- Qualcomm announced a deal with Amazon to manufacture custom data center chips
- As part of the deal, Qualcomm issued a stock warrant to Amazon
- One analyst said of the warrant, “Amazon does not take equity in a vendor it plans to test-drive."
Qualcomm Technologies is making a concerted effort to expand the scope of its semiconductor business beyond smartphones and get in on the AI action.
To that end, today it announced that it’s working with Amazon on multiple generations of customized silicon for large-scale AI data centers. And the companies are also working together on AI inference as well as optical connectivity solutions up to 1.6 Tbps.
Speaking at the Goldman Sachs Communacopia + Technology 2026 conference today, Qualcomm’s CFO and COO Akash Palkhiwala said of the Amazon collaboration, “You should think of this as really a landmark deal for us in the data center business. This kicks us off there.”
He said the arrangement consists of i) a commercial engagement under which Qualcomm will provide multi-generational, multi-product manufacturing for Amazon; and ii) the issuance of a stock warrant to Amazon, which could bring Qualcomm a potential revenue opportunity of up to $60 billion over time.
“We'll start having revenue with Amazon starting the December quarter, and so we are already in production with them,” said Palkhiwala.
Today’s announcement with Amazon follows an announcement in June with Meta, which is working with Qualcomm on data center CPUs.
Palkhiwala said Qualcomm is well positioned to compete in the AI data center category even though it’s “obviously a new player.”
“We have a very strong portfolio of technologies, both from a compute and a connectivity perspective,” he said. “We also do a lot of chips, especially in advanced nodes. And tremendous expertise of high-performance, low-power, high-yield manufacturing. So, we are bringing all of those things together for our custom silicon engagement.”
Analyst Daniel Newman with Futurum said, “Qualcomm stopped being a handset story today.”
Newman said the tell was the warrant with up to 25 million shares at $161.26, vesting against up to $60 billion in payments to Qualcomm, with 3.75 million already vested on initial purchase commitments.
“Amazon does not take equity in a vendor it plans to test-drive,” said Newman. “This is the day investors get to stop mourning Apple,” referring to Apple’s move to begin manufacturing its own cellular modem chips a number of years ago.
Qualcomm’s June investor day set a $15 billion data center target for fiscal 2029 with Meta as the launch customer. “That target was built on one anchor,” said Newman. "It now has two, and the warrant ceiling alone runs four times the annual target over the life of the agreement.”
Qualcomm is also working with HUMAIN, in Saudi Arabia, which is deploying up to 200MW of its AI accelerators.
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