Qualcomm says Meta will use its data center chips starting in 2028

In short: Qualcomm said Meta will be the first major tech company to buy its new data center computer chips, and Qualcomm raised its longer-term revenue outlook.

What happened

Qualcomm, a US chip company best known for smartphone chips, said it will supply data center processors to Meta. Data centers are large buildings filled with computers that power online services (think of them as factories for internet apps).

Qualcomm said its C1000 central processing units, or CPUs, will start powering Meta’s servers in late 2028. A CPU is the main “brain” of a computer that handles general tasks.

Qualcomm also said it has lined up two more large customers for these chips, but it did not name them. Its chief financial officer, Akash Palkhiwala, told the Financial Times that revenue from those two customers should begin showing up by the end of this year.

Alongside the customer news, Qualcomm increased its forecast for non-handset revenue in 2029 to $40 billion, about double its previous estimate. That total includes a goal of $15 billion from its data center business. After the company shared these projections, its shares rose as much as 15 percent in after-market trading.

Qualcomm also said it plans to buy AI software infrastructure company Modular for about $3.9 billion in stock, with the deal expected to close in the second half of this year.

Why it matters

Big tech companies are spending huge sums to build the computers needed for AI. Meta alone expects capital spending of up to $145 billion this year. For Qualcomm, landing Meta helps it prove it can compete in a market where Nvidia is currently a key supplier, and it also reduces Qualcomm’s reliance on smartphone-related business.

Source: Financial Times