Dive Brief:
- Qualcomm has struck a major deal with Amazon to manufacture custom chips for data centers, including multiple generations of silicon for aritificial intelligence inference and optical connectivity as fast as 1.6 terabits per second.
- The chipmaker on Tuesday issued a warrant to an affiliate of Amazon to acquire 25 million shares in the company for a total investment of $4 billion as part of the partnership.
- The warrant is tied to various purchase order agreements, allowing Amazon to buy a maximum of $60 billion of Qualcomm’s products over the next 10 years, according to a securities filing. It is set to expire Sept. 3, 2036.
Dive Insight:
The deal with Amazon is the latest example of chipmakers selling stakes in their companies to fuel growth as they benefit from surging demand for AI infrastructure.
The companies plan to leverage each others’ strengths, including Qualcomm’s optical digital signature processor technologies and Amazon Web Services’ Bedrock cloud computing service, according to a news release.
“Qualcomm is pleased to work with AWS on customized silicon and connectivity solutions, bringing decades of leadership in advanced processing and power-efficient compute, to deliver breakthrough performance and enable the next generation of AI infrastructure,” Cristiano Amon, Qualcomm’s president and CEO, said in a statement.
Qualcomm, based in San Diego, is known for making processors for mobile devices, laptops and wearables, as well as automotive and industrial applications. But the company made a big splash in June when it revealed a central processing unit for data centers called Dragonfly C1000, with Meta signed on to use the chips for its servers.
At the time, Akash Palkhiwala, Qualcomm’s CFO and COO, outlined the company’s plan to grow its data center revenues to more than $15 billion by fiscal year 2029, making it a key part of its product portfolio.
“We’ll be truly diversified across handsets, data center and industrial IoT and automotive,” he said at Qualcomm’s June investor day.
The collaboration with Amazon adds another hyperscaler in the mix for Qualcomm’s data center chips. Amazon and Meta have recently increased their capital spending to span hundreds of billions of dollars related to AI data centers, Data Center Dynamics reported.
