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Qualcomm secures $60 billion long-term partnership with Amazon for AI data center chips

Qualcomm has entered into a long-term partnership with Amazon to purchase up to $60 billion worth of AI data center chips, systems, technology, and manufacturing services. The agreement covers several generations of custom silicon for Amazon Web Services, focusing on AI inference tasks. Additionally, Qualcomm provided Amazon with warrants to purchase 25 million shares of its stock at $161.26 each, a total value of approximately $4 billion. These shares vest in phases as Amazon meets specific commercial milestones and acquires Qualcomm equipment. This deal serves as a major milestone for Qualcomm as it seeks to diversify its revenue beyond smartphones. While smartphone sales currently account for 70% of revenue, the company projects this share will drop to one-third by 2029. To fill this gap, Qualcomm is targeting data center revenue of $15 billion by 2029. Akash Palkhiwala, the Chief Financial Officer and Chief Operating Officer of Qualcomm, stated that the company is executing on its strategy to replace sunsetting smartphone revenue with data center deals. The partnership also includes Qualcomm offering optical connectivity technology to address bandwidth requirements in AI data centers.

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