Amazon Invests Up to $4 Billion in Qualcomm's AI Chip Ambitions

Qualcomm has reached an agreement with Amazon to develop custom chips for artificial intelligence (AI) data centres. In exchange for $60 billion in business with Qualcomm, Amazon will have the right to acquire up to $4 billion worth of Qualcomm shares over the next decade. The deal includes a warrant that allows Amazon to buy Qualcomm shares at a fixed price of $161.26 apiece.

The partnership comes as Qualcomm tries to expand beyond its core smartphone business and move into the AI chip market, where Nvidia dominates. Qualcomm has been pitching custom chips to cloud providers, including this deal with Amazon, which is joining a growing roster of customers that are backing the company's pivot. The agreement also includes the development of high-speed optical connectivity technologies.

The deal marks a significant shift for Qualcomm as it faces the eventual loss of its modem business from Apple. Qualcomm plans to expand its use of Amazon Web Services and infrastructure for chip design workloads, aiming to shorten development cycles. Data-centre chip sales are expected to hit $15 billion by 2029.