Arm server chip maker Ampere says it's readying for an IPO

Reveals confidential filing but no pricing ahead of review by the SEC

Arm-based server processor upstart Ampere Computing has signaled its intention to go public, and said it has filed the initial paperwork with the US Securities and Exchange Commission (SEC).

Ampere announced in an a brief statement that it had filed a draft registration statement for an IPO on a confidential basis with the SEC, but did not disclose the number of shares it expects to offer or the price range for the proposed public offering, saying that these have not yet been determined.

The public offering is expected to be completed following the SEC review process, subject to market and other conditions.

US companies may submit drafts of IPO registration statements confidentially with the SEC as long as they make their plans public at least 15 days before they begin marketing their offerings. This is based on legislation designed to encourage more companies to consider IPOs by letting them keep key details undisclosed during the early stages of the process.

Alan Priestley, vice president analyst, Emerging Technologies & Trends at Gartner, commented that "Arm is gaining traction in the cloud where many workloads are ISA agnostic, bit there's still some way to go in the enterprise where a significant percentage of the workloads and applications are only available on x86. The Chinese market is an exception where government incentives are encouraging the use of Arm."

A public offering will allow Ampere to raise extra investment funding needed to develop its Arm-based server chips and the broader ecosystem surrounding them.

The datacenter market is currently dominated by the X86 chips offered by the likes of Intel and AMD, but recent trends have seen Arm-based systems being adopted by cloud providers, leading researchers at TrendForce to predict that 22 percent of datacenter servers may be Arm-based by 2025.

Ampere was founded in 2017 by CEO Renee James, former president of Intel. Ampere is owned and funded by the Carlyle Group, as well as by SoftBank's Arm subsidiary itself, and Oracle. Oracle's investment in Ampere started out with a sum of $40m in 2019, which then amounted to less than 20 percent of the company’s shares.

However, according to recent reports, Oracle may now own as much as 50 percent of Ampere, based on Oracle's recent Q3 '22 results, where it attributed some of its lower earnings to an operating loss at Ampere.

The road to an Arm-based server ecosystem is littered with companies that have tried and failed to create a viable server platform, including Broadcom, Qualcomm and AMD, but Ampere has had more success than most.

Microsoft recently added Arm-powered virtual machines to its Azure cloud platform based on Ampere Altra server processors, following Oracle, which has sold Arm-powered instances based on Ampere Altra processors since 2020.

VMware also added support for Ampere's Altra chips to the version of its ESXi hypervisor for the Arm architecture last year, although this is mostly experimental.

Investment needed

Gartner's Priestly added:

"Ampere has [had] design wins at Oracle and a number of T2 CSPs and recently Microsoft announced plans for Azure on Arm using Ampere CPUs. However, while these design wins and AWS use of its Arm-based Graviton are establishing a foothold for Arm in the cloud data centre, the x86 vendors are not standing still and continue to move their ... designs forward – both in terms of performance and functionality.

"Vendors like Ampere need to continue to invest in their designs to compete against x86 – which given the need to leverage leading edge manufacturing nodes is an expensive proposition, also while chip ASPs in the data centre are high the total market is not large, especially when compared to other Arm-base markets such as smartphones – hence the need for successive rounds of VC funding or an IPO.

He concluded: "Ampere is currently the only vendor with a commercial Arm-based CPU for servers so much of the software ecosystem enabling will fall to Ampere if it wants to expand its footprint beyond the cloud – which requires resource investment.</d"

The news of Ampere's potential IPO comes after Arm itself proposed an IPO following the collapse of its sale to Nvidia by current owner SoftBank in February. That IPO is expected to value the chip designer at up to $60b.

Korean chipmaker SK Hynix is reportedly considering forming a consortium to acquire Arm, a consortium that may well include Intel, according to remarks made previously by CEO Pat Gelsinger. ®