Qualcomm Inks Multi-Generation AI Silicon Deal with AWS

Qualcomm and Amazon have agreed to a multi-generation collaboration to develop customized silicon for AWS AI infrastructure. [4] The partnership covers customized silicon for AI inference and optical connectivity extending to 1.6T and future generations. [3] Qualcomm expects revenue from the relationship to begin in the December quarter. [3] Executive Vice President Akash Palkhiwala characterized Amazon as a landmark data center customer during the Goldman Sachs Communacopia + Technology Conference. [3] For AWS, the agreement adds an external custom-silicon and optical-connectivity partner. [4]

The commercial scale of the Amazon relationship is tied to a warrant that allows Amazon to purchase up to 25 million Qualcomm shares at $161.26 per share. [3] The vesting structure extends up to a $60 billion maximum payment threshold over the life of the warrant, which expires in September 2036. [3] Amazon's warrant rights vest as commercial arrangements, binding purchase orders, and actual purchases accumulate. [4]

Qualcomm said 3.75 million shares — 15% of the warrant — vested at issuance based on initial purchase commitments. [3] The dollar value of these initial purchase commitments was not disclosed. [4]

The agreement coincides with a broader diversification strategy for Qualcomm, whose handset revenue fell about 20 percent year on year in its June quarter. [4] Palkhiwala tied the Amazon relationship to Qualcomm's target of approximately $5 billion in fiscal 2027 data center revenue, and the company continues to target $15 billion in fiscal 2029. [3]

Palkhiwala outlined a four-part strategy spanning custom silicon, AI inference accelerators, server CPUs, and high-speed connectivity. [3] The server CPU pillar includes the Dragonfly C1000, with Meta previously announced as the first major customer. [3]

The Amazon deal represents a substantial pivot for Qualcomm as it attempts to offset its declining smartphone business with enterprise AI infrastructure. By securing AWS as a customer for inference and optical components, Qualcomm validates its four-part data center strategy without forcing a single architecture on hyperscalers. However, nothing disclosed indicates that AWS is replacing its existing internal silicon efforts like Graviton, Trainium, or Nitro; instead, Amazon appears to be diversifying its hardware supply chain to meet surging AI demand. What the sources don't address: whether the undisclosed initial purchase commitments are large enough to guarantee Qualcomm hits its ambitious $5 billion revenue target for 2027 if AWS scales back future orders.