Qualcomm Strikes $60 Billion AI Chip Deal
Qualcomm has signed a long-term partnership with Amazon to develop custom chips for large-scale AI data centers. The agreement strengthens Qualcomm’s push beyond smartphones and into AI infrastructure.
Under the deal, Amazon could purchase up to $60 billion of Qualcomm’s AI data-center chips and related products. Meanwhile, Qualcomm has granted Amazon warrants worth about $4 billion.
The warrants allow Amazon to buy Qualcomm shares at $161.26 each. They will vest as Amazon purchases products under the agreement.
The partnership will focus on AI inference, which involves running trained AI models. As a result, the agreement targets one of the fastest-growing areas of AI computing.
Qualcomm Expands Into AI Data Centers
Qualcomm and Amazon will develop customized silicon across multiple generations. The companies will specifically target AWS’s expanding AI infrastructure requirements.
In addition, the companies will develop optical connectivity technologies for AI data centers. These solutions will support speeds of up to 1.6 terabits per second.
The optical work will use Qualcomm’s SerDes and optical DSP technologies. As a result, the partnership will cover both computing and high-bandwidth connectivity.
Qualcomm will also increase its use of AWS services for chip-design workloads. The company aims to shorten its electronic design automation cycles through AWS infrastructure and AI services.
Amazon Becomes Key Qualcomm Customer
Amazon’s agreement adds another major cloud provider to Qualcomm’s data-center strategy. The company already works with Microsoft and Meta on AI infrastructure initiatives.
Moreover, Qualcomm expects its data-center chip business to generate $15 billion in annual revenue by 2029. The Amazon partnership could therefore become an important contributor to that target.
Amazon’s custom silicon business has also become an important part of AWS. Its annualized revenue run rate exceeded $25 billion at the end of the June quarter.
Qualcomm Challenges Nvidia in AI Infrastructure
The agreement comes as cloud companies seek alternatives to Nvidia’s dominant AI processors. As a result, Qualcomm is positioning its custom silicon business as another option for large AI data centers.
Qualcomm has spent the past year pursuing cloud providers with customized AI chips and data-center technologies. Amazon now joins Microsoft and Meta as a major customer supporting that strategy.
The company is also expanding its optical communications business. Qualcomm acquired AlphaWave for $2.4 billion last year, adding technology aimed at high-speed data-center connectivity.
The Amazon deal also reflects Qualcomm’s need to diversify beyond smartphones. The company faces weaker handset demand, higher component costs and the eventual loss of Apple’s modem business.
Qualcomm shares rose more than 3% following the announcement, while early trading gains exceeded 7% at one point. Investors therefore viewed the Amazon agreement as a positive signal for Qualcomm’s data-center ambitions.
The partnership also highlights the growing importance of custom AI infrastructure. As AI workloads expand, demand for efficient compute, memory bandwidth and high-speed networking continues to rise.
