Ampere targets cloud companies with new chip, signs Oracle as customer

(Reuters) - Data center chip startup Ampere on Tuesday released a new processor that it claims can outpace offerings from Intel Corp and Advanced Micro Devices Inc, and said it has signed Oracle Corp’s cloud division as a customer.

Led by former Intel president Renee James, Ampere’s processor uses technology from Softbank Group Corp-owned Arm Ltd, whose chip architecture powers most phones and tablets.

Phone chips are often designed for efficiency to conserve battery life, but since its founding two years ago Ampere has focused on layering in its own technology to scale up Arm-based processors to compete with data center chips.

These can use hundreds of watts of electricity to power the back end of websites and cloud services such as those from Microsoft Corp or’s cloud unit.

Ampere designed its new Altra chip for cloud providers, who themselves rent out computing power to other businesses. Because businesses spend tens of billions of dollars on cloud services, small differences in chip speed or power consumption can mean hundreds of millions of extra dollars in sales or savings for the providers.

“They can focus their resources on the thing that makes them the most money, which is building their outstanding services, and we give them a new level of performance and efficiency,” James said in an interview.

Microsoft Corp said Tuesday it is testing Ampere’s chips in its labs. Oracle on Tuesday said that it plans to use Ampere’s processors for its cloud service and is customizing much of its software, including its widely used database systems, to run on Altra chips.

James sits on Oracle’s board. Oracle disclosed last year that it had invested $40 million in Ampere.

Shane Rau, a research vice president at market research firm IDC, said cloud providers have become such huge buyers of chips that they constitute a major market on their own.

“Just having one of those customers adopt you en masse can provide you a business,” Rau said. “That’s part of what Ampere is looking for.”

Ampere faces hurdles. Amazon, the largest cloud provider, is building its own Arm-based chip. And while Ampere’s speed claims will have to proved in real world usage, Intel’s chips have a decades-long track record.

But cloud providers have the technical savvy and financial incentives to consider new chips, especially for fast-emerging fields such as artificial intelligence.

“There’s not going to be one winner, not like the PC market,” said Richard Wawrzyniak, a principal analyst with Semico Research Corp.

Ampere’s chips “compete very well with Intel on several performance metrics, and AMD also. I think the market would like an alternative,” he said.

Reporting by Stephen Nellis in San Francisco; editing by Richard Pullin