By Adam Levine

Softbank is buying a company facing increasingly intense competition with its planned $6.5 billion cash purchase of Ampere Computing, a start-up maker of data-center chips.

Ampere's main investors, Carlyle and Oracle, will sell their interests to Softbank as part of the deal, the Japanese tech holding company said late on Wednesday. Ampere had filed preliminary paperwork for an initial public offering in 2022, but chose not to follow through as rising interest rates tanked stocks, souring the IPO market.

Ampere was founded in 2017 by former Intel President Renée James to make data-center chips based on architecture from Arm, the Softbank-owned chip-technology licensing company, to compete with x86-based offerings from Intel and Advanced Micro Devices.

At first, Ampere faced little competition for Arm-based data-center chips; the strong point of Arm's technology was high power-efficiency chips for smartphones and other mobile devices. But then, Ampere started seeing competition from its potential customers, first with the Graviton chips from Amazon.com in 2018. Microsoft and Alphabet's Google have followed with their own data-center chips more recently.

Ampere was able to gain some traction by selling chips to Oracle's cloud but its future now looks uncertain. Its three largest potential customers are making their own Arm-based data center chips.

In fact, Ampere may also see competition from within Softbank. If reports from February turn out to be true, Arm is making its own data-center chip with Meta Platforms as the lead customer. Both Arm and Softbank declined to comment last month.

This would be the first time Arm made its own chips rather than licensing intellectual property to chip makers. It would put it in direct competition with its customers, Amazon, Microsoft, Google and Ampere.

The Ampere deal will be subject to the usual regulatory scrutiny.

Write to Adam Levine at adam.levine@barrons.com

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March 20, 2025 11:13 ET (15:13 GMT)

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