Management Policy and Priority Issues to Address

Guided by our corporate philosophy, “Information Revolution—Happiness for everyone,” we aim to maximize corporate value while being a corporate group that provides essential technologies and services to people around the world.

Under our management system, SoftBank Group Corp. (“SBG”), a strategic investment holding company, exercises overall control over our subsidiaries, associates, and investees as our investment portfolio. Based on this system, we aim to maximize NAV (Net Asset Value: calculated as equity value of holdings – adjusted net interest-bearing debt^*1) by increasing the equity value of our holdings over the medium to long term. Our financial policy, designed to support this objective, ensures financial stability by managing SBG’s LTV (Loan-to-Value: calculated as adjusted net interest-bearing debt ÷ equity value of holdings,^*1 i.e., the ratio of liabilities to holding assets) below 25% under normal market conditions, with an upper threshold of 35% even in exigent circumstances. Concurrently, we ensure that SBG has secured a cash position sufficient to cover bond redemptions for at least the next two years.

We aim to seize the significant opportunities presented by the Information Revolution, where IT transforms societies and lifestyles, thereby contributing to the well-being of all people over the long term. To achieve this, it is imperative for us to promptly identify changes in social needs and continuously transform ourselves, optimizing the structure of our group to maximize the benefits from the technologies and business models driving the future.

The core of the Information Revolution has evolved over time—from personal computers to the internet, broadband, and smartphones—and is now transitioning to artificial intelligence (AI). In particular, recent advancements in generative AI have enabled breakthroughs in areas such as natural language processing and creative content generation, catalyzing rapid transformation across industries. We believe that continued progress in generative AI will lead to the realization of Artificial General Intelligence (AGI)—with intellectual capabilities equivalent to those of humans—within the next few years, and ultimately to Artificial Super Intelligence (ASI), which surpasses the collective intelligence of humanity, within the next decade.

Amid this epoch-defining shift, we have positioned the realization of ASI as our mission in pursuit of advancing human progress and are undergoing a new phase of self-transformation. Specifically, we are mobilizing our full capabilities to actively invest in and operate businesses in four key areas essential to realizing this vision: (1) AI chips, (2) AI robotics, (3) AI data centers, and (4) the energy infrastructure required to support them. In parallel, we are making strategic investments in and building partnerships with leading enterprises in the generative AI domain. Through these efforts, we aim to capture growth opportunities with certainty. Under our unique “Cluster of No. 1 Strategy,” we seek to drive mutual reinforcement among our group companies and portfolio investees—enabling each to evolve their business models and expand their operations—thereby increasing our equity value of holdings and, ultimately, maximizing NAV over the medium to long term.

From April to December 2024, global equity markets generally trended upward, supported by the initiation of interest rate cuts by the U.S. and European central banks and the continued resilience of the U.S. economy. Notably, the Nasdaq Composite Index and major technology companies and the appreciation of semiconductor-related stocks. The broader market uptrend was further underpinned by growing demand for generative AI technologies. In January 2025, the Trump administration was inaugurated in the U.S. While initial expectations for tax cuts and deregulation briefly lifted equities, sentiment shifted after the late-January announcement by DeepSeek, an emerging Chinese AI company, of an advanced, low-cost AI model. This development raised concerns over the potential erosion of large U.S. technology companies’ competitive advantage and the outlook for demand for cutting-edge AI semiconductors, prompting a sharp, though temporary, decline in the share prices of major U.S. technology and semiconductor companies. Conversely, DeepSeek’s emergence elevated market expectations for China’s technology sector, driving up related stock prices. Toward the end of March 2025, U.S. equity markets continued to trend downward, amid growing concerns over persistent inflation and increased uncertainty around trade policy, including tariffs. In contrast, equity markets in other regions, including Germany, the U.K., and Hong Kong, remained firm through the January–March quarter, highlighting regional divergences.

In the global venture capital market, while total investment volume in 2024 remained well below the 2021 peak, capital flows into AI-related companies were exceptionally robust, reaching a record 37% of total investment.^*2 In the global initial public offering (IPO) market for 2024, although activity in China remained subdued, the U.S. showed signs of recovery and India continued to perform strongly, underscoring divergence in IPO activity across countries. In the U.S. technology sector, several large-scale IPOs in 2024 contributed to optimism for a broader market rebound. However, following the Trump administration’s announcement of “reciprocal tariffs” in April 2025, caution around the U.S. economic outlook increased, prompting a more measured stance among companies regarding IPO timing.

