Qualcomm’s Past Exit from Server Chip Market: Lessons for a Successful Return

Qualcomm and Amazon Forge $60 Billion Partnership

Qualcomm has announced a strategic partnership with Amazon that could see the tech giant purchasing up to $60 billion worth of Qualcomm’s server chips and related technology by 2036. The deal, which involves co-developing customized silicon for Amazon Web Services (AWS), aims to enhance AI inference capabilities in AWS data centers. Shares of Qualcomm rose 3% following the announcement.

The agreement features a structure tying warrant vesting to actual purchase orders, a departure from Qualcomm’s previous struggles with their Centriq processor initiative, which failed to secure substantial orders and ultimately led to the dismantling of the project by 2018. Qualcomm’s management expects non-handset revenue growth to accelerate from 24% in fiscal 2026 to over 60% in fiscal 2027, aiming for more than $15 billion in data center revenue by fiscal 2029.

Initial commitments from Amazon have already led to the vesting of 3.75 million warrants for Qualcomm shares. This new partnership stands as a significant pivot for Qualcomm, indicating a focused strategy on data centers that is vital for its future revenue growth.