{"text":[[{"start":9.54,"text":"SoftBank’s $3.7bn charge on power equipment for US data centres was driven by founder Masayoshi Son’s failed bet on smaller turbines that have since fallen out of favour as the industry shifts to larger, more powerful models."}],[{"start":25.26,"text":"The Japanese group had ordered more than 13GW of capacity, enough to generate power for 11mn homes. It included a large number of small gas turbines that could be delivered more quickly than bigger models but were more expensive and less fuel-efficient, said people familiar with the matter."}],[{"start":43.18,"text":"They said the huge charge that SoftBank was forced to take, leading to an unexpected $7bn loss in the third quarter, was primarily on those smaller turbines after Son mistimed his purchases."}],[{"start":54.44,"text":"In the past few years, AI companies have turned to gas turbines for standalone power generation in their data centres."}],[{"start":61.72,"text":"While initial orders were for smaller, less efficient units to be used as secondary or backup power, the industry now requires larger, more efficient turbines as primary sources of energy to meet growing AI demand."}],[{"start":74.56,"text":"Analysts said SoftBank’s charge may have related to smaller turbines representing more than 3GW of generating capacity, based on calculations of equipment costs and the $2.9bn in advance payments the company has written off."}],[{"start":88,"text":"The overall orders were to fulfil SoftBank’s own energy requirements and a speculative trade by Son, according to the people familiar with the matter."}],[{"start":96.84,"text":"While many of the turbines were procured for the Ports-Pike power plant being developed by SoftBank in Ohio, another chunk was ordered in the hope of rolling them into unspecified projects when demand for data centres increased."}],[{"start":108.76,"text":"Son assumed there would be sufficient demand for the extra turbines he had ordered, said the people, but he miscalculated as SoftBank found itself with more equipment commitments than it needed."}],[{"start":118.94,"text":"The reversal comes amid concerns about the pace of US data centre development. Those fears have intensified after Democratic candidates who campaigned against their construction won this month’s midterm elections."}],[{"start":130.84,"text":"SoftBank’s shares have fallen by nearly 60 per cent from their peak in June as investors fret over whether tech companies’ huge outlays for AI infrastructure will match actual future demand."}],[{"start":141.16,"text":"Mitsubishi Heavy Industries, one of the three biggest gas turbine manufacturers, has said the pullback in AI sentiment will hit smaller turbine makers, while projects managed by utilities that rely on more efficient equipment will survive."}],[{"start":154.72,"text":"“Power generation equipment specifications have evolved, and energy sources have become more diversified,” SoftBank said in a statement to the FT. “As a result, lead times, equipment costs and installation costs have improved significantly compared with the equipment we originally ordered.”"}],[{"start":171.32,"text":"SoftBank added that demand for its data centre business had exceeded expectations and that earnings improvements elsewhere would “substantially outweigh” the costs of modifying its original orders."}],[{"start":182.08,"text":"In its earnings announcement on Tuesday, the company wrote down $2.9bn of $9.5bn in advance payments it had made for power generation equipment."}],[{"start":191.64,"text":"A further $900mn in losses related to contract modifications and settlements brought the total charge to $3.7bn, although the company said it could recoup some losses through $2.1bn of potential rebates."}],[{"start":206.92,"text":"People close to the group said it would have been more costly in the long run to maintain the orders than take the writedown."}],[{"start":212.64,"text":"SoftBank said the Ports-Pike plant was moving ahead as planned and that the write-off was unrelated to the project."}],[{"start":219.04,"text":"The plant, which is being developed by SoftBank but owned by a US-Japan government-backed entity, is intended to supply power to a SoftBank data centre, where OpenAI has taken a 20-year lease."}],[{"start":230.32,"text":"The project is being funded through a $550bn trade deal between the US and Japan. SoftBank had placed a close to $10bn order for hundreds of turbines from US manufacturer GE Vernova, the FT reported in March."}],[{"start":250.24,"text":""}]],"url":"https://audio.ftcn.net.cn/album/a_1794558550_3943.mp3"}