In this business environment, we are focused on implementing the following measures, 1-3, to maximize NAV over the medium to long term. Furthermore, we consider Arm, SVF, and SoftBank Corp. top-priority assets, as they account for a significant share of SBG’s equity value of holdings. Each is implementing the following measures, 4-6, to increase its equity value.

In fiscal 2024, although NAV reached a record high at the end of June 2024, it declined toward fiscal year-end, primarily due to a drop in Arm’s share price amid a broader downturn in the U.S. equity market. As a result, year-end NAV fell below the level recorded at the end of the previous fiscal year. While short-term market volatility is inevitable, our current portfolio, with Arm at its core, spans a wide range of investments, from the hardware layer that supports AI evolution to the application layer that leverages AI. This diversified positioning provides a strong foundation to capture structural transformations driven by AI-led innovation. Leveraging this strength, we are accelerating initiatives to maximize the value of existing investments while continuing to actively pursue new investments in high-growth AI-related companies.

Existing investees Arm and SoftBank Corp. are both expected to steadily execute the growth strategies outlined below, in alignment with our corporate philosophy of “Information Revolution—Happiness for everyone,” thereby contributing to the enhancement of the value of SBG’s equity holdings. As for SVF, we anticipate a steady flow of IPOs and subsequent exits from portfolio companies as the IPO market fully reopens. SVF is also expected to continue exploring divestment opportunities with strategic buyers and other institutional asset managers.

For new investments, we rigorously vet opportunities aligned with our AI investment theme, leveraging funds recovered from exits. Strategic investments that offer added value through deep management involvement are expected to be made by SBG or its wholly owned subsidiaries, while other investments are to be channeled through SVF.

As part of new AI-related initiatives, in January 2025, SBG announced the “Stargate Project” to build AI infrastructure in the U.S. for OpenAI Inc., a U.S.-based AI research and development company, and its affiliates (collectively, “OpenAI”). In February 2025, we also announced a partnership with OpenAI to develop and commercialize a cutting-edge enterprise AI solution, “Cristal intelligence.”^*3 Furthermore, in March 2025, SBG reached an agreement with OpenAI to make a follow-on investment of up to USD 40 billion in OpenAI Global, LLC, OpenAI Inc.’s for-profit subsidiary. After accounting for the USD 10 billion planned to be syndicated to co-investors, our effective investment amount is expected to be up to USD 30 billion. Also in March 2025, SBG agreed with Ampere Computing Holdings LLC—a U.S.-based semiconductor design company specializing in high-performance, energy-efficient, and sustainable AI computing based on the Arm compute platform—and certain of its equity holders, to acquire 100% of its equity interest.

As outlined in “(2) Key Management Indicators,” SBG’s financial policy is to manage its LTV below 25% in normal market conditions, with an upper threshold of 35% even in times of emergency, while securing a cash position sufficient to cover bond redemptions for at least the next two years. In fiscal 2024, we actively invested in AI-related companies, resulting in an increase in LTV and a decrease in cash position at year-end compared to the previous fiscal year-end. However, both remained within the parameters of the stated financial policy.

In fiscal 2025, SBG expects adjusted net interest-bearing debt to increase as it moves forward with the AI-related initiatives outlined in “1. Increasing the value of existing investments and executing new investments” under “(4) Business Environment and Priority Issues to Address,” financing part of the required capital through means such as bank borrowings and bond issuances. Furthermore, since Arm’s share price—a core component of SBG’s equity value of holdings—is sensitive to fluctuations in the U.S. equity market, there is a possibility of significant variation depending on market conditions. Nevertheless, SBG’s financial policy remains unchanged. It will continue to manage its financial position appropriately by monitoring investment opportunities and capital market trends, while also utilizing asset-backed financing as necessary.

