Apple to Invest $1 Billion in SoftBank Fund to Support Tech

© Gerrit De Vynck and Alex Webb BC-APPLE-SOFTBANK-INVESTMENT-2
(Bloomberg) -- Apple Inc. is planning to invest $1 billion in SoftBank Group Corp.’s giant new technology fund, adding its name to a growing list of interested parties and giving the iPhone maker a new avenue to tap up-and-coming technologies.

Qualcomm Inc. also said it will participate in the fund, but the terms and the amount of its investment are still under discussion. Foxconn Technology Co. Ltd. and Oracle Corp. Chairman Larry Ellison also intend to contribute, according to a person familiar with the matter.

“We’ve worked closely with SoftBank for many years and we believe their new fund will speed the development of technologies which may be strategically important to Apple,” said Apple spokeswoman Kristin Huguet. The Wall Street Journal earlier reported the investment.

The $100 billion Vision fund, which Japan’s SoftBank aims to launch this year, will be based in London and make investments in startups around the world. Apple Chief Executive Officer Tim Cook has often faced questions about when and how he will deploy more of the company’s cash hoard on acquisitions to decrease its dependence on the iPhone, which accounts for about two-thirds of revenue. Apple had $238 billion in cash at the end of September.

The deal follows Apple’s $1 billion investment in Chinese ride-hailing company Didi Chuxing, announced in May. The investments mark a shift for Apple, which has focused on acquiring startups valued at less than $1 billion.

SoftBank Chief Executive Officer Masayoshi Son told President-elect Donald Trump in December that about half, or $50 billion, of the fund would be invested in the U.S., pledging to create 50,000 new jobs in the country. It counts Jonathan Bullock, chief operations officer of SoftBank International, and Alok Sama, SoftBank’s chief financial officer, as senior advisers.

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Apple Confirms $1 Billion Investment in SoftBank Vision Fund

Apple Inc. headlines a growing list of investors in SoftBank Group Corp.’s $100 billion technology fund, which is expected to include Foxconn Technology Group Ltd. and the family office of Oracle Corp. Chairman Larry Ellison, the Japanese telecommunications giant said Wednesday.

Apple separately said it plans to invest $1 billion in the Japanese telecom giant’s fund. “We believe their new fund will speed the development of technologies which may be strategically important to Apple,” said Apple spokeswoman Kristin Huguet. She added that Apple has worked with SoftBank for many years.

The trio joins a list of investors that includes Qualcomm Inc. and Saudi Arabia’s government, which plans to invest $45 billion over a five-year period, SoftBank said Wednesday. SoftBank will invest $25 billion in its fund, it added.

Foxconn, known formally as Hon Hai Precision Industry Co., said it didn’t have any announcements regarding future investment plans. Oracle declined to comment on Mr. Ellison’s investment. A Qualcomm spokeswoman said it intends to invest, adding that terms and the amount are still under discussion.

The SoftBank Vision Fund plans to hold an initial close to its fundraising by the end of the month, with a final close expected in mid-2017, according to people familiar with the matter. SoftBank’s recent investment into U.S. startup OneWeb Ltd., which aims to use satellites to bring internet access to rural areas, could be placed into the fund, the people said.

The fund brings together many competitors with overlapping business interests that stretch back years. In 2008, SoftBank struck a deal with Apple to become the exclusive iPhone seller in Japan. Those phones are mostly made by Foxconn and many include microchip technology that Qualcomm licenses from SoftBank-controlled ARM Holdings.

Apple’s $1 billion investment is unusual because the company doesn’t have a record of investing in venture-capital funds. It is the latest example of a changing investment strategy that last year included a $1 billion investment in Didi Chuxing Technology Co., China’s homegrown ride-sharing competitor to Uber Technologies Inc.

SoftBank Chief Executive Masayoshi Son is creating the technology fund to help put his company and investors at the forefront of emerging technologies such as artificial intelligence and the Internet of Things, in which everyday objects such as thermostats, watches and cars are connected online.

While competitors such as Alphabet Inc. and Inc. have launched connected devices, Apple has largely stayed out of that arena. Its focus instead has been on the Apple Watch, a wearable device with some health-monitoring capabilities.

Joining SoftBank’s investment fund could help Apple as it looks to integrate new technologies into its devices or ensure its smartphones are compatible with connected products such as thermostats.

“Apple doesn’t want to sell a lot of the end nodes in the Internet of Things, but it does need to defend its core, smartphone business,” said Roger Kay, a market analyst with Endpoint Technologies Associates.

Mr. Kay said the investment also is about alliances. He said Apple has generally operated independently but is increasingly looking to partner with other companies, particularly in Asia.

Foxconn’s participation in the fund was telegraphed during a December meeting between President-elect Donald Trump and Mr. Son, who is close with Foxconn head Terry Gou. Speaking with reporters that day, Mr. Son held a piece of paper with the logos of Foxconn and SoftBank alongside each other.

In 2015, Foxconn invested $118 million in SoftBank’s robotics venture and began producing a robot called Pepper that is billed as the first robot capable of understanding human emotions.

Apple invests $1 billion in massive tech fund

Apple (AAPL, Tech30) confirmed on Tuesday that it is investing $1 billion in a massive new technology fund from Japan's SoftBank Group, which has recently drawn the attention of the president-elect.

"We've worked closely with SoftBank for many years and we believe their new fund will speed the development of technologies which may be strategically important to Apple," Josh Rosenstock, a spokesman for Apple, said in a statement provided to CNNMoney.

Softbank first announced plans in October to launch a $100 billion fund dedicated to "investments in the technology sector globally." Softbank committed $25 billion to the fund and Saudi Arabia's sovereign wealth fund invested $45 billion.

The fund gained greater attention, however, when SoftBank's billionaire founder Masayoshi Son visited Trump Tower and pledged to invest $50 billion in the U.S. with the goal of creating 50,000 new jobs.

"Masa said he would never do this had we not won the election!," Trump tweeted at the time.

Son later said the $50 billion investment would come from the previously announced $100 billion fund.

The SoftBank founder framed the large U.S. investment as being spurred by optimism about the impact of Trump's promises to ease regulations on businesses. But it could also help him curry favor with a new administration if he needs help with regulatory issues, including a merger between SoftBank's Sprint (S) and T-Mobile (TMUS).

Apple declined to comment on whether its investment would specifically go toward Masayoshi's pledge to create U.S. jobs -- a move that could potentially ease Trump's tensions with Apple over outsourcing manufacturing work to China.
Instead, Apple's focus is capitalizing on the fund's investments in emerging technology categories, which are said to include artificial intelligence and robotics.

Qualcomm (QCOM, Tech30), a chip maker that works with Apple, is also investing in the SoftBank Vision Fund. It said the amount it will invest is "confidential and still under discussion."

SoftBank said two other big names are planning to put money in: Apple supplier Foxconn and Oracle (ORCL, Tech30) founder Larry Ellison.

Foxconn, however, declined to confirm it was interested.

"We do not have any announcements to make at this time regarding any future investments," the company said.
Oracle declined to comment.

Ellison could not be reached for comment outside of office hours late Wednesday.

Mubadala, one of the United Arab Emirates' sovereign wealth funds, says it is considering an investment in the SoftBank fund.

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