Ampere Computing LLC, the semiconductor start-up backed by Larry Ellison’s Oracle Corp, is exploring a potential sale, according to people with knowledge of the matter.

The chip designer has been working with a financial adviser in recent months to help field takeover interest, said the people, who asked not to be identified discussing private information. The Santa Clara, California-based Ampere is open to talks with a larger industry player about a possible transaction, the people said.

The move suggests that Ampere doesn’t see an easy path to an initial public offering (IPO). Though the company stands to benefit from the continuing artificial intelligence (AI) frenzy, the market has grown more competitive, with several large tech companies rushing to develop the same kinds of chips Ampere makes.

Ampere’s deliberations are ongoing and it could opt to remain independent, the people said. While it’s no longer pursuing an IPO in the near term, the company hasn’t ruled one out in the future, they added.

A spokesperson for Ampere declined to comment. Representatives for Oracle didn’t immediately respond to requests for comment.

Ampere, which designs semiconductors that use Arm Holdings Plc technology, was valued at US$8 billion  in a proposed minority investment by Japan’s SoftBank Group Corp in 2021, Bloomberg News reported at the time.

AI infrastructure

A deal for Ampere, whose early backers also include Carlyle Group Inc, would come as chip companies are pushing for a bigger share of the billions of dollars being poured into projects supporting the development of AI infrastructure.

It would also mark something of a departure for company founder and chief executive officer Renee James, a former Intel Corp executive who had eyed taking Ampere public. The company said in April 2022 that it had filed confidentially for a US IPO, at a time when when the world was emerging from pandemic-induced remote work, and the demand for chips was surging.

Ampere has announced that some of the largest providers of cloud computing - including Microsoft Corp and Alphabet Inc’s Google - are using its chips. But like all chip companies vying for orders from the biggest buyers of data centre components, it’s competing with internal chip development efforts, as those businesses look to make themselves less reliant on outside technology.

That tension likely means that Oracle will seek a say in Ampere’s future, as that company’s cloud computing effort has been the main proponent of its chips. Customers such as Uber Technologies Inc use Oracle Cloud’s Ampere-based servers.

While there’s a huge interest in control of key components as the data centre industry retools for the AI age, Ampere, like larger rivals Intel and Advanced Micro Devices Inc, is having to respond to a shift in spending away from central processor units, or CPUs, towards Nvidia Corp’s accelerator chips.

James has maintained that, in the long run, Ampere’s technology will win because it’s more energy efficient than rival products, at a time when data centre power budgets are ballooning.

Ampere has announced more capable products that it believes will create a bigger customer base. The new products are made on the latest production technology of Taiwan Semiconductor Manufacturing Co Ltd, and feature more than 500 cores, the parts of a chip that handle processing.

  - Bloomberg