Qualcomm is taking a major step into the AI data center market after announcing a long-term collaboration with Amazon to develop customized chips and connectivity technologies for artificial intelligence infrastructure. The partnership could eventually involve up to $60 billion in Qualcomm AI data-center chips and related products, according to Reuters.
Qualcomm-Amazon AI chip deal
Under the agreement, Amazon will receive warrants worth about $4 billion, allowing it to purchase Qualcomm shares at $161.26 per share. The warrants are linked to product purchases under the partnership. Qualcomm shares rose more than 4% following the announcement.
The companies will focus on custom AI inference chips, which are designed to run trained AI models and generate responses. They will also develop high-speed optical connectivity solutions supporting speeds of up to 1.6 terabits per second.
Qualcomm officially said the collaboration will span multiple generations of customized silicon for AWS’s growing AI infrastructure. Qualcomm CEO Cristiano Amon said, “AI demand accelerates” and data centers will need advances in both computing and connectivity to deliver better performance and efficiency.
Amazon’s AWS also sees customized silicon as an important part of its infrastructure strategy. AWS Vice President Prasad Kalyanaraman said the partnership with Qualcomm will help deliver “more performant, efficient, and cost-effective infrastructure” for customers.
Qualcomm moves beyond smartphones
The deal is particularly important for Qualcomm as the company works to reduce its dependence on smartphones. Qualcomm has established an ambitious data-center strategy and is targeting more than $15 billion in data-center revenue by fiscal 2029.
Qualcomm is also competing with established AI chip companies such as Nvidia while expanding its Dragonfly portfolio of CPUs, AI accelerators and connectivity products.
What the Amazon deal means
The Qualcomm-Amazon partnership highlights the growing demand for specialized AI inference chips and data-center connectivity. As AI applications expand, cloud providers are looking for alternatives and complementary technologies that can improve performance, energy efficiency and costs.
For Qualcomm, the agreement represents another important milestone in its transformation from a smartphone-focused chipmaker into a broader AI infrastructure company.
