Qualcomm enters the AI data center market, will supply custom chips to major clients, challenging Nvidia’s dominance.

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Qualcomm is shifting its business focus significantly from smartphones to data centers, a move of strategic importance for competing in the AI computing power market and challenging Nvidia’s dominance.

According to The Wall Street Journal, Qualcomm CEO Cristiano Amon stated that the company is working with a leading hyperscale cloud provider to develop custom chips, aiming to build a long-term partnership, with the first shipments expected to start in the December quarter this year. Amon revealed that more details about the company’s data center strategy will be disclosed at the Investor Day in June.

This initiative is highly significant for Qualcomm. Starting in 2025, Apple will use its own chips to replace iPhone modems, and Samsung Electronics is also accelerating in-house chip development. As a result, Qualcomm’s consumer electronic business faces ongoing pressure. Thus, the data center business is seen as a key direction for the company to seek new growth drivers.

Three types of chips launched, large-scale cooperation imminent

According to Reuters, Qual comm is developing three types of chips: CPUs, inference accelerators, and custom ASICs. Amon pointed out that after the acquisition of Alphawave IP Group last year, the company has accumulated a large amount of intellectual property to support the aforementioned R&D.

This move marks Qualcomm’s ambitions in the data center sector becoming even clearer. Last year, Qualcomm announced plans to compete with Nvidia in this arena; according to Bloomberg, its first client is Saudi-backed AI startup Humain. If cooperation with the hyperscale cloud provider materializes, it will be a more substantial step for Qualcomm in this field.

While expanding in data centers, Qualcomm also released its second fiscal quarter results. The data shows that adjusted earnings per share were $2.65, and revenue was $10.6 billion, in line with expectations, but third quarter revenue guidance did not meet targets. Amon said that memory shortages have not yet affected shipment progress of data center chips this year, and the company is still in an early stage of expansion, with a scale far smaller than mature suppliers like Nvidia.

In addition, Qualcomm is actively laying out its AI ecosystem on the device side. According to CNBC, OpenAI announced last week a partnership with Qualcomm to jointly develop AI chips for smartphones, providing computing power for AI agent-centric terminal devices.

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