We believe that promoting sustainability in our corporate activities is essential for achieving both the sustainable development of society and our medium- to long-term growth. With this perspective, we have identified risks and opportunities related to sustainability, and are actively engaged in mitigating these risks while capitalizing on the opportunities.
See “Sustainability” for more details.

Arm is a global leader in the development of semiconductor technology and we believe that it is defining the future of computing at a time when semiconductor technology has become one of the world’s most critical resources. Arm’s processor technology is the world’s most widely licensed and deployed semiconductor design of its kind and is used in virtually all smartphones, the majority of tablets and digital TVs, and a significant proportion of all chips with embedded processors.

As the foundational architecture for more than 310 billion digital devices globally, Arm delivers efficiency without compromising performance and provides a consistent, supported, and security-backed foundation for running current and future AI workloads everywhere—from cloud to edge and endpoint. We believe that Arm is the AI compute platform the world will rely on.

The current advancements and widespread adoption of AI technologies, including generative AI and large language models, are significantly boosting demand for Arm's technology. Many AI algorithms are computationally intensive, requiring high performance CPUs to deliver quick responses to queries. While much of today's AI processing occurs in the cloud, the shift toward edge AI^*4 is well underway. In edge devices, such as smartphones and cars, data is processed in real time and underscores the critical importance of high-performance while maintaining energy efficiency. This trend towards edge computing^*4 makes Arm's energy efficient CPUs especially suited for powering AI applications, positioning Arm as a key player in the AI technology landscape. Accelerated edge AI inference runs best on Arm.

To achieve sustainable long-term growth, Arm focuses on maintaining or gaining share in all target markets, increasing the royalty revenue received per chip, and enhancing its software ecosystem, as detailed below.

Arm holds a strong position in the mobile application processor market, with a greater than 99% market share. Arm’s strategy is to broaden its market share in sectors including the automotive, cloud server, and PC markets. Growing demand for Arm’s technology is driven by the accelerated investment by its customers who strive to develop high-performance and energy-efficient chips that are essential for powering future AI algorithms. Arm’s diverse compute technology portfolio is designed to meet the unique requirements of each market. Furthermore, Arm’s subscription-based licensing model provides customers with broader access to its technologies in exchange for a higher licensing fee, reflecting a flexible business approach that supports Arm’s vision for sustained market share growth. By supplying the essential semiconductor IP components for the next generation of computing devices, Arm underscores its commitment to being at the forefront of technological innovation.

The rapid evolution of AI is driving a demand for energy-efficient chips with higher performance and more complex designs. Arm's latest generation technology, Armv9, along with integrated compute subsystems (CSS) that combine multiple Arm IPs, are seeing significant adoption, especially in high-end smartphones and servers. CSS combines Arm's CPUs with other on-chip technologies, and is pre-integrated and pre-verified to work on a leading foundry manufacturing process. CSS allows customers to design chips more easily and quickly, reducing time to market. Arm charges higher royalty per chip for advanced technologies like Armv9 and CSS, and is focusing on the promotion and expansion of these technologies to secure consistent royalty-driven revenue growth over the medium to long term.

Arm’s growth is underpinned by an ecosystem comprised of more than 20 million engineers who develop software for Arm-based products. The success of a CPU largely depends on the wide availability of compatible software, as programs and applications are optimized for the underlying CPU architecture. For more than three decades, Arm has been dedicated to building and nurturing its ecosystem, providing software engineers with access to the tools and libraries needed to efficiently develop their programs and applications for Arm-based chips. Arm continues to invest in the ecosystem needed for AI to run everywhere on Arm.

SVF1, SVF2, and LatAm Funds are designed to invest in high-growth-potential technology companies primarily leveraging AI. The wholly owned subsidiaries of SBG that manage each fund (SB Investment Advisers (UK) Limited for SVF1, and SB Global Advisers Limited for SVF2 and LatAm Funds; collectively, the “Fund Management Subsidiaries”) aim to maximize returns over the lifecycle of each fund through the following initiatives:

SVF1, SVF2, and LatAm Funds are private capital investment vehicles with substantial capital commitments and management horizons of over a decade since their inception. SVF1, which has completed its investment period and entered the divestment phase, is focused on maximizing returns through the optimal monetization of its assets ahead of its scheduled termination in November 2029. ^*5 Meanwhile, SVF2 and LatAm Funds, both still in their investment periods, aim to generate medium- to long-term returns through October 2032, ^*5 by diversifying investments across geographies, sectors, and technologies to navigate public market volatility, while flexibly deploying capital in high-priority areas under the AI investment theme.

