As was shown in Soulcalibur Legends, this is one of the forms Soul Edge took while being wielded by Siegfried.

As Siegfried journeyed with his friends, he gathered splintered shards from Soul Edge and fused them to his sword, making it more powerful. As it grew in strength, it transformed into this shape, becoming a much more dangerous weapon.

This form has made only one cameo. In Soulcalibur III, it was Nightmare’s 2nd player costume default weapon.