Risk Factors

The material risks that the Company (SBG and its subsidiaries) believes could significantly affect investors’ investment decisions as of June 22, 2026 are outlined below. The materialization of these risks could have an adverse effect on:

These risks do not include all the risks that the Company could face, nor is there a guarantee that measures to address such risks will be fully effective. Forward-looking statements were determined as of June 22, 2026, unless otherwise stated.

Under the Company’s management system, the Company actively invests in and operates businesses in fields essential to the realization of Artificial Super Intelligence (ASI), with SBG, a strategic investment holding company, exercising overall control over its subsidiaries, associates and investees as our portfolio companies (hereinafter “portfolio companies”).
The Company’s material risks in the execution of its business are stated in subsections a. through e. below.
Additionally, please refer to “(2) SoftBank Vision Funds business,” “(3) SoftBank business,” and “(4) AI Computing business” for the material risks in the SoftBank Vision Funds segment, SoftBank segment, and AI Computing segment, respectively.

The Company invests mainly in information and technology companies that leverage AI; however, the valuation of these companies can vary significantly depending on the outlook for technological progress and market growth. Therefore, the Company’s equity value of holdings may be affected by these types of sector-specific factors, in addition to factors such as macroeconomic, monetary policy, and stock market trends. In addition, private portfolio companies are also affected by trends in the venture capital and IPO markets.
Notably, since Arm shares represent a large portion of the Company’s equity value of holdings, a stock price change has a substantial effect on the Company’s equity value of holdings. However, as Arm is a consolidated subsidiary, changes in Arm’s stock price do not affect the Company’s financial condition and results of operations.
Moreover, the Company may be affected by foreign exchange rate movements in connection with its ownership of foreign currency-denominated assets and liabilities.
The Company aims to conduct stable financial management to withstand the impacts of market volatility. For details, please refer to “2. Adhering to financial policy” in “(4) Business Environment and Priority Issues to Address” under Management Policy and Priority Issues to Address.

The Company invests in companies and other entities that operate not only in Japan, but also in countries and regions overseas, such as the U.S., China, India, Europe, and Latin America. Therefore, due to changes in political, military, or social circumstances and to the establishment of new laws, regulations, systems, and other rules (hereinafter “laws and regulations”) and the strengthening thereof (including changes in interpretation and implementation) in those countries and regions, the investment activities of the Company and the business activities of portfolio companies may not develop as expected. Laws and regulations include, besides those related to investment, laws and regulations related to businesses such as AI, semiconductors, data centers, energy, telecommunications services, internet advertising, e-commerce, financial services and payments, automated driving, robotics, logistics, and to other corporate business activities (including, but not limited to, laws and regulations related to business permits and licenses, national security, import and export, personal information and privacy protection, the environment, product liability, fair competition, consumer protection, prohibition of bribery, labor management, intellectual property rights, prevention of money laundering, taxation, and foreign exchange). The investment activities of the Company and the business activities of portfolio companies are directly or indirectly affected by those laws and regulations. Recently, countries have been taking steps to implement stricter regulations from a national security perspective, against the backdrop of factors such as the situation in the Middle East, intensified U.S.-China rivalry, and the Russia-Ukraine conflict. For example, the introduction of laws and regulations to restrict investment in specific countries or companies could constrain the Company’s investment activities, as well as cause the realization of investments to be delayed or the terms and conditions for the realization of investments to deteriorate. Additionally, some countries are moving to strengthen export controls for certain advanced technologies and related products and to revise tariff policies. If these heightened geopolitical risks result in further supply chain disruptions, restrictions on the import and export of specific products and technologies, or increased trade costs, the business development and operating results of portfolio companies may be adversely affected.
Moreover, the investment activities of the Company may require approvals and permissions from the regulatory authorities of relevant countries, or the Company’s involvement with portfolio companies may be restricted. If the necessary approvals and permissions cannot be obtained or other restrictions cannot be avoided, the Company may be unable to successfully implement its investment or divestment plans as it expects.
The Company collects information about the changes in the external environment described above and assesses the impact they may have on investment activities, while receiving advice from outside advisers. Concurrently, the Company works to address each of these regulations. In addition, the Company continuously monitors the concentration of investments in specific countries or regions, and business sectors, within its investment portfolio. By doing so, the Company identifies risks and reflects them in its management decisions.

The Company aims to maximize returns from a medium- to long-term perspective by making investments in information and technology companies that leverage AI. However, portfolio companies may be unable to develop businesses as envisioned at the time of the investment decision, due to factors including the obsolescence of portfolio companies’ technologies and business models, and intensified competitive environments. This may lead to a significant deterioration in business performance or a drastic revision of their business plans. Moreover, the Company may provide loans, loan guarantees, additional investment or other forms of financial support as deemed necessary to improve their shareholder value, if they are unable to develop businesses as anticipated. Providing such support could increase the Company’s exposure to those portfolio companies. Nevertheless, the Company has a general policy of not making investments solely for the purpose of providing relief.
Even after making investments, the Company continuously monitors major risk factors of portfolio companies, including financial and management information, key performance indicators, differences between business plans at the time of the investment decision and actual progress, and the status of corporate governance. To address these risk factors, the Company implements measures such as providing advice and dispatching officers to improve the management of portfolio companies, as necessary.

In the investment decision-making process, the Company may make investment decisions while misjudging the risks concerning such factors as the technology, business model, competitive environment, financial condition, compliance, and governance of an investment target, or the integrity of the founders and managers who have critical influence. In particular, the transparency, accuracy, and completeness of information on which the Company bases its investment decisions are relatively more likely to be inadequate at private companies.
In the investment decision-making process, the Company seeks to assess investment-related risks by conducting due diligence on important factors of the target, while obtaining the cooperation of, for example, outside financial, legal, and tax advisers as necessary, in addition to referring to research and reviews by the relevant internal departments. Based on the results of such procedures, investment decisions are made by either the Board of Directors of SBG, the Investment Committee to which authority is delegated by the Board of Directors (refer to Corporate Governance System), or the Investment Committee of the fund management subsidiary.

