Qualcomm’s Return to the Data Centre Market: Explained
Leading semiconductor company Qualcomm has said it will be returning to the data centre market.
It states it is developing central processing units, or CPUs, saying its future chips will use Nvidia technology that will help them communicate quickly with Nvidia’s graphics processing units (GPUs).
The news comes in the midst of a CPU market surge, with Nvidia also designing a chip with Arm technology to develop its own CPU, Grace. Worldwide, data centre investment into GPU clusters has reached record levels, with Nvidia in particular maintaining a dominant market share in the AI training segment.
Qualcomm’s return to CPUs is primarily to diversify its offerings, but the company will also want to remain competitive in such a fast-paced environment.
“With the ability to connect our custom processors to Nvidia's rack-scale architecture, we're advancing a shared vision of high-performance energy-efficient computing to the data centre,” Cristiano Amon, CEO of Qualcomm, shares.
Qualcomm’s role in the global chip market
Qualcomm first began developing CPUs in the 2010s, which were tested with Meta Platforms. However, the company cut these efforts short because of cost cuts and legal challenges, according to Reuters.
After gaining a team of ex-Apple chip designers in 2021, Reuters has reported that Qualcomm decided to quietly revisit the data centre CPU market. The company has held discussions with Meta about these efforts and then confirmed a letter of understanding with Saudi Arabian AI firm Humain to develop a custom data center CPU.
Entering the data centre market is part of Qualcomm’s broader strategy to offer something new. It has traditionally focused on selling processors and modems for smartphones, but customers like Apple are now starting to design their own products. This could explain why Qualcomm wants to expand its business.
The data centre CPU market is incredibly competitive, with AMD and Intel leading in the space – and tech giants like Microsoft and Amazon already deploying their own custom-build processors.
Intending to pitch its chips as power efficient and capable of running AI directly on devices, Qualcomm is eager to expand into this area and reduce its reliance on other areas of its business. Rather than offloading to the cloud, the company’s on-device strategy could enable faster AI and stronger privacy capabilities.
“I think we see a lot of growth happening in this space for decades to come and we have some technology that can add real value added,” Cristiano tells CNBC in an interview. “So I think we have a very disruptive CPU.”
The importance of a having a competitive edge
Eager to address the competition, Cristiano says there is an obvious place for Qualcomm within the data centre CPU market.
He tells CNBC: “As long as ... we can build a great product, we can bring innovation and we can add value with some disruptive technology, there’s going to be room for Qualcomm, especially in the data centre.
“[It] is a very large addressable market that will see a lot of investment for decades to come.”
Forming a link to Nvidia’s infrastructure is crucial for anyone hoping to enter the data centre space, given how relevant semiconductors are for AI development. This is particularly the case in the US, with the country eager to establish itself as the dominant AI leader.
Nvidia chips are dominant in the AI market, but are always partnered with CPUs. Its GPUs have become critical in the data centre industry, mostly to train large AI models.
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