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In brief: Ampere is weighing its strategic options, and the outcome could have far-reaching implications for the data center chip market. As one of the leading companies developing Arm-based CPUs for data centers, its acquisition could potentially reduce competition. A sale could also affect Oracle's cloud computing strategy and its ability to offer custom silicon.
Ampere Computing, the Oracle-backed semiconductor startup specializing in Arm-based processors for data centers, is reportedly exploring a potential sale, according to Bloomberg, which cited sources familiar with the matter.
The publication reports that Ampere, founded in 2018 by former Intel executive Renee James, has been working with a financial adviser to gauge potential buyers' interest. The company was valued at $8 billion following a proposed investment from SoftBank in 2021 and is now open to discussions with larger industry players about a possible transaction.
Ampere has consistently advanced its product line of multi-core processors. In 2020, it introduced Ampere Altra and Ampere Altra Max CPUs with up to 128 cores and AmpereOne processors with up to 192 cores in 2023. This year, it debuted CPUs with up to 256 cores. This next-generation CPU is being manufactured on Taiwan Semiconductor Manufacturing's 3-nanometer process, which could broaden its appeal to new customers. It also has added a 512-core model to its roadmap.
According to Ampere, these chips have been adopted by major cloud providers, including Oracle, Microsoft, and Google. Competition in this space, though, is stiff, with established players like AMD and Intel having rolled out their own high-core-count x86 processors.
Meanwhile, the semiconductor industry is undergoing a fundamental shift as companies vie for a larger share of the billions being invested in AI infrastructure development. The industry is also transitioning to accelerator chips, such as those produced by Nvidia, and away from traditional central processing units. Despite these challenges, Ampere believes its energy-efficient chips will offer a competitive advantage as data center power demands continue to rise.
Oracle is Ampere's primary financial and strategic backer and is likely to play a major role in determining the company's future. Oracle's cloud computing division heavily relies on Ampere's chips, which opens the possibility that it could acquire the company. However, Oracle abandoned proprietary processor development after it acquired Sun Microsystems and it's unclear whether it would be interested in bringing chip design in-house.
The exploration of a sale represents a significant shift for Ampere, particularly for CEO James, who had once advocated for a public listing. The company confidentially filed for a US IPO in April 2022, but changing market dynamics and increased competition appear to have forced it to reconsider. However, Bloomberg reports that the company would be open to an IPO in the future if market conditions improve.