The Company utilizes a diverse range of procurement methods, such as loans from financial institutions and the issuance of bonds, as well as raising funds through asset-backed financing and selling assets.
For loans from financial institutions and bonds, if the procurement environment deteriorates due to factors such as changes in interest rates or credit ratings, the Company may be unable to raise funds at the planned timing, scale, or conditions. In addition, various covenants may be attached to the debts. If these covenants are breached, the Company may forfeit the benefit of the term with respect to such obligations. Furthermore, in connection with this forfeiture, the Company may be requested to make lump-sum repayments with respect to other obligations.
For asset-backed financing (excluding prepaid forward contracts) using public equities such as Arm shares, or private equities, if the value of eligible equity holdings declines, the Company may be required to post additional cash collateral or incur prepayment obligations. The Company may also face difficulties in raising new funds and refinancing.
Regarding fundraising through the sale of asset holdings, the Company may be unable to sell assets at anticipated prices when necessary due to factors such as sluggish market liquidity, market volatility, contractual restrictions on asset sales, and delays in scheduled IPOs.
To control risks related to fund procurement, the Company raises funds with timing and methods that are deemed appropriate based on careful monitoring of market conditions. In particular, when borrowing from financial institutions, issuing corporate bonds, and conducting asset-backed financing, the Company increases the stability of each type of fund procurement by conducting prior reviews and implementing measures based on various anticipated scenarios. Through these measures, the finance departments strive to maintain a sufficient cash position in accordance with SBG’s financial policy.

The Company’s major subsidiaries and investment funds are run autonomously, the subsidiaries by their respective CEOs and other leaders, and the investment funds by the CEOs of the fund operating subsidiaries described below. However, unforeseen situations with respect to Representative Director, Corporate Officer, Chairman & CEO Masayoshi Son, who plays a pivotal role in the Company’s management, could impede the overall activities of the Company.
If such an unforeseen situation were to occur, the decision-making process could be affected. To minimize this impact, the Company has drawn up contingency plans. In addition, the Nominating & Compensation Committee periodically discusses succession plans.

As of March 31, 2026, the Company had invested a cumulative total of USD 34.6 billion in OpenAI through SVF2. In addition, in February 2026, the Company decided to make follow-on investments of USD 30.0 billion in OpenAI. In March 2026, the Company entered into a bridge facility agreement with a total facility amount of USD 40.0 billion, primarily to raise the funds necessary for this follow-on investment. During fiscal 2026, the Company will prioritize refinancing this bridge facility into long-term funding, along with its repayment. However, the Company may be unable to do so as expected due to various factors, including the market environment.
The AI industry is experiencing rapid technological innovation and intensifying competition, and OpenAI’s business is subject to various risks. For example, it may not succeed in securing and retaining highly skilled technical talent or sufficiently expanding its user base; may be unable to secure earnings at the expected timing or level; may face increased burdens associated with long-term contracts for securing large-scale computing capacity and semiconductors; and may be subject to financial burdens or reputational impact arising from the outcomes of ongoing lawsuits. If these risks materialize, they may affect OpenAI’s business development, competitive advantages, and corporate value, and may also affect the Company’s equity value of holdings.
In addition, as a minority shareholder of OpenAI, the Company has only a limited ability to influence OpenAI’s business strategies and decision-making. Accordingly, there is no guarantee that OpenAI’s management will adopt the strategies that the Company believes would be the most beneficial. Additionally, in strategic or operational decision-making, OpenAI’s stated public benefit mission may be prioritized over maximizing shareholder value, which may, as a result, conflict with the Company’s interests as an investor.
Furthermore, if OpenAI seeks to conduct an initial public offering in the future, due to factors such as market conditions and regulatory trends, the timing or terms of such offering may differ from the expectations of the Company or OpenAI, or such offering may not be realized at all. In this case, OpenAI’s fundraising may be affected and its liquidity position may deteriorate, and the Company’s equity value of holdings or the timing of monetization may also be affected.
Even after the investment, the Company continuously monitors OpenAI’s major risk factors, including financial and management information, key performance indicators, and differences between the business plan at the time of the investment decision and actual progress.

In January 2025, the Company jointly announced the “Stargate Project” with OpenAI and other partners to build new AI infrastructure in the U.S. in support of OpenAI’s operations. As part of this project, in January 2026, SBG’s subsidiary Energy Global entered into a strategic partnership with OpenAI and is advancing the construction of data center buildings pre-fitted with power and network connectivity infrastructure (powered shells) for a 1.2 GW-scale AI data center project in Milam County, Texas.
In March 2026, the U.S. Department of Energy (DOE) and the U.S. Department of Commerce (DOC), together with the Company, Energy Global, and AEP Ohio (a regional electric utility subsidiary of American Electric Power Company, Inc., a leading U.S. power company), announced a public-private partnership project to develop 10 GW-scale power generation and a 10 GW-scale AI data center at the PORTS Technology Campus in Piketon, Ohio. Of this project, the plan to develop 9.2 GW-scale power generation facilities is one of the projects covered under the “Strategic Investment Initiative,” a USD 550 billion framework based on an agreement between the governments of Japan and the U.S.
Furthermore, in May 2026, the Company announced its commitment to develop and operate 5 GW-scale AI data center capacity in France. The initiative is aimed at expanding access to high-performance compute capacity in France in support of the rapidly growing AI sector, and the Company will advance this project in collaboration with Energy Global and other strategic partners.
Given that these projects require substantial funding, the Company will steadily advance the development of the infrastructure that supports the expansion of AI usage while limiting our own capital burden by utilizing external financing. However, these projects may not proceed as expected by the Company if it is unable to secure external financing at the planned timing, scale or terms, or due to various other factors.

