According to Reuters, Qualcomm stated that as its business expands beyond its core smartphone chip business, it expects its data center revenue to reach $15 billion by 2029 (approximately RMB 102.006 billion at the current exchange rate). Boosted by this news, Qualcomm’s stock rose more than 12% in after-hours trading on Wednesday.
Qualcomm’s Chief Financial Officer Akash Parshiwara said at an investor conference that Qualcomm’s data center business revenue will reach $5 billion in fiscal year 2027, of which $1 billion will come from new custom chip customers.
Qualcomm also raised its long-term revenue forecast: it expects total chip revenue from business segments other than mobile phone chips to reach $40 billion by 2029, up from the previous forecast of $22 billion; at that time, mobile phone chips will only account for one-third of the company’s total chip revenue.
Parshiwala stated, “We will truly achieve a diversified business portfolio.”
Arm, which provides underlying technology for many Qualcomm chips, saw its stock price rise by 5% after the release of this earnings outlook.
Bank of America analysts had previously predicted that Qualcomm’s efforts in the data center business would only generate about $2 billion to $5 billion in revenue annually in fiscal years 2027 and 2028, a relatively conservative estimate.
Client list: Meta and Microsoft are both involved
Earlier that day, Qualcomm revealed that Microsoft and Meta would adopt its new AI chip, and that the company would also customize dedicated chips for two other unnamed hyperscale cloud vendors.
Qualcomm’s increased investment in AI chips stems from the continued pressure on the smartphone market: on the one hand, the surge in demand for AI infrastructure has led to a shortage of memory chips, squeezing the profits of the mobile phone industry chain; on the other hand, major customers such as Apple and Samsung are developing their own chips, resulting in a continuous loss of external orders.
The chipmaker announced on Wednesday that Microsoft will adopt its new category of chips. These chips rely on affordable storage chips commonly used in phones and laptops, rather than the expensive HBM high-bandwidth memory used by Nvidia, and also differ from the static RAM used by Cerebras Systems.
Qualcomm has named this new chip category High Bandwidth Compute (HBC).
“By leveraging our performance advantage per unit cost, we create tremendous value for the entire industry,” said Tony Pialis, head of Qualcomm’s data center business.
Meta will be equipped with Qualcomm’s new central processing unit, Dragonfly C1000, designed specifically for AI data centers, officially entering the cloud market currently fiercely contested by Arm and Nvidia.
Pialis also revealed that Qualcomm has secured custom chip orders from two leading hyperscale cloud vendors, with related revenue expected to materialize within this year’s calendar year. He did not disclose the names of the clients, only stating, “We don’t need to actively seek out hyperscale cloud vendor clients; on the contrary, these vendors are proactively approaching us seeking cooperation.”
Competition in the data center chip sector is becoming increasingly fierce
In a research note sent to clients on Tuesday, Bank of America analysts warned that while Qualcomm has made several attempts to expand its data center business, it is now re-entering the high-growth AI chip market. However, the industry is extremely competitive, with several established giants, including Nvidia, newcomer Cerebras, and self-developed custom chip product lines such as Amazon Graviton and Google Axion.
In April, Qualcomm announced plans to deliver data center processors and various AI chips to the market by the end of this year. The company also revealed that it is simultaneously developing three types of chips for its customers: central processing units (CPUs), AI inference accelerators, and application-specific integrated circuits (ASICs). Competitors such as Broadcom and Marvell have already achieved rapid business growth in the ASIC market.
