Qualcomm and Amazon forge $4B partnership to build custom data center silicon
The chipmaker will design specialized processors for Amazon's infrastructure, with the e-commerce giant investing $4 billion through a warrant agreement that could lead to $60 billion in purchases over a decade.
Qualcomm announced a significant partnership with Amazon on Tuesday to develop proprietary chips tailored for data center operations. The arrangement encompasses multiple iterations of processors designed for artificial intelligence inference tasks, along with optical connectivity capable of reaching speeds of 1.6 terabits per second.
As part of the agreement, Qualcomm granted an Amazon affiliate a warrant to purchase 25 million shares, representing a $4 billion investment in the chipmaker. The warrant is contingent on various purchase commitments, permitting Amazon to acquire as much as $60 billion worth of Qualcomm products across the following 10 years. The warrant expires on September 3, 2036, according to regulatory filings.
This partnership reflects a broader trend among semiconductor manufacturers that are selling equity stakes to capitalize on accelerating demand for AI computing infrastructure. The two companies intend to combine Qualcomm's expertise in optical digital signature processor technology with Amazon Web Services' Bedrock cloud platform capabilities.
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 president and CEO
Qualcomm, headquartered in San Diego, has traditionally focused on processors for mobile devices, computers, wearables, and automotive and industrial systems. The company entered the data center market in June with the introduction of Dragonfly C1000, a central processing unit that Meta committed to deploying in its server infrastructure.
During Qualcomm's June investor day, the company outlined an ambitious growth strategy for its data center business. Akash Palkhiwala, serving as both CFO and COO, disclosed plans to expand data center revenues beyond $15 billion by fiscal 2029, positioning it as a cornerstone of the company's future revenue streams.
We'll be truly diversified across handsets, data center and industrial IoT and automotive.
Akash Palkhiwala, Qualcomm CFO and COO
The Amazon collaboration brings another major cloud operator into Qualcomm's data center customer base. Both Amazon and Meta have substantially ramped up their infrastructure investments in recent months, with spending commitments reaching hundreds of billions of dollars directed toward AI data center buildouts.
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