SoftBank's Ampere Acquisition: Navigating FTC Scrutiny and the Race for AI Dominance

The $6.5 billion acquisition of Ampere Computing by SoftBank Group has become a focal point for antitrust regulators, raising critical questions about market consolidation in the fast-growing AI infrastructure sector. As the Federal Trade Commission (FTC) launches an in-depth investigation—known as a “second request”—into the deal, investors must assess the risks of regulatory delays or outright rejection, alongside the strategic stakes for SoftBank's ambitions in AI.

Antitrust Risks: A Second Request Signals Uncertainty

The FTC's second request for information marks a significant escalation in scrutiny. Such requests, uncommon in just 5-10% of reviewed deals, typically prolong the approval timeline to over a year and often precede litigation. For SoftBank, the hurdle stems from its existing control of Arm Holdings, whose foundational semiconductor technology Ampere licenses. Regulators fear the merger could reduce competition in AI-driven data center processors, a market critical to cloud computing and generative AI.

The parallels to SoftBank's failed 2020 NVIDIA-Arm deal are stark. That transaction collapsed under antitrust pressures in the U.S., EU, and China, with concerns about stifling innovation in chip design. Similarly, Ampere's role as a licensee of Arm's intellectual property (IP) raises red flags: if SoftBank vertically integrates Ampere, it might restrict rivals' access to Arm's IP or leverage dominance to undercut competitors.

SoftBank's stock has already dipped by 12% since the FTC's probe was announced, reflecting investor anxiety over regulatory overhang. A prolonged delay or rejection could amplify this volatility, as the deal's success is tied to SoftBank's AI infrastructure growth strategy.

Strategic Implications: The Battle for AI Infrastructure Dominance

SoftBank's acquisition of Ampere is part of a broader play to dominate AI hardware. Ampere's energy-efficient server processors—key to data centers—are a natural complement to SoftBank's 83% stake in Arm, whose designs underpin most mobile and IoT chips. Adding Graphcore, another SoftBank-backed AI chip firm, the conglomerate aims to control a vertical stack of IP, processors, and accelerators.

However, this integration risks creating a de facto monopoly in AI infrastructure. Competitors like Qualcomm, already embroiled in antitrust disputes with Arm, may push regulators to block the deal. The FTC's focus on labor markets and corporate consolidation—evident in recent cases against Burger King and KKR—suggests a heightened sensitivity to market concentration in tech.

Investment Considerations: Balancing Risk and Reward

For investors, the calculus hinges on three factors:
1. Regulatory Outcome: If the FTC approves the deal, SoftBank's stock could rebound as its AI ecosystem gains credibility. A rejection, however, would force SoftBank to pivot, potentially diluting its AI ambitions.
2. Market Dynamics: Ampere's processors are in high demand for cloud providers like AWS and Google, which rely on scalable, low-power chips. A successful acquisition could cement SoftBank's position as a key supplier.
3. Sector Momentum: The AI infrastructure sector is booming, with data center spending projected to grow at 6% annually. SoftBank's success here could offset losses in its Vision Fund portfolio.

While SoftBank's rivals like NVIDIA and AMD are publicly traded giants, Arm's private status complicates valuation. Investors should monitor Ampere's valuation multiples and SoftBank's balance sheet flexibility amid the FTC's timeline.

Conclusion: Proceed with Caution, but Watch for Catalysts

The FTC's investigation is a high-stakes test for SoftBank's AI strategy. A favorable outcome could position the company as a leader in AI hardware, while rejection might force it to retreat or sell non-core assets. Investors should remain cautious but attentive to regulatory updates.

For now, the stock's valuation reflects uncertainty, but a resolution by late 2025—assuming the FTC's timeline—could unlock pent-up demand. Those bullish on AI infrastructure's long-term growth may consider gradual exposure, while bears might wait for clearer visibility. The Ampere deal isn't just a regulatory hurdle; it's a defining moment for SoftBank's role in the next era of computing.

Investment advice: Hold SoftBank's stock with a tight stop-loss until the FTC's decision. Monitor Ampere's product roadmaps and any shifts in regulatory rhetoric as key catalysts.