According to Bloomberg, one option being considered is for SoftBank to raise $70 billion from Middle East financial institutions and inject $30 billion itself.
Sources told Bloomberg details of the venture are being worked out and could change.
Bloomberg wrote the project is codenamed Izanagi, the Japanese god of creation and life.
The venture would compete directly with Nvidia, a key supplier of high-end chips for AI workloads running in data centres.
SoftBank returned to profit for the first time in five quarters in its fiscal Q3 2023 (which ran to end-December 2023), with its net asset value rising after Arm boosted its full-year revenue guidance, lifting its share price.
The company owns 90 per cent of Arm. SoftBank CFO Yoshimitsu Goto said on an earnings call there is strong demand for its AI chip designs.