Qualcomm secures up to $60bn Amazon deal to expand AI chip business
Qualcomm is set for a major expansion in the artificial intelligence infrastructure market after announcing a long-term partnership that could see Amazon purchase up to 60 billion dollars worth of its AI data-centre chips and related products.
The deal marks a significant push by Qualcomm to challenge Nvidia’s dominance in AI chips and reduce its dependence on the smartphone market.
As part of the agreement, Qualcomm will also grant Amazon warrants worth about four billion dollars, allowing the cloud giant to purchase Qualcomm shares at 161 dollars and 26 cents each as it buys the products.
Qualcomm shares rose more than four percent following the announcement, as investors welcomed the company’s growing ambitions in the data-centre market.
The partnership comes as Qualcomm prepares for challenges including the eventual loss of Apple’s modem business, weaker smartphone demand and rising component costs. Amazon joins Microsoft and Meta among major customers supporting Qualcomm’s expansion into AI infrastructure.
The two companies will develop chips focused on AI inference, which involves running already-trained AI models, as well as high-speed optical connectivity solutions capable of speeds of up to 1.6 terabits per second for AI data centres.
Qualcomm expects its data-centre business to generate about 15 billion dollars in revenue by 2029, while Amazon’s custom-chip business has continued to expand, reaching an annualised revenue run rate of more than 25 billion dollars in June.
