Oracle dropped a bombshell in a proxy statement, revealing it owns a 29% stake in Ampere Computing, with the option to become a majority owner in 2027.

Ampere is a semiconductor firm that was founded by former Intel President Renée James. The company has garnered significant attention, with Microsoft, Google, HPE, and Oracle among the company’s customers, with the latter being a major investor.

Join us as we dive into Oracle’s big bet on chip firm Amere!

In an SEC filing, Oracle revealed the extent of its investment in the semiconductor startup.

Oracle is an equity and convertible debt investor in Ampere. Renée J. James, an Oracle director who is not standing for re-election, is the Chairman and CEO of Ampere and Oracle has appointed one director to Ampere’s board. From time to time since 2017, we have made investments in Ampere in the form of equity and convertible debt instruments. The total carrying value of our investments in Ampere, after accounting for losses under the equity method of accounting, was $1.5 billion as of May 31, 2024.

Our equity investments in Ampere represent an ownership interest of approximately 29% as of May 31, 2024.

Even more of a revelation is Oracle’s option to become majority owner of Ampere in the near future.

We also own convertible debt investments in Ampere which, under the terms of an agreement with Ampere and other co-investors, will mature in June 2026 and are convertible into equity securities at the holder’s option under certain circumstances. During the fiscal year ended May 31, 2024, we invested an aggregate of $600 million in convertible debt instruments issued by Ampere. In accordance with the terms of an agreement with other co-investors, we are also a counterparty to certain put (exercisable by a co-investor) and call (exercisable by Oracle) options at prices of approximately $400 million to $1.5 billion, respectively, to acquire additional equity interests in Ampere from our co-investors through January 2027. If either of such options is exercised by us or our co-investors, we would obtain control of Ampere and consolidate its results with our results of operations.

Oracle has been making waves in the cloud industry, especially as the industry pivots to AI. Once criticized for being well behind the cloud leaders—AWS, Microsoft, and Google—Oracle’s products are suddenly in high demand, with the company struggling to keep up.

With semiconductors to drive AI innovation quickly shaping up to be the next tech goldmine, not to mention the two companies’ close ties, Oracle acquiring a majority stake in Ampere looks like a solid bet.