Qualcomm Grants Amazon $4B in Warrants in Custom AWS Chip Strategy

Qualcomm has granted Amazon warrants to acquire 25 million shares as part of a multi-generation contract to manufacture tailored server processors for Amazon Web Services, according to financial disclosures reported by CNBC and detailed by The Next Web. The strategic partnership directly links equity incentives to substantial purchasing commitments from the cloud infrastructure provider.

The warrants carry an exercise price of $161.26 per share, establishing an equity position valued at roughly $4 billion. Under the terms of the filing, the warrants vest across multiple tranches contingent on specific commercial milestones and Amazon purchasing up to $60 billion worth of Qualcomm server processors and technology solutions. The financial instruments are scheduled to expire on September 3, 2036. Shares of Qualcomm gained 4% following news of the deal.

The technical agreement focuses on hardware for artificial intelligence inference and high-capacity optical connectivity capable of up to 1.6T transfers. Qualcomm will incorporate its proprietary SerDes design and optical digital signal processor technology into the custom silicon. In return, Qualcomm has agreed to run its internal semiconductor design workloads on Amazon Bedrock, AWS's managed platform for generative AI model deployment.

The contract represents a significant expansion in Qualcomm's data center push. In June, the semiconductor maker unveiled its Dragonfly C1000 data center processor, naming Meta as a primary customer starting in 2028, while establishing a $15 billion data center revenue target for fiscal year 2029. To strengthen its software capabilities, Qualcomm was also reported to be in discussions earlier this year to acquire AI infrastructure software startup Modular for approximately $4 billion.

The structure of offering equity warrants to secure high-volume technology buyers highlights a growing trend across the AI hardware industry, where chip suppliers use equity positions to guarantee demand. Market research from Bank of America projects that the global server processor market will expand from $27 billion in 2025 to $60 billion by 2030, driven by intensified competition among hardware providers including Nvidia, AMD, and Intel.

Alongside its cloud contract with Amazon, Qualcomm is expanding its footprint in European government-backed computing programs. Qualcomm, Nvidia, and AMD have each signed memoranda of understanding to serve as hardware suppliers for the European Union's planned network of AI gigafactories. The regional infrastructure initiative targets up to seven computing sites representing 30 billion euros in total investment, supported by 10 billion euros in public funds and approximately 1 billion euros currently committed by Brussels.

Construction on the European facilities is set to begin early next year, with operations projected to go live in mid-2028 across ten interested host nations. Meanwhile, Europe's domestic processor developments remain focused on specialized scientific applications. SiPearl, an independent chip developer, powered on its Rhea1 80-core Arm processor built on TSMC's N6 process node in May. Scheduled for delivery by the end of this year, the Rhea1 design is slated for deployment in the Jupiter supercomputer at the Jülich Supercomputing Centre rather than hyperscale cloud platforms.