Qualcomm and Amazon have entered into a multi-generational partnership to create custom silicon for AI inference workloads within AWS data centers. The company's CFO and COO, Akash Palkhiwala, expects this deal to significantly increase revenue from data centers during fiscal years 2027 and 2028.
As part of the agreement, Qualcomm granted Amazon warrants for up to 25 million shares at $161.26 per share, a package valued at approximately $4 billion. These warrants vest in tranches linked to commercial arrangements for purchases totaling up to $60 billion, with 3.75 million shares vesting upon issuance.
The partnership also includes the development of high-speed optical connectivity solutions with speeds up to 1.6 terabits per second. Revenue from custom silicon projects is expected to start in the December quarter, as wafer production for initial hyperscaler projects has already begun.
Amazon joins Meta and Microsoft as key clients in Qualcomm's strategy to expand into data center silicon, especially as revenue from Apple-related products declines. Qualcomm targets $5 billion in data center revenue for fiscal 2027, increasing to $15 billion by fiscal 2029.
The company's broader financial objective is to reach $40 billion in revenue from non-handset segments by fiscal 2029.