SVF aims to maximize returns over the lifecycle of each of the funds by making investments in technology companies primarily leveraging AI that are deemed to have high growth potential. SBG invests in these investment funds as a limited partner. Additionally, the Company’s wholly owned subsidiaries who manage these funds (SBIA, which manages SVF1, as well as SBGA, which manages SVF2 and LatAm, hereinafter the “Managers”) are respectively entitled to receive management fees, performance-linked management fees, and performance fees, each of which is measured by reference to the investment activities of the investment funds.
The material risks at SVF and their Managers are stated in subsections a. through d. below. In this section (2), the phrase “portfolio companies” refers to the investees of SVF.

Many portfolio companies are seeking to leverage new technologies such as AI and large complex data-sets to create new business models. There are various risks involved for these companies to develop their businesses as planned, earn profits, and establish a solid business foundation.
In particular, these risks include: that they may not be able to develop technologies or implement business models as expected, or provide products and services that continue to meet customer needs and market practices; their unit economics may not be strong enough to fully cover the cost of the platform and continued investment in technological advancement; they lose out to other new entrants with the latest technologies or to incumbents with strong business foundations; they are unable to adjust themselves to achieve scalability or expansion into adjacent businesses or different geographies and to changes in the economic or business environment; they are not able to secure profits if the customer acquisition costs, such as advertising and sales staffing, significantly exceed their original plans; and, they are unable to respond to growing compliance complexity and/or manage the costs for privacy and AI across varying jurisdictions.
In addition, as the strategic importance of advanced technology in national security has been growing in recent years, and with a backdrop of a challenging relationship between the U.S. and China, it remains possible that stricter regulations in various countries will be introduced, which may adversely affect the business development of the portfolio companies or expected return on investment.
Furthermore, many portfolio companies have funding needs for business development. If the fund-raising environment deteriorates, it may not be possible to raise funds on the expected terms, resulting in the need to cut costs materially, which may impede growth, or to raise funds on terms that dilute the Company’s share in the portfolio company. At the Managers, the independent investment risk team plays a central role in identifying risks early and mitigating them through the investment approval process and ongoing independent post-investment monitoring.

Due to the size and/or illiquid nature of many of the investments that SVF may acquire, as well as economic, legal, political, or other factors, there can be no complete assurance that SVF will be able to monetize such investments as originally planned. Additionally, SVF may be prohibited by contract or other limitations from selling certain securities for a period, which may mean that SVF is unable to sell investments in a timely manner and/or at favorable market prices.
Approval of an exit strategy is a key part of the Managers’ Investment Committees’ considerations. Exit strategies are regularly reviewed and updated by the Managers’ investment teams. Exit strategies are also stress tested under various market conditions by the investment risk team to aid forward planning. In setting up a long-term fund structure, it was anticipated that multiple economic downturns could occur and that some investments may take longer to exit than others.

SVF’s investment portfolios may contain securities issued by public companies. Such asset holdings are subject to risks that include increased obligations to disclose information regarding such companies, limitations on the ability of SVF to dispose of such securities at their discretion, increased likelihood of shareholder litigation and insider trading or conflict allegations being brought against such companies’ executives and board members, including employees of the Managers. In addition, there may be increased costs associated with addressing each of the aforementioned risks.
The primary mechanism employed to mitigate the market risk following a liquidity event is to follow a deliberate plan for selling down the positions to minimize the market impact and to maximize the value of the proceeds. The Managers also examine whether to hedge the foreign-exchange risk should the securities be denominated in a currency whose exchange rate relative to USD is volatile. Additionally, the operational and compliance risks that arise while managing SVF’s public securities positions are managed through an appropriate control framework spanning the Managers’ operational, compliance, and enterprise risk activities including policies, staff training, whistleblower helpline, pre-trade approval processes (including the approval of trading counterparties), and post-trade reconciliations and exception monitoring.

The Managers, aligned to their fiduciary obligations, seek to maximize the equity value of SVF funds that they respectively manage, by carefully selecting investments and promoting growth after investment through the provision of a wide range of support.
For the success of these investment activities, it is essential to secure and retain capable personnel who possess broad specialist knowledge of investing, technology and financial markets. A failure of the Managers to remain agile, secure or retain an adequate number of capable personnel could have an adverse effect on the maintenance or expansion of the investment scale and future investment performance of the investment funds they manage.
In order to maintain their broad investment and management capabilities, the Managers provide various HR support programs and ensure the human capital in the firm has the requisite skill sets to meet business objectives. The Managers conduct a range of efforts including regularly reviewing performance, organization re-design, and training and development, as well as moving staff across the organization to ensure they fulfill their potential.

SoftBank Corp. and its subsidiaries (hereinafter the “SoftBank Corp. Group”) engage in its core business of telecommunications, in addition to providing services such as Yahoo! JAPAN, LINE, and PayPay, and developing its business in various fields within the information and technology domain. The material risks at the SoftBank Corp. Group are stated in subsections a. through f. below.

