Qualcomm and Amazon enter into a ten-year agreement to supply AI chips for AWS
Qualcomm has entered into an agreement with Amazon to supply AI chips (AI200, AI250) and optical systems for AWS infrastructure; Amazon will receive a warrant for shares of Qualcomm worth $4 billion in exchange for purchases worth $60 billion over 10 years.
Qualcomm and Amazon have entered into an agreement under which Qualcomm will supply customized chips to support the growing AI infrastructure of AWS, with a focus on inference in large data centers. The collaboration also includes other hardware components, including optical connectivity systems with capacity of up to 1.6 terabits per second and future generations of these products, intended to meet the scaling and bandwidth needs of AI infrastructure.
The agreement includes a financial mechanism: Qualcomm issued a stock warrant that will allow Amazon to purchase up to 25 million shares of Qualcomm at a price of $161.26 per share, for a total value of $4 billion. According to a filing with the US SEC, the issuance of shares is conditional on Amazon purchasing $60 billion worth of products, technologies, systems and manufacturing services from Qualcomm over the next ten years. Qualcomm also committed to making greater use of AI hardware and software from AWS, including Amazon Bedrock, for automated chip design with the aim of shortening development cycles.
The agreement follows the entry of Qualcomm, traditionally associated with smartphone processors, into the market for data center AI chips, where it aims to challenge the dominance of Nvidia. The company introduced its first data center chips, AI200 and AI250, in October of the previous year, added further products in June, and had previously also entered into a multiyear chip supply agreement with Meta.
Why it matters
The agreement strengthens the position of Qualcomm as an alternative supplier of AI inference chips alongside Nvidia and expands the portfolio of suppliers on which AWS builds its AI infrastructure. For companies running AI workloads on AWS, this could mean a broader range of hardware over the longer term and a potential impact on the prices and availability of inference capacity, but the sources do not specify the concrete impact on end customers.
Relevant practical impact
What this means
For a business
A new major buyer-supplier relationship is emerging between Qualcomm and AWS with a ten-year commitment worth $60 billion, strengthening competition with Nvidia in the AI inference chip market and potentially affecting the supply and prices of infrastructure for companies running AI workloads on AWS over the longer term.
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