Qualcomm is joining forces with Amazon to develop custom chips, mounting a challenge to Nvidia's dominance of the artificial intelligence chip market.
Qualcomm said on the 8th that it will co-develop custom semiconductors with Amazon to support the buildout of Amazon Web Services' AI infrastructure. The partnership will focus in particular on inference, the process of running AI models in live services. The companies did not disclose specific terms.
Qualcomm cited the explosive growth in AI workloads as the reason for the joint development. Demand is rising at an unprecedented pace for infrastructure with strong computing, storage, networking and memory bandwidth as well as power efficiency, the company said, and the deal combines AWS's AI infrastructure with Qualcomm's low-power processors, chip design and system integration technology.
Qualcomm is best known as a maker of processors for smartphones and other mobile devices. But it moved in earnest into the data center market in June, when it unveiled the Dragonfly C1000, a central processing unit for data centers. Before the Amazon deal, it had already signed an agreement with Meta, which plans to use the CPU once production begins in 2028.
The AWS partnership carries weight because Amazon, one of the largest cloud providers, has effectively endorsed Qualcomm's data center chip technology. Like Meta, Amazon is pouring hundreds of billions of dollars a year into AI infrastructure. Analysts say chipmakers are lining up to challenge Nvidia, which controls the market for high-performance graphics processing units, as the expansion of the data market raises the importance of CPUs in AI computing. CPUs handle general-purpose tasks sequentially with a relatively small number of powerful cores. Bank of America projects the CPU market will more than double to $60 billion in 2030 from $27 billion in 2025.
Qualcomm said its CPU was designed for agentic AI and built to deliver high computing performance at low power. On that basis, the company aims to generate $15 billion in data center revenue in 2029 and to strengthen its market position through a broader product lineup, including AI chips and products that link multiple chips. Qualcomm shares jumped nearly 10% in early trading after the announcement. Competition among Qualcomm, Nvidia and other chipmakers is expected to intensify as the AI infrastructure market expands from a GPU-centered business to entire systems that include CPUs.