In the telecommunications-related market, the SoftBank Corp. Group deploys products, services, and sales methods that fit consumer preferences. However, if the SoftBank Corp. Group is unable to meet the expectations of consumers for price plans, voice and data communications quality, and so forth, or if the products and services provided by the SoftBank Corp. Group have significant defects, the SoftBank Corp. Group’s competitiveness may decline. Moreover, the introduction, amendment, or change in interpretation or application of laws, regulations, systems, and so forth, could result in the effective restriction of products and services that the SoftBank Corp. Group can deliver to its customers, or of sales methods and price plans, etc., causing the SoftBank Corp. Group to experience a decline in revenue and to incur a larger financial burden.
In certain instances, the SoftBank Corp. Group’s competitors may have a competitive advantage over the SoftBank Corp. Group in terms of capital, products and services, technology development capabilities, price competitiveness, customer base, sales capability, brands, public recognition, or overall capability in all of these, for example. If these competitors were to strengthen sales of products and services that harness these competitive advantages to a greater extent than at present, the SoftBank Corp. Group may be placed at a disadvantage in sales competition, including price competition, may be unable to acquire or retain customers, or may experience a decrease in Average Revenue Per User (ARPU) with a resultant decline in profitability. Furthermore, the products and services of startup companies and new entrants could raise competition with the SoftBank Corp. Group’s products and services. In addition, the SoftBank Corp. Group may experience an increase in expenses related to the development of new products and services and the promotion of sales, and so forth, for maintaining and securing its competitiveness.
The SoftBank Corp. Group may conduct internal realignment for purposes such as streamlining overlapping business resources, speeding up decision-making, and generating greater synergies among businesses. However, if the SoftBank Corp. Group is unable to sufficiently capture the expected benefits of the realignment, or if authority becomes concentrated among a small number of management personnel, problems such as trouble with and delays in services to be rolled out, adverse effects on strategies and synergies, disruptions associated with the realignment, and inadequate governance.

The SoftBank Corp. Group’s primary business domain is the information technology industry, which is subject to rapid changes in technology and business models. Notably, technologies related to generative AI and AI agents have been evolving dramatically and have significantly impacted existing business models. The SoftBank Corp. Group is constantly undertaking measures such as surveying the latest technology and market trends, conducting verification trials to introduce services with highly competitive technologies, and considering alliances with other companies. However, there are no assurances that the development of new technologies will proceed on time or results will be delivered as planned, or that common standards or specifications will be established and commercial viability will be achieved. Even if the aforementioned measures are undertaken, the SoftBank Corp. Group may be unable to develop or introduce outstanding services, technologies, and business models in keeping with market trends due to the inability to appropriately adapt to changes in the market environment in a timely manner, such as the emergence of new technologies and business models, or due to the inability to deploy equipment and facilities rapidly and efficiently. In this case, the SoftBank Corp. Group’s service offerings could lose competitiveness in the market, possibly curtailing the number of subscribers that the SoftBank Corp. Group is able to acquire or retain, or reducing ARPU.

In its business operations, the SoftBank Corp. Group handles customer information (including personal information) and other confidential information. The SoftBank Corp. Group strives to build a framework to protect and manage information assets appropriately, including the appointment of a Chief Information Security Officer and education and training sessions on information security for officers and employees. However, this information could be leaked, lost, or involved in a similar incident, either intentionally or accidentally by the SoftBank Corp. Group (including officers and employees of the SoftBank Corp. Group and people related to subcontractors), or through a malicious cyber-attack, hacking, computer virus infections, or other form of unauthorized access or other means by a third party.
Moreover, if the products and services supplied by the SoftBank Corp. Group are used inappropriately for crimes and so forth such as fraud and the like, it could impair public trust in the SoftBank Corp. Group and the SoftBank Corp. Group’s credibility.
Such an occurrence could reduce the SoftBank Corp. Group’s competitiveness and give rise to significant costs to the SoftBank Corp. Group for payment of damages and modification of security systems, in addition to having an adverse impact on the SoftBank Corp. Group’s credibility or corporate image and making it difficult to acquire or retain customers.
Furthermore, LY Corporation, a significant group company, has submitted reports concerning the incident of unauthorized access it announced on November 27, 2023 to the Ministry of Internal Affairs and Communications (MIC) and the Personal Information Protection Commission of Japan (PPC). Based on the administrative guidance and recommendations, as of March 31, 2026, LY Corporation completed the implementation of major technical and organizational measures to prevent recurrence. These measures include the decoupling of system networks from associate companies and other relevant entities that shared the system infrastructure, the introduction of multifactor authentication across the entire LY Corporation environment, and the enhancement of subcontractor management. The measures have since transitioned to a phase of routine and ongoing operation. Additionally, in November 2024, a malfunction occurred in LINE Album, a service provided by LY Corporation, in which image data from other users was mistakenly included in album thumbnail images. As a result, on March 28, 2025, LY Corporation received administrative guidance from MIC. LY Corporation has designed recurrence prevention measures, and has completed its report to MIC. Furthermore, since its reorganization as LY Corporation, LY Corporation and its group companies have been working to develop and continuously strengthen a framework to ensure the efficient and proper functioning of its group’s overall data governance. On the other hand, recent trends in cybersecurity threats include increasing damage due to ransomware and so forth. In October 2025, LY Corporation’s consolidated subsidiary, ASKUL Corporation, experienced an impact on some of its business activities caused by a system outage due to a ransomware attack. LY Corporation and its group companies are taking this new threat environment and the incident that occurred at a group company seriously. In addition to their existing general security measures, they are also promoting focused measures specifically to address system outages caused by ransomware and related attacks, such as data preservation and verification of effective recovery procedures. However, if the measures of LY Corporation and its group companies and a group governance response by SoftBank Corp. are judged to be inadequate or insufficient, this could lead to impairment of trust in the SoftBank Corp. Group, a decrease in demand for the SoftBank Corp. Group’s services or other such consequences. Such outcomes could have an impact on the SoftBank Corp. Group’s businesses.

