Qualcomm has agreed to a major deal to supply AI chips and other hardware to Amazon, deepening its push into the data center market dominated by rival chipmaker Nvidia.

The U.S. chipmaker said Wednesday that the agreement will see it provide customized silicon chips to support AWS's growing AI infrastructure, with a specific focus on inference — the stage at which trained AI models generate their outputs — at large-scale data centers.

$4 Billion Stock Warrant

The collaboration forms part of a wider arrangement under which Qualcomm issued a stock warrant — a contract giving its holder the right to buy shares at a set price — enabling Amazon to acquire up to 25 million shares of the company at $161.26 per share, for a total potential investment of $4 billion.

That investment was revealed in an SEC filing, which stated that the stock issue depends on Amazon buying $60 billion worth of server chip products, technology, systems and manufacturing services from Qualcomm over the next decade. The structure ties Amazon's potential equity stake directly to its own future purchases, binding supplier and customer across the ten-year term.

Broader Hardware Collaboration

Beyond the chips themselves, Qualcomm and Amazon will work together on additional hardware, including high-performance optical connectivity systems that extend up to 1.6 terabits per second, along with future-generation products designed to support the ever-evolving scale and bandwidth needs of AI infrastructure. The optical connectivity work extends Qualcomm's data center ambitions beyond processors alone, into the hardware that moves data between AI systems.

Qualcomm has also committed to increasing its use of AWS's AI hardware and software infrastructure, including Amazon Bedrock, to run automated electronic design programs, with the goal of reducing chip design cycles.

Challenging Nvidia's Dominance

The deal appears to vindicate Qualcomm's decision to enter the chip market and take on Nvidia, the world's dominant producer of AI processors, despite the company being traditionally associated with smartphone processors. Landing AWS as a customer also gives Qualcomm's young data center unit a marquee name alongside Meta, extending its reach across the companies building out AI infrastructure.

The firm introduced its first data center chips — the AI200 and AI250 — last October, before adding a series of other data center products to its portfolio in June and unveiling a multi-year agreement to supply chips to social media giant Meta. With a decade-long AWS commitment now in place, the future-generation products pledged under the collaboration and deployments under the Meta agreement will be the next visible markers of how far Qualcomm's challenge to Nvidia extends.