Qualcomm inks AI chip, optical networking deal with Amazon

Qualcomm has signed a deal with Amazon.com Inc. to supply the tech giant with artificial intelligence chips and networking hardware. This partnership extends to other areas as well. Amazon received a stock warrant that allows it to purchase up to 25 million shares of Qualcomm, valued at $4 billion. The stock will be granted in tranches over time and vest up to 2036.

However, some share issuance is dependent on Amazon purchasing up to $60 billion worth of Qualcomm's products. Amazon Web Services Vice President Prasad Kalyanaraman stated that the collaboration aims to deliver better-performing, efficient, and cost-effective infrastructure for customers. Together, the companies will develop customized silicon at scale for large-scale AI data centers.

Qualcomm describes the partnership as multi-generational, meaning they plan to provide Amazon with multiple generations of chips optimized for inference workloads. This deal follows a similar AI chip contract Qualcomm made with Meta Platforms Inc. recently. In that agreement, Meta will buy future iterations of Qualcomm's Dragonfly C1000 series, featuring more than 250 cores per chip and a top frequency exceeding five gigahertz.

The focus of Qualcomm's partnership with Amazon also includes optical network equipment. Optical networks connect servers inside AI clusters. For this purpose, Qualcomm will provide Amazon with SerDes (Serializer/Deserializer) and DSP (Digital Signal Processor) technologies. Servers process data as electrical signals, which DSPs convert into light that can travel over fiber-optic cables.

SerDes modules in Qualcomm's DSPs consolidate multiple parallel information streams into a single stream, aiding data transmission and reducing power consumption. Qualcomm's most advanced optical DSP, the CO400, can transmit data over distances of up to 12 miles, suitable for linking data centers. The CO400 uses forward error correction to minimize transmission errors, enriching data streams with additional information for the recipient to fix degraded optical signals.

Optical networking plays a significant role in Amazon's data center strategy. In June, Amazon purchased billions of dollars worth of hardware from Corning Inc., a leading fiber-optic cable manufacturer. Earlier, Amazon detailed its internally developed network design, RNG, using fiber-optic cables arranged in a semi-random configuration to optimize traffic flow.

Qualcomm will also expand its use of Amazon Bedrock, a managed AI service, to run electronic design automation applications, speeding up its product development efforts.