Qualcomm has entered the custom hyperscale silicon market, confirming on its second-quarter earnings call that it will supply bespoke data centre chips to an unnamed leading cloud provider, with initial shipments expected in December and plans for a multi-generation engagement.
The disclosure sent shares up more than 13% in after-hours trading and represents the most significant strategic pivot in the San Diego chipmaker's history, extending its reach from smartphones and cars into the data centre market dominated by Nvidia, Broadcom and AMD.
"We are in a period of profound industry transformation. The rise of AI agents is reshaping our roadmap across every platform we develop," chief executive Cristiano Amon said.
Amon described an evolution in AI infrastructure from GPUs for training to dedicated inference hardware and now to systems optimised for token generation in agentic AI, a phase he said increases the importance of CPU design.
"I think when you think about agents, CPU becomes very important," he said, confirming that Qualcomm has built "a dedicated CPU for agentic experiences in the data centre."
The company gained custom ASIC capability through its acquisition of Alphawave Semi and is developing both merchant data centre chips and bespoke products tailored to individual hyperscalers.
When asked whether Qualcomm was prioritising custom silicon over off-the-shelf products, Amon said the answer was "all of the above."
Qualcomm promised further detail at an investor day scheduled for 24 June.
Quarterly revenue came in at $10.6 billion, down 3% year on year but ahead of the $10.56 billion consensus, while adjusted earnings per share of $2.65 beat expectations of $2.55.
The automotive division was the standout performer, exceeding $5 billion in annualised revenue for the first time during the quarter, with Amon projecting an exit run rate above $6 billion by fiscal year-end.
Qualcomm expects to capture 70% of Samsung's system-on-chip business this year and next, up from approximately 50%, and previewed commercial shipments of its fifth-generation Snapdragon Digital Chassis by year-end, with three times higher CPU throughput, triple the GPU capability and 12 times the neural processing performance of its predecessor.
Net income surged 162% to $7.37 billion, though the comparison is distorted by one-off charges in the prior year.
The company announced a fresh $20 billion share buyback programme.
Executives flagged a memory shortage that is constraining handset production plans, particularly among Chinese manufacturers.
Related reading
- Adobe deepens NVIDIA and WPP ties to embed autonomous AI agents in marketing
- Meta researchers unveil AI framework that rewrites its own problem-solving code
- Nvidia launches NemoClaw to bring security infrastructure to always-on AI agents
Chief financial officer Akash Palkhiwala said demand would bottom in the third quarter before recovering, and that Qualcomm would monitor memory capacity growth into 2027.
Amon also highlighted the emergence of "agentic smartphones," citing a ZTE device running ByteDance's Doubao assistant and Xiaomi's Miclaw integration as early examples of handsets designed around always-on AI agent capabilities rather than traditional app-based interfaces.
The recap
- Qualcomm enters custom hyperscale silicon and datacenter CPU market.
- Revenue $10.6 billion; net income $7.37 billion this quarter.
- Investor day in June; hyperscaler shipments expected in December quarter.
