Qualcomm has struck a long-term deal with Amazon covering up to $60 billion in AI data centre chips, optical links, and related kit.
According to Reuters the agreement gives Amazon warrants worth about $4 billion, which vest as products are purchased. They allow the cloud giant to buy Qualcomm shares at $161.26 each. Qualcomm shares rose more than three per cent following the announcement.
The San Diego chipmaker has been trying to escape its dependence on smartphones as its modem business winds down with the Fruity Cargo Cult Apple. The Tame Apple Press has been writing off Qualcomm because it is less able to get work with Apple, which has been rushing to make its own modem.
Qualcomm has spent the past year courting cloud operators with custom AI chips and data centre technology as customers hunt for alternatives to Nvidia’s dominant processors. Amazon joins Microsoft and Meta among customers backing Qualcomm’s push into AI infrastructure. Qualcomm expects data centre chip revenue to reach $15 billion by 2029.
TECHnalysis Research chief analyst Bob O’Donnell said: “The deal is exactly the kind of development that Qualcomm needed to reassure the market that the lofty data-centre ambitions they set for themselves could indeed be met.”
The partnership follows a similar agreement between Marvell Technology and Google’s parent Alphabet in August. That deal handed Google warrants allowing it to buy a stake in Marvell worth up to $12.2 billion in connection with custom AI chip purchases.
Qualcomm and Amazon will work together on processors for AI inference, the increasingly lucrative job of running already-trained AI models. Inference has become another semiconductor battleground as cloud providers look beyond conventional GPU-heavy infrastructure.
Amazon’s custom chip operation had an annualised revenue run-rate of more than $25 billion at the end of the June quarter. The Qualcomm agreement extends beyond compute silicon into optical communications. The companies plan high-speed optical connectivity technology reaching 1.6 terabits per second to handle the growing bandwidth demands inside AI data centres.
That gives Qualcomm another route into AI infrastructure following its $2.4 billion acquisition of AlphaWave last year. The takeover brought AlphaWave chief executive Tony Pialis into Qualcomm as its data centre chip chief.
“By incorporating both compute and optical interconnect, Qualcomm is highlighting the range of semiconductor technologies that it can uniquely bring to AI infrastructure,” O’Donnell said.
Qualcomm plans to expand its use of Amazon Web Services infrastructure for chip-design workloads as part of the deal, aiming to shorten development cycles.
