Technology & Science
Qualcomm and Amazon strike AI chip deal tied to up to $60 billion in purchases
Amazon received a warrant for as many as 25 million Qualcomm shares while the companies expand work on AI inference and optical connectivity.
Executive summary
- The collaboration: Qualcomm and Amazon agreed to develop multiple generations of customized silicon for AWS artificial-intelligence data centers, with an initial focus on AI inference.[1][2]
- The warrant: Qualcomm issued Amazon a warrant for up to 25 million shares at an exercise price of $161.26 per share, or about $4.03 billion if fully exercised at that price.[3][2]
- The conditions: The shares vest in tranches tied to commercial arrangements, binding orders and actual purchases that could total as much as $60 billion; 3.75 million shares vested at issuance based on initial commitments.[3][2]
- The technology: The companies also plan to work on optical-connectivity systems reaching 1.6 terabits per second and future generations of data-center networking technology.[1][2]
Qualcomm and Amazon agreed to develop multiple generations of custom chips for AWS artificial-intelligence data centers, expanding the mobile-chip maker's push into the market for AI infrastructure. Qualcomm announced the collaboration Tuesday, and Reuters independently reported the agreement and its financial terms.[1][2]
The work will initially focus on silicon for AI inference, the process of running trained models in production. Qualcomm said the companies will also develop high-performance optical-connectivity systems, including technology reaching 1.6 terabits per second, to move data across increasingly large AI clusters.[1][2]
The commercial relationship includes an equity incentive. A Qualcomm filing with the U.S. Securities and Exchange Commission says the company issued an Amazon affiliate a warrant to acquire as many as 25 million Qualcomm shares at $161.26 each. Exercising the full warrant at that price would cost about $4.03 billion; the warrant expires in September 2036 and does not confer voting or shareholder rights before exercise.[3][2]
The shares vest in stages tied to commercial agreements, binding purchase orders and actual purchases of Qualcomm server chips, technology, systems and manufacturing services. The filing sets a maximum of $60 billion in qualifying payments and says 3.75 million shares vested when the warrant was issued because of initial purchase commitments. The filing does not say Amazon has committed to spend the full $60 billion or exercise every share.[3]
Qualcomm also said it plans to deepen its use of AWS services, including Amazon Bedrock, for electronic-design-automation workloads in an effort to shorten chip-development cycles. The agreement gives Qualcomm a major cloud customer as it seeks growth beyond smartphones, while giving Amazon another route to customized AI infrastructure and a potential equity position whose size depends on future business between the companies.[1][2]