Qualcomm Teams Up with Amazon on Custom AI Chips for AWS

Qualcomm has formed a major partnership with Amazon to co-develop AI chips for AWS data centers. The deal, which could funnel up to $60 billion in commercial purchases to Qualcomm through September 2036, marks the chipmaker's first substantial engagement with a Western hyperscaler for data center silicon.

The collaboration focuses on AI inference chips, which run trained models at scale rather than training them from scratch. Qualcomm's new chips integrate high-speed optical connectivity capable of hitting 1.6 terabits per second, making them well-suited for warehouse-scale computing clusters.

Beyond chip sales, the deal has a software dimension. Qualcomm gains access to AWS AI infrastructure, including Amazon Bedrock, to improve its electronic design automation workflows.

The financial engineering behind the deal is also noteworthy. Qualcomm issued warrants giving Amazon the right to purchase up to 25 million shares of QCOM stock at $161.26 per share. An initial tranche of 3.75 million shares has already vested, and if Amazon exercises the full allotment, the warrants would be worth roughly $4 billion at current prices.

The partnership is significant for Qualcomm's data center ambitions. The company aims to reach $15 billion in data center sales by fiscal 2029 and has been expanding its capabilities through acquisitions like Alphawave Semi, which brought critical high-speed connectivity IP in-house.