Qualcomm is significantly expanding its business focus from smartphones to data centers, a strategic move to compete for the AI computing market and challenge NVIDIA's leading position. The company's CEO, Cristiano Amon, stated that Qualcomm is collaborating with a leading hyperscale cloud provider to develop custom chips, aiming to establish a long-term partnership. Initial shipments are expected to begin in the December quarter. Amon indicated that further details regarding the data center strategy will be disclosed at an investor day event in June.
This expansion is critical for Qualcomm. With Apple planning to replace iPhone modem chips with its own designs starting in 2025, and Samsung Electronics accelerating its in-house chip development, Qualcomm's consumer electronics business continues to face pressure. Consequently, the data center business is viewed as a key avenue for seeking new growth.
The company is developing three types of chips: a CPU, an inference accelerator, and a custom ASIC. Amon noted that last year's acquisition of Alphawave IP Group has provided substantial intellectual property to support this development. This initiative marks a clearer competitive ambition for Qualcomm in the data center sector. Last year, the company announced plans to compete with NVIDIA in this arena, with its first reported customer being the Saudi government-backed AI startup, Humain. A successful partnership with a hyperscale cloud provider would represent a more significant step forward for Qualcomm in this field.
Alongside its data center expansion, Qualcomm reported its fiscal second-quarter results. Adjusted earnings per share were $2.65, with revenue of $10.6 billion meeting expectations. However, the revenue guidance for the third quarter fell short. Amon mentioned that memory shortages have not yet impacted the shipment schedule for data center chips this year, emphasizing that the company is still in the early stages of expansion and its scale remains much smaller than established suppliers like NVIDIA.
Additionally, Qualcomm is actively building its AI ecosystem on the device side. OpenAI recently announced a collaboration with Qualcomm to jointly develop AI chips for smartphones, providing computing power for AI agent-centric devices.
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