Qualcomm strikes AI chip deal with Amazon, offers right to buy about $4 billion in stock

On September 8, Qualcomm announced a long-term partnership with Amazon worth up to $60 billion for AI data-center chips and related products. The agreement includes warrants valued at approximately $4 billion, which will vest with product purchases and allow Amazon to buy shares at $161.26 per share, as reported in a regulatory filing.

Qualcomm's stock price increased by more than 3 percent following the news. This deal showcases Qualcomm's efforts to diversify beyond smartphones, particularly as it faces potential losses from its Apple modem business, increasing component costs, and declining handset demand. The collaboration aims to bolster Qualcomm's position as a major supplier of AI infrastructure, with revenue targets of $15 billion in data-center chips by 2029.

This development follows a similar custom AI chip deal between Marvell Technology and Alphabet's Google, granting the latter a stake worth up to $12.2 billion. The partnership focuses on AI inference chips and optical communications technology, enabling high-speed connectivity of up to 1.6 terabits per second in AI data centers.

Qualcomm's CEO Tony Piali, who oversees data center chip development, emphasized the significance of incorporating both compute and optical interconnects in the AI infrastructure landscape.