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

U.S. semiconductor company Qualcomm has secured Amazon as a customer for its artificial intelligence (AI) semiconductors for data centers. The deal is valued at up to $60 billion over the next 10 years, and Amazon has also been granted the right to purchase up to $4 billion worth of Qualcomm shares.

According to Bloomberg News on September 8 (local time), Qualcomm announced that it will jointly develop custom semiconductors for Amazon Web Services (AWS) to be incorporated into AWS’s AI infrastructure. The two companies plan to co-develop multiple generations of semiconductors for powering AI services, as well as networking chips for connecting semiconductors and computer components.

As part of the agreement, Qualcomm granted Amazon warrants to purchase up to 25 million newly issued Qualcomm shares at $161.26 per share. If Amazon places orders for Qualcomm semiconductors totaling up to $60 billion over the next 10 years, it can exercise these warrants in stages based on actual purchase volume. Should the full amount be exercised, Amazon’s share acquisition would amount to approximately $4 billion.

This agreement is expected to support Qualcomm’s business diversification strategy, which aims to reduce reliance on the smartphone application processor (AP) market. CEO Cristiano Amon has been expanding Qualcomm’s semiconductor business beyond the slowing smartphone market to data centers, automobiles, and personal computers (PCs).

Qualcomm is pursuing a strategy of selling its own data center semiconductors while also supporting major customers in designing and manufacturing custom chips. Previously, Qualcomm secured Meta Platforms and Saudi Arabian AI company Humane as clients for its data center semiconductors.

Amazon is a leading big tech firm that develops its own central processing units (CPUs), networking chips, and AI accelerators. Its in-house AI accelerator ‘Trainium’, launched in 2020, is supplied through AWS to clients such as OpenAI, Anthropic, and Uber. In April, Amazon announced that it had surpassed $225 billion in secured revenue commitments related to Trainium.

Meanwhile, Qualcomm’s stock climbed as much as 8.7% to reach $183.49 during trading on the New York Stock Exchange, marking its largest intraday increase since June 25. Amazon’s share price declined by less than 1%.

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