Qualcomm Surges on $4 Billion Deal with Amazon for Custom Data Centre Chips
Qualcomm's shares surged nearly 9% on Tuesday after announcing a deal with Amazon for customised data centre chips. The agreement allows Amazon to acquire up to $4 billion in Qualcomm shares, supporting the development of AI infrastructure amid Qualcomm's efforts to diversify beyond smartphone processors.
The partnership will involve developing customised silicon to support Amazon Web Services' artificial intelligence infrastructure, and the companies will work on chips that run AI services as well as those designed to connect computer components. Under the terms of the transaction, Qualcomm issued Amazon a warrant to acquire up to 25 million shares at $161.26 apiece.
The agreement is the latest sign that Qualcomm's efforts to expand beyond its core smartphone business are gaining traction, as the company faces the eventual loss of its modem business from Apple. The partnership comes weeks after Marvell Technology struck a similar custom AI chip deal with Alphabet's Google, giving the tech giant the right to acquire a stake worth up to $12.2 billion.
Qualcomm has spent the past year pitching customised chips and other data-centre technologies to cloud providers seeking alternatives to Nvidia's dominant AI processors. Amazon now joins a growing roster of customers supporting Qualcomm's push into the data centre market, which is expected to reach $15 billion by 2029.