Qualcomm Forms AI Alliance with Amazon in $60 Billion, 10-Year Deal

Development of Custom AI Chips for AWS
Amazon Secures Warrants to Acquire Qualcomm Shares

Qualcomm, the U.S. semiconductor company, has secured Amazon as a customer for its artificial intelligence (AI) chips for data centers. The deal could be worth up to $60 billion over the next 10 years, and Amazon received the right to purchase up to $4 billion worth of Qualcomm shares.

According to Bloomberg on September 8, Qualcomm announced that it would jointly develop custom chips with Amazon Web Services (AWS) for use in AWS’s AI infrastructure. The two companies plan to develop not only semiconductors to power AI services, but also networking chips that connect semiconductors and computer components, across multiple generations.

As part of this agreement, Qualcomm granted Amazon warrants to purchase up to 25 million shares of its stock at $161.26 per share. If Amazon places orders for up to $60 billion worth of Qualcomm chips over the next 10 years, it may exercise these warrants in stages depending on the size of its purchases. If exercised in full, Amazon’s equity stake would amount to approximately $4 billion.

This deal is expected to bolster Qualcomm’s business diversification strategy, aimed at reducing its reliance on the smartphone application processor (AP) market. CEO Cristiano Amon has already expanded beyond the slowing smartphone market into data center, automotive, and personal computer (PC) semiconductor segments.

Qualcomm is pursuing a strategy in which it not only sells its own data center chips, but also supports large clients in designing and producing their own custom chips. Previously, Qualcomm secured Meta Platforms and the Saudi Arabian AI company Humane as data center semiconductor customers.

Amazon is a leading big tech company that develops its own central processing units (CPUs), networking chips, and AI accelerators. Its proprietary AI accelerator “Trainium,” launched in 2020, is supplied via AWS to companies such as OpenAI, Anthropic, and Uber. In April, Amazon announced that the value of revenue commitments related to Trainium had surpassed $225 billion.

Meanwhile, Qualcomm’s stock price rose as much as 8.7% to $183.49 during intraday trading on the New York Stock Exchange, marking the biggest intraday gain since June 25. Amazon’s share price fell by less than 1%.

This content was produced with the assistance of AI translation services.