The SoftBank Corp. Group consigns in whole or part to subcontractors customer sales activities, acquisition and retention of customers, and telecommunications network construction and maintenance for various services and products, along with the execution of other related operations. In addition, the SoftBank Corp. Group’s information search services make use of other companies’ search engines and paid search advertising distribution systems. While the SoftBank Corp. Group strives to reduce risks in the supply chain, if these subcontractors (including their directors and employees, or related parties) are unable to execute operations in line with the SoftBank Corp. Group’s expectations, or if a human rights infringement-related issue occurs, such as a case where the information of the SoftBank Corp. Group’s customers is obtained without authorization, it could have an impact on the SoftBank Corp. Group’s business.
Moreover, any damage to the credibility or corporate image of these subcontractors as a result of the kind of incident described above would also have an impact on the SoftBank Corp. Group's credibility or corporate image. Furthermore, if these subcontractors should fail to comply with laws and regulations, the SoftBank Corp. Group could receive a warning or administrative guidance from the regulatory authorities, or be investigated for non-fulfillment of its supervisory responsibility, and the SoftBank Corp. Group’s credibility or corporate image could deteriorate as a result, making it difficult to acquire and retain customers.

In the provision of various services by the SoftBank Corp. Group, including telecommunications networks and systems for customers such as Yahoo! JAPAN, LINE, and PayPay, there is a possibility that a major problem could occur if the SoftBank Corp. Group were to become unable to continuously provide the services, or were to suffer a decline in the quality of the services, due to human error or serious problems with equipment or systems (including factors due to natural disasters and other unpredictable events), or cyber-attack, hacking or other form of unauthorized access or other causes by a third party. The SoftBank Corp. Group has built redundancy into its networks, along with clearly defining restoration procedures in preparation for systems faults and other incidents. In the event of a system fault or other incident, the SoftBank Corp. Group conducts restoration activities with appropriate capabilities in place, such as setting up an Incident Response Headquarters according to the scale of the incident. Even with these measures in place, the SoftBank Corp. Group may be unable to avoid disruptions of services or declines in quality. If such disruptions of services or declines in quality were to become widespread or significant time were required to restore services, the SoftBank Corp. Group’s credibility or corporate image could deteriorate, making it difficult to acquire and retain customers.

In accordance with the Act on the Promotion of Ensuring National Security through Integrated Implementation of Economic Measures (hereinafter, the “Economic Security Promotion Act”), SoftBank Corp. and LY Corporation were designated as specified social infrastructure providers (core infrastructure providers) in the telecommunications business on November 16, 2023. From May 17, 2024, this new regulatory framework became effective. If SoftBank Corp. or LY Corporation fail to comply with a national government review mandated by the Economic Security Promotion Act, the authorities may impose administrative measures against them, such as recommendations or orders for business improvement or suspension. These administrative measures may potentially cause temporary business suspensions, delays, or additional capital expenditures, as well as extra measures and costs, and impairment of public trust in the SoftBank Corp. Group. Such outcomes could have an impact on the SoftBank Corp. Group’s businesses, financial position, and results of operations.

In the AI Computing business, semiconductor-related subsidiaries such as Arm and Ampere are working together to enhance the Group’s semiconductor business toward the realization of ASI. Arm’s operations and activities primarily consist of developing and licensing its high-performance and energy-efficient Arm compute platform, including central processing unit (“CPU”) products, compute subsystems and other complementary products. Arm licenses its CPU and other products to semiconductor companies, original equipment manufacturers (“OEMs”) and other organizations to design their chips. These chips are built into end products such as smartphones, tablets and PCs, and vehicles, by systems companies. Arm’s revenue includes licensing fees for Arm’s technology, and royalties received on chips with Arm’s products that the licensees have shipped. Arm also continues to expand the scope of its product offerings, investing in more holistic, end-market optimized designs, expanding beyond individual design intellectual property (“IP”) to providing subsystem designs. For example, in March 2026, Arm expanded its compute platform into production silicon products with the Arm AGI CPU. Ampere complements Arm’s design strengths by specializing in designing high-performance, energy-efficient CPUs for AI-driven workloads, built on the Arm compute platform. Since Arm represents a large portion of asset value and net sales in this business, the material risks related to Arm are stated in subsections a. through k. below.

Demand for Arm’s technology and services is largely dependent on the semiconductor and electronics industries, which are volatile and intensely competitive and generally characterized by declining average selling prices over the life of a generation of chips. The revenue Arm generates from licensing activities is also largely dependent on the rate at which semiconductor and systems companies develop and adopt new generations of Arm’s products, which is affected by the demand for these companies’ chips and other products. Decreasing demand from systems companies for chips based on Arm’s products would directly and adversely affect the amount of revenue Arm receives.
Arm’s success depends substantially on the acceptance of its products and services by semiconductor and systems companies. There are competing architectures in the market and there is no certainty that the market will continue to accept Arm’s products.
The semiconductor and electronics industries have also become increasingly complex and subject to increasing design and manufacturing costs. Many of Arm’s customers utilize third-party vendors for electronic design automation tools and the manufacture of their semiconductor designs. Arm works closely with those third parties to ensure that its technology is compatible with their design tools and manufacturing processes. However, if Arm fails to optimize its products appropriately or if Arm’s access to such tools and processes is hampered, then Arm’s products may become less desirable.
In order to mitigate against these risks, Arm’s management team regularly reviews its strategy and long-term product development plans to test that Arm is developing products to meet future needs. Arm works with many partners and companies in the semiconductor and electronics industries and is well positioned to detect any change and act accordingly.

