In another episode of corporate chess, SoftBank is said to be on the verge of acquiring Ampere, the deal might still be fragile and it is clear that Ampere’s destiny is about to turn, but it raises the question about why SoftBank is eager to add another chip company to its collection?
Reports have suggested that SoftBank is close to acquiring Ampere, a semiconductor company founded by Renee J. James, a former Intel executive, for about $6.5 billion. This deal is a huge development in the controversy surrounding Ampere’s ongoing ownership narrative and could be viewed as a continued investment of SoftBank into the semiconductor space.
As per the report, the supposed acquisition price is lower from Ampere’s $8 billion valuation in 2021 when SoftBank was considering purchasing a minority stake. However, even with a downgraded valuation, the deal is considered to be very strategic, given that Ampere’s expertise in designing ARM-based data center chips fits well with SoftBank holding a major stake in ARM Holdings, the chip designer.
Ampere’s rise:
Founded in 2017 by Renee James, who has had a 28 year long career at Intel, Ampere was formed with the view of producing data center chips based on ARM low-energy designs. That was a truly novel idea in the context of that time. Backed by Oracle and private equity firm Carlyle, Ampere gained a fast grip, luring in key cloud computing customers such as Microsoft and Oracle.
Oracle in its annual report disclosed a 29% stake in Ampere, has put in place options and convertible notes that could confer on it a controlling interest in Ampere. Oracle wrote, “If either of such options is exercised by us or our co-investors, we would obtain control of Ampere and consolidate its results with our results of operation”.
These financial arrangements have fed speculation on the eventual future of Ampere. Conversely, the most recent speculation has it that, after serving on the board since 2015, Renee James would depart from it, which raises even more questions.
A Strategic Acquisition for SoftBank:
For SoftBank to be interested in Ampere, the demand from the AI perspective for efficient data center chips at scale is on the increase. With ARM Holdings as its other asset, the ARM chip technology of Ampere is enhancing the prospect of SoftBank as a player in the AI and cloud computing revolution.
Negotiations are underway, and there is a possibility that terms may change or the acquisition may not happen at all, as the deal is not concluded yet. Should it be concluded, this acquisition could be transformative for the future of Ampere and will further sustain its reputation in the semiconductor business. The semiconductor industry is fast in being merged and transformed with companies racing to establish AI-driven processing power.
If SoftBank goes through with the Ampere acquisition, this will represent yet another turning point in the rapidly changing world of chip manufacturing and data center computing. Whether the deal goes on or dies is one thing that needs not be clarified now but the struggle for dominance in the semiconductor world will go on.
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