Oracle has quietly invested almost half a billion dollars over the past several years into server chip startup Ampere Computing, giving it more than a 20% stake in the business run by one of its board members.
The size of Oracle’s stake in Ampere became apparent when Oracle reported a wider-than-expected operating loss for its fiscal third quarter, which it blamed, in part, on Ampere’s losses. According to accounting rules, Oracle's inclusion of Ampere’s operating losses in its earnings implies that it owns between 20% to 50% of Ampere.
Oracle and Ampere did not respond to a request for comment. In filings prior to its 2021 proxy statement, Oracle had included a note that it owned less than 20% of Ampere. Its most recent proxy statement did not disclose the company's ownership stake in the startup.
Oracle has bet on Ampere’s server chip business since 2017, when it made an initial $46 million investment, 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 her status after the funding round. James has served on Oracle’s board since 2015 and was formerly president of Intel.
Oracle upped its stake in Ampere by $40 million in 2019, and again in 2020 with a second $40 million investment. It appears Oracle’s ownership stake grew over 20% in March 2021, when it invested $300 million, according to SEC filings. In total, Oracle has invested $426 million. Oracle's stake could increase in the future: The SEC filing said that Oracle has the obligation to acquire additional Ampere stock "under certain circumstances" from James and other shareholders.
In addition to Oracle’s equity investments, the company also gave Ampere a $25 million prepayment for its processors, and three payments of under $500,000 for hardware used for testing and development, according to filings. Oracle disclosed that it had 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 Jefferies research. Within Oracle’s cloud server offering, Ampere has an 8% share, Jefferies noted.