The market for Arm’s products is intensely competitive and characterized by rapid changes in design and manufacturing technologies, software development efficiencies, end-user requirements, industry standards, and frequent new products and improvements. Arm anticipates continued challenges from current and new competitors, including established technologies, such as the x86 architecture, and free, open-source technologies, such as the RISC-V architecture. In addition, Arm’s developments in its product offering, including entry into production silicon products, such as the Arm AGI CPU, may create real or perceived conflicts with companies important to Arm’s business. Many of our customers who have historically licensed Arm’s IP may face direct competition from Arm in certain market segments.
Arm’s competitors may devote greater resources to the development, promotion, and sale of products and services, they may offer lower pricing and different customer engagement models, and their performance, features, and product quality may be more desirable than those of Arm. Arm may therefore have to invest substantial resources to further develop its ecosystem that allows it to compete with alternative architectures.
Arm mitigates against these risks by working closely with leading semiconductor companies. Arm’s established ecosystem includes many software and chip design engineers who understand how to build Arm-based chips and write software optimized for Arm processors. Arm invests in this ecosystem to help further reduce the total cost of developing and maintaining a portfolio of Arm-based chips.

To remain competitive, Arm must continue to innovate and develop new products and services, as well as enhancements to existing products and services, in response to expressed or anticipated customer demand and market opportunities. This has resulted in Arm allocating resources to, and exploring, new markets and/or different products and solutions for existing and prospective customers in various end markets, including, without limitation, new products in Arm’s IP portfolio, as well as solutions beyond individual IP designs such as compute subsystems, chiplets, and complete chip solutions. Arm intends to continue allocating resources and engaging with its ecosystem partners to explore the viability and development of new products. Any products or solutions that constitute an entry into new markets or offerings of different solutions may be unsuccessful for any number of reasons.
For example, as with any company entering a new market or offering new products or solutions, Arm will compete with companies that have a more established presence, long-standing customer relationships and established brand awareness or may have significantly greater resources dedicated to such markets and solutions than Arm. Further, Arm’s customers may prefer to continue integrating Arm’s IP components in their products and solutions, and, therefore, Arm’s more integrated compute products may not be adopted by customers on Arm’s expected timeline or at all. Any developments in Arm’s product offerings, including its entry into production silicon products such as the Arm AGI CPU, and other changes to Arm’s products and services, may create real or perceived conflicts with companies that are important to Arm’s business, such customers or partners may terminate or materially reduce their relationship with Arm and seek alternative architectures or products from competitors.
Arm’s entry into production silicon also exposes it to new manufacturing, supply chain, and inventory risks that differ materially from Arm’s traditional IP licensing business. These include dependence on third-party foundry partners and contract manufacturers, the potential for manufacturing defects or quality control issues, significant upfront capital commitments and purchase obligations, inventory management challenges, complex supply chain dependencies, supply chain disruptions, price volatility in manufacturing inputs, and increased working capital requirements.
Furthermore, Arm has, and may in the future, need to recruit and hire engineers or other employees or acquire companies that possess the requisite expertise, which Arm may not be able to do successfully on a timely basis, on competitive terms or at all. To the extent that Arm does not have the technical expertise, financial resources or other capabilities for a particular research and development project with respect to new products or solutions, Arm has partnered, and may in the future partner, with third parties, and there can be no assurances that any such third parties will dedicate the resources, or have the requisite technical or other capabilities, necessary to achieve Arm’s and/or Arm’s customers’ expectations.
In addition, in order to remain competitive, Arm may need to change the prices of its products or services or otherwise change the structure and terms of its customer relationships or business model. Arm can provide no assurance that customers will accept these changes. In such case, Arm may not realize the anticipated financial benefits of such changes as anticipated, on the expected timeline or at all.
Additionally, increases in the number or value of commercial contracts signed in the future may not materialize in the same way or at all under a new business model and, therefore, Arm’s revenue may be lower than expected. Further, the use of a new business model may have unexpected consequences for Arm, including making Arm’s products less attractive to customers.
In order to mitigate against these risks, Arm undertakes extensive reviews in relation to its new business models, including undertaking discussions with its customers in advance of implementing key changes, in order to ensure that any risks are identified and managed appropriately.

To remain competitive, Arm must continue to innovate and develop new products, applications and enhancements to existing products and services, particularly as next-generation technology is adopted by market participants. Allocating and maintaining adequate research and development resources, such as the appropriate personnel and development technology, to meet the evolving demands of the market is essential to Arm’s continued success, but Arm’s allocations may be inadequate or Arm may pursue research and development initiatives based on assumptions about future demand that prove to be incorrect.
In order to mitigate against these risks, Arm’s management team regularly reviews its research and development resources.

A significant portion of Arm’s total revenue is generated from a limited number of key customers. As a result of this customer concentration, Arm is particularly susceptible to adverse developments affecting its key customers and their respective businesses.
In order to mitigate against this risk, Arm typically develops multiple processors each year, reducing the impact of a customer deciding not to move forward with Arm.

Arm is subject to risks arising from adverse changes in global economic conditions and other events outside of Arm’s control, including political instability, geopolitical turmoil, sanctions, and export control restrictions. In addition, the global market for Arm’s products may be impacted by such geopolitical and economic factors, which could lead to the fragmentation of the global semiconductor market, as certain countries want more end-to-end control of architecture, leading to increased architectural fragmentation and a reduced role for a global architecture. For Arm, this could lead to increased costs to support region specific products, reduced revenue as a result of lost investment in territories that no longer use Arm products and loss of potential markets and future licensing opportunities.
Arm mitigates against this risk by working with trade authorities to reduce the risk of any impact of new trade barriers and reviewing its strategy to ensure that it is developing products in line with the future needs of the industry.

