Qualcomm Inc. has secured a contract to supply Amazon.com Inc. with artificial intelligence chips and networking hardware, a deal that also includes a stock warrant enabling the e-commerce and cloud giant to buy up to 25 million Qualcomm shares, worth $4 billion. The shares will vest in tranches through 2036, and according to a regulatory filing, some share issuance depends on Amazon purchasing up to $60 billion worth of Qualcomm products. This partnership marks a significant expansion of the relationship between the two U.S.-based technology firms, with implications for large-scale AI data center infrastructure.
The companies said they will collaborate on what Qualcomm calls a “multi-generational” effort to develop customized silicon optimized for AI inference workloads at scale. Amazon Web Services Vice President Prasad Kalyanaraman said the joint work on customized silicon and advanced connectivity aims to deliver more performant, efficient, and cost-effective infrastructure for customers. This agreement follows a similar multi-generational AI chip contract Qualcomm announced three months ago with another major U.S. tech company, Meta Platforms Inc., which agreed to buy future iterations of the Dragonfly C1000, a central processing unit series designed for AI servers, with the most advanced versions featuring more than 250 cores and a top frequency exceeding five gigahertz.
Beyond processors, the partnership focuses on optical networking equipment, which links servers inside AI clusters. Qualcomm will supply Amazon with SerDes and DSP technologies, where a digital signal processor converts electrical signals from server data into light for transmission over fiber-optic cables. Qualcomm’s DSPs include a SerDes module that consolidates multiple parallel electrical streams into a single stream, easing data transfer from a server CPU and reducing the power needed to move data. This optical technology is central to Amazon’s data center strategy, as the company in June agreed to buy billions of dollars in hardware from Corning Inc., a leading fiber-optic cable manufacturer, and earlier detailed an internally developed network design called RNG that uses fiber-optic cables in a semi-random arrangement to optimize traffic flow.
Qualcomm’s most advanced optical DSP, the CO400, can transmit data over distances up to 12 miles, making it suitable for linking separate data centers. The chip uses forward error correction, which enriches data streams with extra information so the recipient can fix degraded optical signals. As part of the agreement, Qualcomm also plans to increase its use of AWS, specifically Amazon Bedrock, a managed AI service, to run electronic design automation applications that help engineers create and test chip blueprints. The company expects this initiative to accelerate its product development. Financial terms beyond the stock warrant and product purchase thresholds were not disclosed in the announcement.
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