Qualcomm rolls out AI data center CPU, signs Meta as major customer

Qualcomm Shares jumped in extended trading Wednesday after the chipmaker said non-mobile phone revenue in fiscal 2029 would be $40 billion, down from a previous forecast of $22 billion.

The company also said as part of its shareholder meeting that it was targeting $15 billion in data center sales for that year.

Earlier Wednesday, Qualcomm announced a central processing unit for data centers called the Dragonfly C1000, saying: Meta We will use it when it starts production in 2028.

The chipmaker said the new data center CPU is designed for agency AI and focuses on delivering computing performance without using too much power.

The announcement, made at Qualcomm’s presentation to investors, is another sign that the chipmaker known for its smartphone processors and modems is aggressively targeting the data center market.

Qualcomm on Wednesday said it has a roadmap to target the fast-growing market with several different products, including an AI chip and a product that will connect multiple chips together.

“We were just executing, gathering assets, and when we got to this point, we felt like we had a comprehensive portfolio to move into the next phase of the data center,” Qualcomm CEO Cristiano Amon said at investor day.

Shares of the chipmaker fell in trading Wednesday.

Qualcomm is already doing business with nearly every hyperscaler through its smartphone chips and other existing products, Qualcomm CFO Akash Palkhiwala said in an interview.

“This is not a new relationship. The benefits we already offer them at the edge, combined with the scale, expertise and trust in Qualcomm, enable them to engage with us in the data center,” Palkhiwala said.

Investors’ interest in CPUs is growing as experts believe that central processors will take on more of the workload from graphics processing units and AI chips due to autonomously working AI agents.

“There is actually not enough supply and there is a need for multiple players” in the CPU market, Palkhiwala said.

Qualcomm’s main business in recent years has been smartphones, which accounted for two-thirds of the company’s product revenue in the quarter ended March.

But the company aims to move away from the smartphone industry, which peaked in terms of shipments in 2017, according to estimates, and into faster-growing chip markets: automobiles, robots and now the data center.

The chipmaker says its expertise in making smartphone and computer chips that preserve battery life will serve customers like hyperscalers building data centers where electrical power is the limiting factor.

The company said it signed two deals to make custom silicon chips for hyperscalers.

Separately, Qualcomm announced it has acquired Modular for an undisclosed price. The startup has produced software that enables AI applications to run on a wide range of chip architectures, and Qualcomm says it’s equivalent to Nvidia’s CUDA, which is used in many AI applications.

Amon told investors that the company did not enter the data center market too late.

“When people ask if it’s too late to get into the data center, you have to think about scale and application, engineering capabilities or operations and supply chain,” Amon said.