Qualcomm Projects $15 Billion Data Center Chip Revenue by 2029
Qualcomm expects its data center business to generate $15 billion in annual revenue by 2029 as it accelerates its expansion beyond smartphone chips. Following the announcement, the company’s shares surged more than 12% in after-hours trading.
The company also projects $5 billion in data center revenue by fiscal 2027. Moreover, around $1 billion is expected to come from newly secured custom-chip customers.
At the same time, Qualcomm raised its forecast for non-smartphone chip revenue to $40 billion by 2029, compared with an earlier estimate of $22 billion. Consequently, smartphones are expected to account for only one-third of its chip business.
“We will be truly diversified,” Chief Financial Officer Akash Palkhiwala said.
AI partnerships drive expansion
Qualcomm also announced that Microsoft and Meta will deploy its latest AI-focused chips. In addition, the company will develop custom chips for two unnamed hyperscale customers, with revenue expected to begin before the end of this year.
Microsoft plans to use Qualcomm’s High Bandwidth Compute (HBC) chips for artificial intelligence workloads. Unlike many competing solutions, HBC chips rely on lower-cost memory commonly used in smartphones and laptops instead of expensive high-bandwidth memory.
“That is a tremendous value that we deliver to the industry in terms of performance per cost advantage,” said Tony Pialis, Qualcomm’s data center chief.
Meanwhile, Meta will deploy Qualcomm’s Dragonfly C1000 processor, which the company designed specifically for AI data centers. As a result, Qualcomm strengthens its position in a market where several major chipmakers continue to compete for AI infrastructure projects.
Pialis also revealed that Qualcomm has secured two major hyperscale customers for custom chip development.
“I have not had to push my way into hyperscale customers; they’ve been pulling us in,” Pialis said, without naming the customers.
Competition intensifies in AI chips
Qualcomm’s renewed focus on AI infrastructure comes as the smartphone market faces slower growth and increasing competition. Furthermore, several leading smartphone manufacturers continue developing their own processors, reducing dependence on external chip suppliers.
The company plans to begin shipping processors and other AI chips for data centers before the end of the year. Additionally, it is developing three major product categories: central processing units, inference accelerators and custom application-specific integrated circuits (ASICs).
Although the AI data center market continues to expand rapidly, Qualcomm faces strong competition from established chipmakers and cloud providers already offering their own AI processors. Even so, the company believes its diversified product strategy and growing customer base will support long-term growth in enterprise AI infrastructure.
