Qualcomm is making moves to prove it is way more than just a smartphone silicon company. The San Diego chipmaker announced a multi-generational deal with Amazon Web Services (AWS) to design custom AI chips, sending Qualcomm’s stock surging up to 10% following the news.
As reported by Reuters and CNBC, the agreement centers on developing specialized silicon tailored for AI inference. The latter is the process of running already-trained AI models in real time. Under the terms disclosed in regulatory filings, the partnership could see Amazon purchase up to $60 billion in AI data center hardware over time. It also grants Amazon warrants to buy up to $4 billion in Qualcomm stock.
Custom silicon and high-speed optical connections
The partnership goes beyond standard processors. It addresses one of the biggest bottlenecks in modern data centers: moving massive amounts of data fast enough.
Combining Qualcomm’s power-efficient silicon capabilities with AWS infrastructure, the two companies are building custom hardware designed to handle heavy AI workloads without scorching energy grids. Additionally, the deal integrates optical communications technology stemming from Qualcomm’s recent $2.4 billion acquisition of AlphaWave. Together, they plan to engineer high-speed optical connections reaching up to 1.6 terabits per second to link server racks seamlessly.
Diversifying beyond mobile hardware
For Qualcomm, landing AWS as a customer represents a massive milestone in its push to challenge Nvidia’s dominance in server hardware. After unveiling its Dragonfly C1000 server CPU with Meta as a launch partner, adding Amazon gives Qualcomm a second major tech giant backing its target of $15 billion in data center revenue by fiscal 2029.
The move comes at a key time for Qualcomm. The firm is facing rising component costs and the eventual phase-out of its modem supply deal with Apple. On Amazon’s side, working with Qualcomm fits perfectly into its expanding custom silicon ecosystem. This already includes its internal Trainium, Graviton, and Nitro chip lines.
As part of the tie-up, Qualcomm will also shift more of its internal chip design workloads directly onto AWS cloud infrastructure to accelerate development cycles for future hardware.
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