Jinping's request. His administration prioritized the conclusion of a trade deal with China over all other considerations. That yielded a 'historic trade agreement' (says a White House fact sheet) that has since been dismissed. Analysis by the Peterson Institute for International Economics concluded that China bought a little more than half (58%) of the U.S. exports promised under the deal, failed to return to pre-trade war levels and none of the additional $200 billion in exports that were promised. There are other grounds for criticism of Trump's China policies, but the most fundamental is this: If the NSS is correct and the U.S. is locked in a bitter rivalry with China, why then is Washington pushing away allies and partners — Japan, the European Union and India, to name the three most prominent — that it needs to balance and check China's size, scale and determination to reshape the world in its image? Trump's trade policies have been especially irritating, but his behavior has also raised doubts about U.S. credibility and commitment among even its most reliable friends. 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Readiness to pull back tough sanctions on China is either a gesture to show benevolence — Trump claimed that 'China was being hurt very badly. ... They were closing up factories. They were having a lot of unrest' — or recognition that a trade war would inflict unacceptable damage on both sides. Beijing's willingness to cut exports of rare earth minerals critical to high-tech industries was a 'pain point ... the United States could not withstand,' explained Michael Sobolik, a senior fellow at the Hudson Institute, to the Washington Post. A desire to conclude a trade deal with China seems to outweigh all other considerations. Bloomberg reports that Trump has been 'the least hawkish voice in the room' during meetings, signaling a desire for engagement and deals over confrontation. That would confirm the most widespread explanation for Trump's behavior: He is a dealmaker and transactionalism guides his every move. James Crabtree, a journalist, policy analyst and former adviser to the British government, writes that the president has 'few fixed ideological convictions but he remains a transactional leader.' Knowing that Taiwan is Beijing's overriding concern, Trump's readiness to weaken relations with Taipei facilitates progress on that front. Those searching for a unifying theory argue that Trump's penchant for dealmaking reflects, in Crabtree's words, the 'embrace of a raw form of great-power politics.' The president believes that U.S. power — both economic and military — should dictate outcomes and constraints on that power — his power — are illegitimate. In this world view, there are global powers such as the U.S., China and Russia, regional powers, such as Israel, Turkey and India, and all countries should know their place in that hierarchy. That is most, but not all, of the answer. I'd add that Trump doesn't use 'strategic' as traditionally conceived. His 'China threat' is considerably narrower than that embraced by the NSS and most of the strategic community. Sure, he likes to flex his military muscles and brag about the awesome power that he can yield, but that's not his frame when discussing China. Lyle Goldstein, a senior fellow at the Watson Institute for International and Public Affairs at Brown University, explained to NPR that Trump doesn't talk about the South China Sea. 'He didn't mention going to war over rocks or reefs. He said nothing about the Taiwan Strait or the Luzon Strait. He's focused on commerce. ...' He highlights trade figures — regardless of the real significance of those numbers — because economic statistics, such as size of the economy, job growth, market share, are the most important metrics to him. As Sobolik explained, 'The president cares more about American businesses getting access to China's market than he seems to about national security concerns with Beijing.' White House spokespersons agree without apology, noting that 'This president is successful because he will look anyone in the eye to negotiate better deals for our country, and he will continue to advance American interests." This approach may work — if we use Trump's analytical framework to assess the results. China likes a 'great power mindset' that affords it influence and status. It is as unhappy as Trump with restraints imposed on its sovereignty by international law and multilateral organizations. China too wants a grand bargain, and if Taiwan is part of that equation, then Beijing is likely to deal. Lanxin Xiang, professor emeritus of international history and politics at the Graduate Institute of International and Development Studies in Geneva, agrees. He laid out his thinking in an interview for the Stimson Center, and his analysis follows mine. Trump hates ideology, which precludes a new Cold War, since it was at heart an ideological conflict; he is a dealmaker who 'likes to make linkages'; and he and Beijing want a 'grand bargain' in which trade is a 'secondary' consideration. Taiwan is the big issue. He adds that most members of the Chinese 'intellectual policy elite' think like him. That is the foundation for a grand bargain. Or at least a bargain. I doubt there would be a lot of applause outside China or from anyone who isn't one of the president's most ardent supporters. Brad Glosserman is a senior adviser at Pacific Forum and the author of "Peak Japan." His upcoming book on the geopolitics of high-tech is expected to be released by Hurst Publishers this fall.