Substantially all of Arm’s China-related revenue is earned through the intellectual property license agreement with Arm Technology (China) Co. Limited*2 (“Arm China”), a significant portion of which is derived from Chinese semiconductor companies and OEMs, and from non-Chinese semiconductor companies and OEMs that utilize Arm’s products in chips and end products sold into China. Arm expects that its licensing relationship with Arm China will continue to account for substantially all of its total IP revenues from China and represent a significant portion of its revenues for the foreseeable future. A failure of Arm to maintain its commercial relationship with Arm China and China-sourced revenues, access new and existing markets in China or gain traction for new business areas in China, or a loss of Arm’s market share in China, could materially and adversely affect Arm’s results of operations and competitive position.
China is a significant source of semiconductor industry revenues. However, the near-term growth prospects of the Chinese semiconductor industry and related industries are unclear due to the uncertain effects of trade and national security policies, continued elevated levels of indebtedness, and related policies. A prolonged downturn or slow recovery in the Chinese semiconductor industry or economy generally could materially and adversely affect Arm.
In addition, regulatory and legislative actions, including trade and national security policies of the U.S. and Chinese governments, currently do and could in the future limit or prevent Arm from transacting business in China or with Chinese customers or suppliers.
Arm mitigates against these risks by ensuring that any U.S/China policy changes are kept under close review. In addition, Arm regularly reviews Arm China’s sales pipeline and any requests from Arm China to deviate from standard licensing contracts in order to monitor and manage developments in the Chinese market.

Arm’s success and ability to compete depends significantly on protecting its IP rights. Arm primarily relies on patent, copyright, trade secret and trademark laws, trade secret protection, and contractual protections, such as confidentiality, invention assignment and license agreements with its employees, customers, partners, and others to protect its IP rights. The steps Arm takes to protect its IP rights may be inadequate. Arm also may not be able to obtain desired patents. Arm’s exposure to different legal jurisdictions may also impact its ability to exercise its contractual and other rights around IP in such jurisdictions. If Arm is unable to successfully navigate the relevant legal and regulatory environment and/or enforce its IP and/or contractual rights in relevant jurisdictions, its business, results of operations, financial condition, and prospects could be materially and adversely impacted.
Litigation has been and may be necessary to enforce Arm’s patents and other IP rights. Any such litigation could be costly and would divert the attention of management and technical talent from normal business operations.
From time to time, Arm is involved in various legal, administrative and regulatory proceedings, claims, demands, and investigations relating to the business, which may include claims with respect to commercial, product liability, IP, cybersecurity, privacy, data protection, antitrust, breach of contract, labor and employment, whistleblower, mergers and acquisitions, and other matters. Arm is involved in pending litigation, including but not limited to lawsuits with Qualcomm, Inc. and Qualcomm Technologies, Inc. (together “Qualcomm”) and Nuvia, Inc. Arm can provide no assurances regarding the outcome of the litigation or how the litigation will affect Arm’s relationship with or revenue from Qualcomm, which is currently a major customer of Arm. Further, Arm is subject to antitrust laws and regulations in multiple jurisdictions, which could and has from time to time subjected it to investigations by antitrust regulators. Arm’s involvement in such litigation or in any antitrust investigation could cause Arm to incur significant reputational damage in the industry, in its relationship with Qualcomm and/or other third-party partners.
Arm mitigates against these risks by closely monitoring developments in relevant jurisdictions in relation to patents, litigation trends, and incidence of claims.

Arm has in the past been and it may in the future be subject to claims by third parties alleging infringement, misappropriation or other violation of third-party IP rights. Arm’s increasing use of AI internally as well as its entry into production silicon may increase these risks. In any potential dispute involving Arm’s patents or other IP, Arm’s licensees or the customers of its licensees could also become the target of litigation, and Arm may be bound to indemnify such parties under the terms of its customer agreements. Although Arm does not agree to indemnify its customers’ end customers and its indemnification obligations are generally subject to a maximum amount, such obligations could result in substantial expenses and end customers may initiate claims against Arm as well. Any such litigation would divert the efforts and attention of our management and technical talent, could be costly, require Arm to enter into royalty or licensing arrangements, subject Arm to damages or injunctions restricting the sale of its products, result in invalidation of a patent or family of patents, require Arm to refund license fees to its customers or to forgo future payments or require Arm to redesign or rebrand certain of its products.
Arm mitigates against these risks by designing and implementing its products without the use of IP belonging to third parties, except under strictly maintained procedures and with the benefit of appropriate license rights.

Arm’s brand and reputation are critical factors in its relationships with customers, employees, governments, suppliers, and other stakeholders. Arm’s reputation can be impacted by catastrophic events, incidents involving unethical behavior or misconduct, product quality, security or safety issues, allegations of legal noncompliance, internal control failures, corporate governance issues, security incidents, workplace incidents, climate issues, the use of its technology for illegal or objectionable applications, marketing practices, media statements, the conduct of suppliers or representatives, and other issues that result in adverse publicity. Arm’s own internal use of artificial intelligence, or AI, including but not limited to generative AI, concerns about Arm’s practices related to AI, and machine learning, or ML, or the ultimate uses of Arm’s products in conjunction with AI and ML technologies, even if unfounded, could damage Arm’s reputation. If Arm fails to respond quickly and effectively to these corporate crises and other threats to its brand and reputation, the ensuing negative public reaction could significantly harm its brand and reputation. Arm’s brand and reputation may also be damaged by the actions of third parties that are imputed to Arm, for example, through Arm China.
Arm mitigates against these risks by investing in the verification and validation of its products. Arm has rigorous quality assurance and verification and validation processes to reduce the risk of faults or bugs. Arm regularly gathers feedback from its customers and partners to determine whether the perception of Arm is changing, and ensure that corrective action can be taken early if customers are becoming less satisfied with its products or behavior.

