Qualcomm has announced a major long-term partnership with Amazon that could involve up to $60 billion in AI data-center chips and related products.
The deal strengthens Qualcomm’s push into AI infrastructure and gives the company another major cloud customer as it works to reduce its dependence on smartphones.
Amazon Could Buy Up to $60 Billion in Qualcomm AI Chips
Under the agreement, Amazon could purchase as much as $60 billion worth of Qualcomm AI data-center chips and related technology.
The partnership is focused on AI inference, a rapidly growing market centered on running trained artificial intelligence models.
AI inference has become an increasingly important area of competition among semiconductor companies as demand for data-center computing continues to rise.
Qualcomm is trying to position itself as a meaningful alternative to Nvidia, which currently dominates much of the AI accelerator market.
Amazon Gets Right to Buy Around $4 Billion in Qualcomm Stock
The agreement also includes a significant equity component.
Qualcomm has granted Amazon warrants worth roughly $4 billion.
These warrants will vest as Amazon purchases Qualcomm products and will allow the company to buy Qualcomm shares at a fixed price of $161.26 each.
The structure highlights the growing financial ties between major cloud providers and semiconductor companies during the AI investment boom.
Qualcomm shares rose more than 4% following the announcement.
Qualcomm Pushes Beyond Smartphones
The Amazon deal comes as Qualcomm continues to diversify away from its traditional smartphone business.
The company faces several challenges in mobile, including the expected loss of Apple’s modem business, higher component costs and weaker handset demand.
As a result, Qualcomm has spent the past year building out its data-center strategy.
The company has been targeting cloud providers with custom AI chips and other infrastructure technologies designed for large-scale computing environments.
Amazon now joins Microsoft and Meta among the major customers supporting that effort.
Qualcomm Targets $15 Billion in Data-Center Revenue
Qualcomm expects its data-center business to become a major growth driver over the coming years.
The company is targeting roughly $15 billion in annual data-center chip revenue by 2029.
That ambition had previously raised questions among investors about whether Qualcomm could compete effectively in a market dominated by established AI chip suppliers.
The Amazon partnership gives the company a stronger argument that its targets may be achievable.
Bob O’Donnell, chief analyst at TECHnalysis Research, said the agreement provides the type of validation Qualcomm needed to support its ambitious data-center strategy.
AI Chip Partnerships Are Becoming More Common
Qualcomm’s agreement with Amazon follows a broader trend of strategic partnerships between cloud companies and semiconductor firms.
Just weeks earlier, Marvell Technology announced a custom AI chip deal with Alphabet’s Google.
That agreement also included an equity component, giving Google the right to purchase a stake valued at up to $12.2 billion.
These arrangements show how cloud providers are increasingly using long-term supply agreements and equity incentives to secure access to critical AI infrastructure.
Amazon Expands Its Custom AI Chip Business
Amazon has also been rapidly expanding its own custom semiconductor operations.
The company’s chip business has become an important growth driver for Amazon Web Services.
By the end of the June quarter, Amazon’s custom chip operations had reached an annualized revenue run rate of more than $25 billion.
The partnership with Qualcomm could strengthen Amazon’s ability to expand AI infrastructure while reducing its dependence on a limited number of chip suppliers.
Qualcomm and Amazon Target AI Inference
One of the main areas of cooperation will be AI inference.
Inference refers to the process of using a trained AI model to generate responses, predictions or other outputs.
As artificial intelligence applications become more widespread, inference workloads are expected to become a major source of data-center demand.
Qualcomm and Amazon plan to work together on processors designed specifically for these workloads.
That could open another growth opportunity for Qualcomm as enterprises and cloud providers look for more efficient ways to run AI models at scale.
High-Speed Optical Connectivity Is Also Part of the Deal
The partnership goes beyond processors.
Qualcomm and Amazon also plan to develop high-speed optical connectivity technologies for AI data centers.
The companies are working on solutions capable of reaching speeds of up to 1.6 terabits per second.
These technologies are designed to meet the rapidly increasing bandwidth demands created by large AI systems.
By combining computing hardware with optical interconnect technology, Qualcomm is trying to position itself as a broader AI infrastructure supplier rather than just a chipmaker.
Qualcomm Will Expand Its Use of AWS
Qualcomm also plans to increase its use of Amazon Web Services infrastructure.
The company will use AWS services for chip design workloads, with the goal of shortening development cycles and improving efficiency.
This creates a two-way relationship between the companies.
Amazon gains access to Qualcomm’s AI hardware, while Qualcomm increases its reliance on AWS for semiconductor development.
Qualcomm’s AI Strategy Gains Momentum
The Amazon agreement represents an important step in Qualcomm’s effort to become a larger player in the AI data-center market.
The potential $60 billion purchasing commitment gives the company a major commercial opportunity, while the $4 billion stock warrant adds another layer to the partnership.
Qualcomm still faces intense competition from Nvidia and other semiconductor companies.
However, support from major cloud providers such as Amazon, Microsoft and Meta strengthens the company’s case that its AI infrastructure strategy can become a meaningful new source of growth.
