What happens when one of the world’s biggest cloud companies bets billions on a chipmaker better known for smartphones? Qualcomm may be turning that question into one of the biggest challenges yet to Nvidia’s dominance of AI infrastructure. The company has reached a long-term partnership with Amazon that could see the cloud giant purchase up to $60 billion worth of Qualcomm AI chips and related technology.
• Qualcomm could supply Amazon with up to $60 billion in AI products
• The deal strengthens Qualcomm’s push into data centres
• Nvidia faces another major challenger in AI infrastructure
The partnership also comes with an unusual financial incentive. Qualcomm has granted Amazon warrants valued at about $4 billion, allowing the company to buy Qualcomm shares at $161.26 each. The warrants will vest as Amazon makes qualifying purchases, tying the potential stock deal directly to the success of the chip partnership. Qualcomm shares rose more than 3% following the announcement.
• Amazon receives rights linked to Qualcomm purchases
• The stock warrants are worth about $4 billion
• Qualcomm shares climbed after the deal was announced
For Qualcomm, the agreement is about much more than winning a major customer. The chipmaker is trying to reduce its dependence on smartphones as handset demand weakens and its long-standing modem relationship with Apple faces an eventual end. Qualcomm has been aggressively pursuing cloud companies looking for alternatives to Nvidia, with Microsoft and Meta also among companies working with its AI technology.
• Qualcomm is expanding beyond its smartphone business
• Microsoft and Meta are also part of its AI push
• The company targets $15 billion in data-centre chip revenue by 2029
The new chips will focus heavily on AI inference, which involves running trained AI models to produce responses and results. That market is becoming increasingly important as companies deploy AI at scale. Amazon has already made custom chips a major part of its cloud strategy, with its chip business reaching an annualised revenue run-rate of more than $25 billion by the end of June.
• Qualcomm and Amazon will target AI inference
• AI inference is becoming a major chip battleground
• Amazon’s custom chip business is already generating significant revenue
The partnership goes beyond processors, with Qualcomm also supplying optical communications technology designed to move enormous amounts of data around AI data centres. The companies plan to develop connectivity capable of reaching 1.6 terabits per second. Qualcomm will also expand its use of AWS infrastructure for chip design, potentially speeding up development while giving Amazon another stake in the growth of a Qualcomm business that could reshape the AI chip market.
• Optical technology will support high-speed AI data centres
• Connectivity speeds could reach 1.6 terabits per second
• Qualcomm is positioning itself as a broader AI infrastructure supplier
Via: Reuters