Arm’s headquarters are in the U.K., and it currently operates in jurisdictions around the world, including the U.S., Europe, China, India, South Korea, Japan, and Taiwan. Risks associated with these international operations include exposure to political, economic, and financial conditions and expected and unexpected changes in legal and regulatory environments. As Arm continues to develop its business to include new products and solutions, these risks may evolve or expand.
Arm is subject to governmental export and import requirements that could subject Arm to liability or restrict its ability to license its products. If the U.S. Department of Commerce were to further broaden U.S. export restrictions on advanced semiconductors or foreign-origin items, this could subject more of Arm’s products to U.S. export controls and restrictions. Furthermore, if the U.S. government implemented expanded economic sanctions on specific countries or regions where certain customers and trading partners are based, that could impact Arm’s portfolio.
Trade relations between countries where Arm does business or where Arm’s customers have end customers have recently been and continue to be volatile. The U.S. government has imposed enhanced sanctions and export controls impacting the semiconductor industry, in particular advanced computing chips and services. Such restrictions have in the past and may in the future reduce Arm’s ability to license its products directly to entities and end users in affected countries and could potentially harm its commercial relationships by limiting the ability of certain customers and partners to manufacture, ship or receive chips and end products incorporating certain of Arm’s products.
Arm mitigates against these risks by maintaining strong relationships with the U.S., U.K., and EU export control authorities in order to effectively monitor any policy and regulatory developments, as well as by obtaining export licenses and authorizations where applicable.

The Company conducts investment activities pursuant to laws and regulations in each country. If the Company and its portfolio companies (including officers and employees) conduct activities in breach of those laws and regulations, regardless of whether they were aware of the breach or not, the Company and its portfolio companies may be subject to administrative sanctions or legal measures. As a result, the credibility and corporate image of the Company and its portfolio companies may be impaired, their contracts may be canceled by business partners, or a financial burden may be incurred. Furthermore, in countries and regions in which the Company and its portfolio companies conduct business activities, tax laws and regulations may be newly introduced or amended, or their interpretation or enforcement may be revised, leading to additional tax burdens. Views differing with those of tax authorities may also give rise to additional tax burdens.
The Company has established the SoftBank Group Code of Conduct, which applies to all officers and employees, in order to go beyond compliance with laws and regulations and conduct corporate activities based on a high ethical standard. The Company also works to strengthen the Group compliance structure and carries out activities to increase the knowledge and awareness of officers and employees, such as training. In addition, the legal departments collect information on new or revised laws and regulations, while receiving advice from outside advisers.

Infringement of SBG’s SoftBank brand by a third party could impair the corporate image or credibility of SBG and subsidiaries that employ the SoftBank brand. Additionally, infringement of the intellectual property of subsidiaries and portfolio companies by a third party could have a negative impact on these companies’ business development and results of operations. On the other hand, if the Company and its portfolio companies were to unintentionally infringe on intellectual property rights held by a third party, the Company and such portfolio companies may be prevented from using the intellectual property or subjected to claims for compensatory damages, license fees, and so forth from the third party.
In light of the importance of SBG’s brands in supporting sustained business growth, SBG strives to strategically obtain trademarks worldwide, while evaluating the intellectual property activities and strategies of subsidiaries and forming intellectual property partnerships with them. Through these and other efforts, SBG aims to protect and utilize intellectual property throughout the Group as a holding company.

The Company faces the possibility of lawsuits by third parties claiming compensatory damages for the alleged infringement of rights or benefits. These third parties may comprise shareholders, portfolio companies, business partners, and employees (including current and past shareholders and employees of portfolio companies). Such lawsuits could hinder the Company’s investment activities or may impair the Company’s corporate image, as well as create a financial burden.

The Company believes that it is crucial to take the initiative and implement substantive sustainability efforts. However, the Company’s sustainability activities may diverge significantly from the expectations of internal and external stakeholders, including investors; for example, investors may judge that sustainability factors are not sufficiently integrated into the Company’s governance structure and management strategy, or that the Company’s measures are inadequate for addressing identified material issues relating to sustainability, especially issues with priorities such as “Responsible AI,” “Climate change,” or “Human capital.” In these cases, the Company’s evaluation by stakeholders may deteriorate and adversely affect its investment and financing activities.
In addition, the Company may be unable to adequately assess the risks and opportunities associated with the sustainability aspects of portfolio companies. In these cases, portfolio companies may be unable to develop their businesses as expected by the Company. Moreover, if sustainability-related regulations concerning the Company’s investment activities and/or its portfolio companies’ business activities are tightened, the pace of investment may slow down or the cost to address such regulations may increase.
Furthermore, SBG identifies the Company’s sustainability-related risks and opportunities, and the Sustainability Committee, which is chaired by the Chief Sustainability Officer (“CSusO”) appointed by SBG’s Board of Directors, regularly discusses sustainability-related issues and countermeasures, along with strengthening sustainability-related response measures and disclosures.
Also, in investment activities, each investment entity analyzes the risks and opportunities associated with the sustainability aspects of portfolio companies and carries out comprehensive investment evaluations.

Against the backdrop of recent international conditions, the threat of cyberattacks has been increasing around the world, and attack methods, including those involving the malicious use of AI, are becoming increasingly advanced and sophisticated. The Company and its portfolio companies may be unable to completely prevent cyberattacks, hacking, computer virus infections, or other forms of unauthorized access or internal misconduct. The inability to prevent such events could lead to various service outages, or the leakage, alteration, or loss of information, or cause other such security incidents. Such occurrences may impair the credibility and corporate image of the Company and its portfolio companies and may hinder their business activities. The Company and its portfolio companies may also incur financial losses or additional cost outlays or other responses may be needed to address such occurrences.
The Chief Information Security Officer (CISO), who is appointed by the Board of Directors, is responsible for the information security of the Company. Under the leadership of the CISO of SBG, the Company endeavors to protect information assets by identifying vulnerabilities and risk factors that could threaten information security and by implementing information security measures focused on organizational, physical, technical, and human dimensions according to risk.