SoftBank's Dual Bet: Powering AI with Copper and Credit

SoftBank invests in Kandou AI's data transfer tech while its credit default swaps widen to an 11-month high, signaling financial strain from aggressive infrastructure spending.

While much attention focuses on SoftBank Group Corp.'s massive investments in data centers and power grids, the Japanese conglomerate is also placing strategic bets on the underlying technology that makes such infrastructure function. A recent equity stake in Swiss startup Kandou AI highlights this approach, targeting a fundamental bottleneck in artificial intelligence development: the movement of data between processors and memory.

Credit Markets Signal Concern Amid Spending Spree

This strategic investment coincides with a period of heightened scrutiny on SoftBank's financial health. The company's credit default swaps (CDS) have recently widened to an eleven-month high. At approximately 355 basis points for five-year contracts—the highest level since April 2025—SoftBank's CDS spreads are now the widest among major Japanese corporations, sitting roughly 100 basis points above those of Nissan.

Rating agency S&P Global Ratings has revised its outlook on SoftBank to negative, cautioning that the restoration of asset liquidity and portfolio quality may take longer than previously anticipated. This financial pressure emerges directly from an aggressive investment tempo. The Kandou AI deal was finalized in the same week SoftBank broke ground on a mega-campus in Ohio's Pike County, on the site of a decommissioned uranium enrichment plant. This project alone aims to deliver a data center with a staggering ten gigawatts of capacity—more than half of the United States' current total data center capacity—alongside plans for up to ten gigawatts of new, predominantly natural gas-fired power generation.

Both ventures form part of a broader $550 billion investment package pledged by Japan, a move linked to tariff reductions promised by the Trump administration.

Kandou AI: A Semiconductor Play on Copper Connections

The specific technology attracting SoftBank's capital is Kandou AI's CNRZ-5 Chord signal technology. This innovation moves data across six copper wires instead of the conventional two, transmitting up to five bits simultaneously. The company claims this method uses half the energy of competing solutions. By championing copper over fiber optics, the technology promises lower costs, greater flexibility in chip architecture, and effective operation over longer distances.

On March 23, 2026, Kandou AI closed an oversubscribed Series A funding round, raising $225 million. The investment syndicate included industry leaders Synopsys, Cadence Design Systems, and Alchip Technologies, with Maverick Silicon acting as the lead investor. According to CEO Srujan Linga, the 2011-founded Swiss firm now holds a valuation of $400 million.

Since Linga assumed leadership in 2025, Kandou AI has deliberately shifted its focus from consumer electronics to AI infrastructure. The fresh capital is earmarked to scale chip production and fund the next product generation, which targets multi-terabit connections beyond the 448G threshold. The startup has already secured a letter of intent with at least one hyperscaler for future chip supply, though Linga has not publicly named the partner.

Building the Physical and Silicon Layers of AI

SoftBank's strategy represents a two-pronged assault on the AI infrastructure challenge: constructing the physical facilities and simultaneously investing in the semiconductor layer that dictates their ultimate performance. The coming quarters will reveal whether the company can maintain this aggressive pace without triggering a further deterioration in its credit profile. For now, the debt markets have already priced in a significant degree of skepticism.