Qualcomm Scores Big Win with Amazon Partnership
Qualcomm has struck a significant deal with Amazon to supply AI data-center chips and related products. Under the agreement, Amazon can buy up to $60 billion of these chips over time. To incentivize this purchase, Qualcomm is granting Amazon warrants worth about $4 billion that vest with product purchases.
The agreement allows Amazon to buy shares at a price of $161.26 per share. This deal highlights Qualcomm's efforts to diversify beyond smartphones and tap into the growing AI market. The partnership also includes optical communications technology from Qualcomm, which will be used for high-speed connectivity in AI data centers.
Qualcomm expects this partnership to help drive its data-center chip revenue to $15 billion by 2029. This goal is ambitious, but the company's efforts are gaining traction with cloud providers like Amazon and Microsoft backing its custom AI chips and data-center technology. In fact, Amazon has already seen significant growth in its custom chip business, with an annualized revenue run-rate of over $25 billion at the end of the June quarter.