Qualcomm signs multi-generation AI chip and optical networking deal with Amazon
Qualcomm announced a multi-generation deal to supply Amazon with custom AI inference chips and optical networking technology, accompanied by warrants for up to 25 million Qualcomm shares.
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Qualcomm–Amazon custom silicon and optical networking pact
Qualcomm disclosed a multi-generational agreement to supply Amazon with AI chips and optical networking hardware for AWS data centers. The companies said they will collaborate on "customized silicon at scale for large-scale AI data centers" and that the chips will be optimized for inference workloads. The deal covers several future chip generations, according to the announcement.
Warrants tied to as much as $60 billion in product purchases
Qualcomm issued Amazon a stock warrant for up to 25 million shares, valued at roughly $4 billion, vesting in tranches through 2036. Some of the warrants will only vest if Amazon purchases up to $60 billion worth of Qualcomm products, tying the equity sweetener to the commercial scale of the engagement.
Optical DSP and SerDes role inside AI clusters
Under the partnership, Qualcomm will provide Amazon with SerDes and DSP technologies used to link servers inside AI clusters. Its CO400 optical DSP can transmit data up to 12 miles and uses forward error correction to reduce transmission errors, features that support inter-data-center connectivity for AI workloads.
Market reaction and management outlook
Qualcomm shares rose more than 3% in afternoon trading on the news, while Amazon shares slipped 0.5%. Qualcomm management indicated high confidence in reaching $5 billion in data center revenue and said Amazon-related revenue contribution is expected to begin in the December quarter.
Echoes of the recent Meta AI chip contract
The Amazon arrangement follows a separate multi-generational AI chip deal Qualcomm disclosed about three months earlier with Meta Platforms. That agreement covers multiple future iterations of Qualcomm's Dragonfly C1000 server CPU series, with the most advanced variants slated to feature more than 250 cores and clock speeds above 5 GHz, underscoring Qualcomm's broader push into data center silicon beyond its traditional mobile business.