The Fund Management Subsidiaries seek to maximize the equity value of SVF’s holdings by identifying companies within the portfolio that have significant equity value or the potential for enhancement and supporting their growth through a range of strategic support and network connections. For example, they seek to identify and execute opportunities to accelerate the profitability and growth of portfolio companies by establishing partnerships and collaborations across our greater ecosystem, including its portfolio companies and partners. They also provide growth-oriented portfolio company leaders with guidance for cross-border business expansion, profitability improvement, and monitor the governance structures to support sustained growth.

The Fund Management Subsidiaries implement disciplined approaches to selectively exit assets in a timely and appropriate manner, aiming to maximize returns and ultimately make distributions to limited partners, including SBG. Funds may exit portfolio company investments through acquisitions by strategic buyers, secondary share sales to other institutional asset managers, or via public market listings. For public portfolio companies, the Fund Management Subsidiaries have a mechanism in place to systematically sell the funds’ shareholdings while prudently assessing the company’s performance against the investment case, market environment, and share price trends. Moreover, these funds may procure asset-backed financing for distributions to limited partners, optimizing the timing of sales to maximize returns.

In fiscal 2024, a total of five portfolio companies across all funds went public, bringing the total number of IPOs since the inception of SVF to 55. As SVF are long-term investment vehicles, the Fund Management Subsidiaries aim to maximize returns from a medium- to long-term perspective, minimizing the impact of short-term market fluctuations.

Creating a strong organization, especially attracting and retaining top talent, is critical to the reproducibility of investment successes and the sustained growth of the funds. The Fund Management Subsidiaries are run by senior leadership with extensive experience in investment banking and venture capital. To date, they have built and continue to improve an organizational structure with investment, operating, capital, functional, and management teams that match the needs and scale of global operations and portfolio management responsibilities. By taking a team approach with a group of experts, the Fund Management Subsidiaries aim to accumulate and share institutional knowledge to achieve sustained growth for each fund.

Changes in people’s lifestyles, such as remote work, online shopping, and growing use of contactless payment, which were driven by the COVID-19 pandemic, as well as the worsening labor shortage have made the digitalization of companies and government essential. We believe that digitalization will become a driving force that will transform Japan’s society in the future, by facilitating improvement in productivity and the creation of innovation, and furthermore that the emergence of generative AI, which can generate a variety of content such as text, images, and programming code, will accelerate the speed of this transformation.

In this environment, under its Beyond Carrier growth strategy, SoftBank Corp., which is responsible for our domestic operations, will strive to spur sustainable growth of its core telecommunications business, as it goes beyond the confines of telecommunications carriers and proactively expands its business in various fields of the information and technology sector, with the aim of maximizing its corporate value. Specifically, SoftBank Corp. is working to (1) drive further growth in the telecommunications business, (2) expand the DX/solution business in the enterprise business, (3) drive growth of the Media & EC (e-commerce) business, (4) drive growth of the financial business, (5) develop and expand new business fields, and (6) streamline costs.

In terms of its financial strategy, SoftBank Corp. believes that primary free cash flow^*6 is a key performance indicator. By steadily generating primary free cash flow, it aims to maintain robust shareholder returns while continuing to invest in growth. Furthermore, it seeks to maintain a sound financial position and pursue highly capital-efficient management with appropriate financial leverage.

LY Corporation, a core company in the Media & EC business, received administrative guidance from the Ministry of Internal Affairs and Communications in March and April 2024 and recommendations and guidance from the Personal Information Protection Commission in March 2024 concerning the leakage of information due to unauthorized access, which was announced in November 2023. In response, the company has been submitting regular reports to both authorities since April 2024. LY Corporation recognizes the seriousness of the incident, which undermined trust in its role as a platform operator with a large user base, and is implementing measures to prevent recurrence. As the parent company, SoftBank Corp. is reinforcing its security governance through regular risk assessments and strengthened emergency communication frameworks.