Oracle has quietly invested nearly half a billion dollars over the past few years in server chip startup Ampere Computing, giving it a more than 20% stake in the company run by one of its members. board of directors.
The size of Oracle’s stake in Ampere became apparent when Oracle reported a wider than expected operating loss for its third fiscal quarter, which it attributed, in part, to Ampère’s losses. Under accounting rules, Oracle’s inclusion of Ampère’s operating losses in its results implies that Oracle owns between 20% and 50% of Ampère.
Oracle and Ampere did not respond to a request for comment. In filings prior to its 2021 proxy statement, Oracle had included a note indicating that it owned less than 20% of Ampère. Its most recent proxy statement did not disclose the company’s stake in the startup.
Oracle has been betting on Ampere’s server chip business since 2017, when it made an initial investment of $46 million, according to SEC filings. Prior to the investment, Ampere CEO Renee James was considered an independent member of Oracle’s board, but the company changed status after the funding round. James has served on Oracle’s board of directors since 2015 and was previously chairman of Intel.
Oracle increased its stake in Ampere by $40 million in 2019, then again in 2020 with a second investment of $40 million. Oracle’s stake appears to have increased by more than 20% in March 2021, when it invested $300 million, according to SEC filings. In total, Oracle invested $426 million. Oracle’s stake may increase in future: SEC filing says Oracle has an obligation to acquire additional Ampere stock “under certain circumstances” from James and other shareholders.
In addition to Oracle’s equity investments, the company also paid Ampere a prepayment of $25 million for its processors and three payments under $500,000 for hardware used for testing and development, the documents show. deposited. Oracle disclosed that it acquired $3.4 million worth of chips against the $25 million prepayment in fiscal 2021.
Ampere makes server chips powered by Arm designs and accounts for less than 1% of the server market which is dominated by Intel and AMD, according to research by Jefferies. Within Oracle’s cloud server offering, Ampere has an 8% share, Jefferies noted.