Qualcomm Loses Apple Modem Business but Secures Amazon AI Data Center Deal
Qualcomm is losing a significant portion of its revenue from supplying modems to Apple, with iPhone-related sales expected to drop by about half quarter-over-quarter. In response, Qualcomm has partnered with Amazon on a multi-generational project for next-generation AI data center infrastructure. The deal includes warrants potentially worth $4 billion if certain milestones are met. Qualcomm aims to generate up to $5 billion in data center revenue by fiscal 2027 and scale further to $15 billion by 2029, targeting a broader diversification goal of reaching $40 billion in non-handset revenue. However, the initial phase is expected to have lower margins than Qualcomm’s current average gross margin of around 55.4%. The data center market is highly competitive with established players like NVIDIA and Broadcom already serving major hyperscalers. The partnership comes as analysts revise their earnings estimates downward for Qualcomm in response to these developments, highlighting the challenges associated with entering a crowded AI infrastructure space.
Topics: AI Data Centers Amazon Apple Modem Business Exit Qualcomm