SoftBank Group has announced plans to acquire Ampere Computing for $6.5 billion, significantly expanding its footprint in the rapidly evolving Arm-based server processor market.
The deal, which sees Oracle and Carlyle selling their stakes in Ampere, strengthens SoftBank’s position in the growing market for AI-optimized processors as major cloud providers increasingly look beyond traditional x86 architecture.
“The future of Artificial Super Intelligence requires breakthrough computing power,” Masayoshi Son, SoftBank Group CEO and Chairman said in a statement. “Ampere’s expertise in semiconductors and high-performance computing will help accelerate this vision, and deepens our commitment to AI innovation in the United States.”
This acquisition fundamentally demonstrates SoftBank’s recognition of chipsets’ critical role in AI development and continues their pattern of strategically investing in promising technologies, said Faisal Kawoosa, Founder and Chief Analyst at Techarc.
Strategic implications in hyperscale computing
Ampere has established itself as a formidable player in the server processor space with its manycore CPUs, including the 2023 “Ultra” model featuring up to 192 cores and the recently announced AmpereOne Aurora, which will reach an unprecedented 512 cores. These processors have attracted major cloud providers including Google, Microsoft, Oracle, Alibaba, and Tencent.
The acquisition creates an intriguing dynamic within SoftBank’s portfolio, as it now controls both Ampere and a significant stake in Arm Holdings.
SoftBank’s announcement suggests Ampere will collaborate with other SBG companies, potentially creating a powerful ecosystem of Arm-based computing solutions. This collaboration could extend to SoftBank’s numerous portfolio companies, including Korean/Japanese web giant LY Corp, ByteDance (TikTok’s parent company), and various AI startups.
If SoftBank successfully steers its portfolio companies toward Ampere processors, it could accelerate the shift away from x86 architecture in data centers worldwide.
Questions remain about Arm’s server strategy
The acquisition, however, raises questions about how SoftBank will balance its investments in both Arm and Ampere, given their potentially competing server CPU strategies. Arm’s recent move to design and sell its own server processors to Meta signaled a major strategic shift that already put it in direct competition with its own customers, including Qualcomm and Nvidia.
“In technology licensing where an entity is both provider and competitor, boundaries are typically well-defined without special preferences beyond potential first-mover advantages,” Kawoosa explained. “Arm will likely continue making independent licensing decisions that serve its broader interests rather than favoring Ampere, as the company can’t risk alienating its established high-volume customers.”
Industry analysts speculate that SoftBank might position Arm to focus on custom designs for hyperscale customers while allowing Ampere to dominate the market for more standardized server processors. Alternatively, the two companies could be merged or realigned to present a unified strategy against incumbents Intel and AMD.
“While Arm currently dominates processor architecture, particularly for energy-efficient designs, the landscape isn’t static,” Kawoosa added. “The semiconductor industry is approaching a potential inflection point, and we may witness fundamental disruptions in the next 3-5 years — similar to how OpenAI transformed the AI landscape. SoftBank appears to be maximizing its Arm investments while preparing for this coming paradigm shift in processor architecture.”
As the data center market increasingly embraces Arm architecture for its power efficiency and specialized AI processing capabilities, SoftBank’s dual investments position it to capture significant market share in this rapidly evolving segment of the semiconductor industry.
Market impact and competitive landscape
The acquisition underscores the seismic shifts occurring in the server processor market, traditionally dominated by Intel’s x86 architecture. Analysts feel, that with this move, SoftBank is positioning itself at the center of the Arm-based server revolution.
“The Ampere acquisition enables SoftBank to double down on its semiconductor industry ambitions,” said Prabhu Ram, VP – Industry Research Group at CyberMedia Research. “Ampere’s high-performance Arm-based CPUs for data centers fit into SoftBank’s vision of creating a cohesive ecosystem spanning data center and AI sectors. This move complements SoftBank’s previous acquisition of Arm and aligns with its investments in the Stargate Project and joint ventures with OpenAI.”
“However,” Ram pointed out, with SoftBank now owning both Ampere and Arm, “significant uncertainties remain around its licensing policies and their potential impact on the broader semiconductor ecosystem.”
SoftBank’s dual ownership of Arm and Ampere introduces significant implications for licensing dynamics across the semiconductor ecosystem, pointed out Rachita Rao, senior analyst at Everest Group. “While SoftBank will likely maintain Arm’s neutral licensing structure to preserve industry confidence, concerns remain about potential preferential treatment, such as Ampere receiving privileged access to advanced Arm IP. Though these factors might prompt processor manufacturers to explore alternative architectures, the practical reality is that transitioning away from Arm would require substantial resources and time.”
The timing is particularly noteworthy as enterprise and cloud providers increasingly prioritize energy efficiency and specialized AI acceleration capabilities—areas where Arm-based designs have demonstrated significant advantages. Ampere claims its processors deliver up to 50% better performance per watt compared to comparable x86 solutions.
Financial outlook and industry response
Industry insiders suggest the $6.5 billion price tag — while substantial — could prove a strategic bargain if AI workloads continue their explosive growth trajectory. Competitors are closely monitoring the situation, with Intel recently accelerating its own energy-efficient processor roadmap and AMD expanding its EPYC server processor lineup.
For enterprise customers, the consolidation raises both opportunities and concerns. While potentially accelerating innovation in the server processor space, some worry about SoftBank’s growing influence over critical computing infrastructure. Cloud providers that aren’t aligned with SoftBank’s ecosystem may find themselves increasingly dependent on a competitor for essential processor technology.
“The $6.5 billion Ampere acquisition clearly signals SoftBank’s confidence in the Arm architecture as the foundation for next-generation AI infrastructure,” Rao added. “This investment reflects a strategic conviction that Arm’s energy-efficient, scalable designs offer immediate advantages for cloud and data center environments compared to still-developing technologies like specialized accelerators or quantum computing.”
Source:: Network World