Qualcomm to buy AI chip software startup Modular for nearly $4 billion

In short: Qualcomm says it will acquire Modular, a Silicon Valley startup that builds software for running AI on different computer chips, for nearly $4 billion.

What happened

Qualcomm and Modular announced the deal on Wednesday. Qualcomm said it expects to pay by issuing up to 19.2 million shares of its stock, which comes to just under $4 billion based on its last closing share price.

The deal includes $300 million set aside for Modular employees. Qualcomm said the acquisition is expected to close in the second half of this year.

Modular makes a software platform and its own coding language that helps developers run the same AI program on different chips without rewriting it each time. You can think of it like a universal power adapter, but for AI software (one plug that works in many outlets). Modular was founded in 2022 by Chris Lattner and Tim Davis, and its roughly 150-person team is expected to join Qualcomm. Modular will remain a standalone entity for now, headquartered in Los Altos, California.

Why it matters

This deal shows Qualcomm is trying to grow beyond the smartphone chips that bring in most of its revenue. AI is being added to more devices and to large data centers (warehouse-sized buildings filled with computers), and software that makes AI run across different chips can make it easier and cheaper for companies to choose their hardware. Qualcomm has also been investing in more powerful chips for servers, including a recent acquisition of Ventana Micro Systems, as it pushes further into data centers.

Source: Wired