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Server Chip Startup Ampere Gains Big Name Backer

Ampere, a startup challenging Intel in the market for high-performance processors used in data centers and cloud servers, in April raised $40 million in funding from Oracle, one of its early customers. The startup, led by former Intel president and current Oracle board member Renée James, sells server processors based on chip designs from Intel rival Arm Holdings.

In April, the Santa Clara, California-based company raised additional capital from Carlyle and Japan's Softbank. But the company made no mention of the funding from Oracle, which revealed the deal in its annual filing on Friday. Before she founded Ampere in 2018, James spent 28 years in management roles at Intel, which makes most of its profit selling server chips. She left in 2016 and was hired by The Carlyle Group to launch Ampere. 

Intel holds more than 95% of the global market share for server chips and its x86 architecture —which is also used by AMD—is the gold standard in data centers. Ampere is looking to gain ground on Intel by building chips based on the Arm architecture, which is used in nearly every smartphone in the world, including Apple's iPhone and Samsung's Galaxy. The startup is trying to challenge Intel with better performance per watt and reduced prices. 

Arm Holdings has also released chip designs dedicated to the the largest data centers, where high-end server chips can run thousands of dollars each. The company's new Neoverse chip designs use TSMC's most advanced production process, the 7-nanometer node. The chip designer has also collaborated in recent years with some of its customers including Huawei, Marvell, Ampere and Amazon to roll out server chips fabbed by TSMC. 

Amazon, one of the world's biggest buyers of server processors, last year started renting out its custom Graviton CPU based on Arm's Cortex-A72 cores to businesses over the cloud. The company said cloud services running on the custom Graviton CPUs would carry significantly lower costs than established services using Intel's Xeon CPUs. Amazon started making custom server chipsets following its acquisition of startup Annapurna Labs in 2015. 

Ampere last year started selling its first generation of Armv8-A CPUs, with 32-cores running at 3.3 GHz and based on more mature 16-nanometer technology from TSMC. The company said its new Arm-based CPUs cost around 40% less than Intel's Xeon CPUs that deliver roughly the same performance. Oracle said it had spent more than $400,000 with Ampere "for hardware used for development and testing purposes" as part of the April funding.

Oracle added that it owns less than 20% of Ampere's outstanding stock.

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