Qualcomm Targets AI Chip Market to Reduce Reliance on Smartphones
Qualcomm's Strategic Shift Towards AI and Data Center Chips
June 24 (Reuters) - Qualcomm is expected to use its investor day on Wednesday to lay out a push beyond its core smartphone business into the fast-growing, but highly competitive, market for AI data center chips.
Expanding Customer Base in a Competitive Market
Analysts expect the San Diego-based company to name new customers for its AI chips as it tries to gain a foothold in a market dominated by Nvidia.
Pressure from Smartphone Market Dynamics
The shift reflects mounting pressure in the smartphone market, where Qualcomm is one of the world’s largest chip suppliers to Android device makers.
The sector has been squeezed by a memory chip shortage driven by surging demand for AI infrastructure, while major customers such as Apple and Samsung are increasingly developing chips in-house.
Diversification into Automotive and Data Center Sectors
In response, Qualcomm has been expanding into automotive and data center sectors.
Challenges and Opportunities in the AI Chip Arena
Facing Established Rivals
The company, which has attempted to boost its data-center business multiple times, is re-entering a fast-growing, but hyper-competitive AI market full of large incumbents such as Nvidia, the newly minted Cerebras and other custom chip options including Amazon's Graviton and Google's Axion, Bank of America analysts warned in a client note on Tuesday.
Product Roadmap and AI Chip Offerings
Qualcomm said in April that it plans to begin shipping processors and other AI chips for data centers by year-end.
Three Types of AI Chips in Development
It also said it was working with customers on three kinds of chips: central processing units, inference accelerators, and custom application-specific integrated circuits (ASICs), a segment that has been booming for rivals such as Broadcom and Marvell.
AI Inference as a Key Battleground
AI inference — running trained AI models — has emerged as a key battleground.
Financial Outlook and Investor Focus
Projected Revenue and Growth Targets
BofA analysts said they expect modest revenue of roughly $2 billion to $5 billion annually from Qualcomm's data center push by fiscal 2027-2028.
Investors will be watching for updated long-term financial targets at the event, including Qualcomm's growth ambitions for its non-handset businesses.
Strategic Acquisitions and Competitive Positioning
Attention is also likely to focus on its $4 billion all-stock deal for AI software startup Modular, announced earlier on Wednesday, which positions Qualcomm against Nvidia’s proprietary CUDA software that has locked in millions of developers.
(Reporting by Anhata Rooprai in Bengaluru; Editing by Sayantani Ghosh and Sahal Muhammed)