Qualcomm has announced a major partnership with Amazon as the chipmaker pushes deeper into the fast-growing artificial intelligence data center market.
Under the agreement, Qualcomm and Amazon will work together on multiple generations of custom chips designed for large-scale AI data centers. The companies will mainly focus on AI inference, which is the process of using trained AI models to generate answers, predictions and other results.
The partnership is important for Qualcomm because the company is looking to expand beyond its traditional smartphone chip business. AI data centers have become one of the biggest areas of technology investment, with companies spending heavily on processors, networking equipment and other infrastructure needed to run advanced AI systems.
As part of the agreement, Amazon has also received a warrant that could allow it to buy up to 25 million shares of Qualcomm stock at an exercise price of $161.26 per share. At that price, the shares would be worth about $4 billion.
However, Amazon will not automatically receive all of those shares. The stock rights are linked to business milestones between the two companies, including purchase orders and payments for Qualcomm server chips, technology, systems and manufacturing services.
The commercial relationship could involve up to $60 billion in payments over the life of the agreement. The stock warrant is expected to remain available until September 2036.
Qualcomm and Amazon are also planning to work together on high-speed optical connectivity technology for AI data centers. These systems help move large amounts of information quickly between servers and computing hardware, which is becoming increasingly important as AI models grow larger and require more computing power.
The companies are working on connectivity solutions reaching speeds of up to 1.6 terabits per second, along with future generations of the technology.
Qualcomm also plans to make greater use of Amazon Web Services and its AI infrastructure for chip development. This could help Qualcomm improve electronic design automation workloads and potentially shorten the time required to design new processors.
The partnership gives Amazon another major semiconductor partner as it continues expanding its AI infrastructure. Amazon already develops its own chips for cloud computing and AI workloads, but working with Qualcomm could give the company more options for building customized hardware for its growing data center network.
For Qualcomm, the agreement represents another major step toward becoming a stronger player in AI infrastructure. The company has long been known for processors and wireless technology used in smartphones, but it is increasingly targeting servers, cloud computing and AI data centers.
Competition in the AI chip market remains intense, with companies racing to offer faster and more energy-efficient hardware. Qualcomm’s experience in low-power chip design could become an important advantage as data center operators look for ways to control the enormous electricity and cooling costs associated with AI.
The Amazon partnership could therefore help Qualcomm build a much larger position in the AI computing market while giving Amazon access to customized chips and connectivity technology designed for its future AI infrastructure.
