Qualcomm and Amazon Web Services announced Monday a multi-generation partnership to co-develop custom AI inference chips and high-bandwidth optical networking for AWS data centers, sending Qualcomm's stock up as much as 9.5 percent.
Under the agreement, described in a joint announcement, Amazon's purchases of Qualcomm server chips, networking hardware and manufacturing services could total as much as $60 billion through September 2036. Qualcomm issued Amazon a warrant to acquire up to 25 million shares of its common stock, at an exercise price of $161.26, worth roughly $4 billion, which vests in tranches tied to Amazon's purchase commitments, according to CNBC.
Chips, Optics and Chip Design
The program spans three areas: customized inference silicon built for AWS workloads, optical interconnects designed to move data between servers at up to 1.6 terabits per second, and expanded use of AWS infrastructure — including Amazon's Bedrock service — inside Qualcomm's own chip-design workflow. Qualcomm said the first chips are already in production, with revenue from the deal beginning in its fiscal first quarter of 2027, the December 2026 quarter.
"As AI demand accelerates, data center infrastructure will require advances in both computing and connectivity to deliver greater performance with more efficiency," Qualcomm chief executive Cristiano Amon said in the announcement. AWS vice president Prasad Kalyanaraman said the deal "builds on a strong foundation of partnership" aimed at "delivering more performant, efficient, and cost-effective infrastructure" for AWS customers.
The deal marks Qualcomm's first major push into custom silicon for a Western hyperscaler's data centers, an arena long dominated by Nvidia's GPUs and increasingly contested by in-house chips from Amazon, Google and Microsoft. For Qualcomm, whose revenue has historically leaned on smartphone modems and licensing, the agreement diversifies the company into a data-center chip market that has driven much of the technology sector's growth over the past three years.
For Amazon, the deal adds a second major custom-chip supplier alongside its in-house Trainium and Inferentia processors, giving AWS more leverage in negotiating with Nvidia while spreading the technical risk of an increasingly compute-hungry AI buildout across more than one hardware partner.
Qualcomm re-entered the data-center market last year after an earlier retreat in 2019, unveiling AI200 and AI250 inference chips built on its Oryon CPU architecture and targeted at customers such as Humain, the Saudi sovereign-backed AI venture. The Amazon agreement gives that renewed push its first publicly disclosed commitment from a major Western cloud provider, a validation Qualcomm has sought as it tries to diversify beyond a slower-growing smartphone business.