Qualcomm on Tuesday said Amazon could buy up to $60 billion of its AI data-centre chips and related products under a long-term partnership, bolstering the chipmaker’s effort to become a major supplier of AI infrastructure.
The deal also highlights increasingly intertwined financing in the AI boom, with Qualcomm granting Amazon warrants worth about $4 billion that vest with product purchases and allow the cloud giant to buy shares at a fixed price of $161.26 apiece, according to a regulatory filing.
Shares of San Diego, California-based Qualcomm rose more than 4%.
The agreement is the latest sign Qualcomm’s efforts to diversify beyond smartphones are gaining traction as it faces the eventual loss of its Apple modem business, rising component costs and weaker handset demand.
Qualcomm has spent the past year courting cloud providers with custom AI chips and data-centre technology as they seek alternatives to Nvidia’s dominant processors.
Amazon joins Microsoft and Meta among customers backing that push, which Qualcomm expects will help drive data-center chip revenue to $15 billion by 2029.
“The deal is exactly the kind of development that Qualcomm needed to reassure the market that the lofty data-center ambitions they set for themselves could indeed be met,” said Bob O’Donnell, chief analyst at TECHnalysis Research.
The partnership comes weeks after Marvell Technology struck a similar custom AI chip deal with Alphabet’s Google, giving the tech giant the right to buy a stake worth up to $12.2 billion.
Under Tuesday’s deal, Qualcomm and Amazon will work together
on chips for AI inference, a fast-growing market focused on
running trained AI models that has become a key battleground
among semiconductor firms.
Amazon’s custom chip business, meanwhile, has been growing
at a fast clip this year and has become a growth driver for its
cloud unit. It hit an annualized revenue run-rate of over $25
billion at the end of the June quarter.
The companies will also develop high-speed optical
connectivity technologies, including solutions extending to 1.6
terabits per second, to support growing bandwidth demands in AI
data centers.
“By incorporating both compute and optical interconnect,
Qualcomm is highlighting the range of semiconductor technologies
that they can uniquely bring to AI infrastructure,” O’Donnell
said.
As part of the tie-up, Qualcomm plans to expand its use of
AWS services and infrastructure for chip design workloads,
aiming to shorten development cycles.
Source: Khaleej Times