QUALCOMM Incorporated has entered into a definitive agreement to acquire Modular Inc, strengthening Qualcomm Technologies, Inc.’s software foundation for generative and agentic AI across data center and edge environments. As consideration for the acquisition, QUALCOMM expects to issue up to 19.2 million shares of the Company’s common stock to the equity owners of Modular. The transaction is expected to close in the second half of 2026, subject to customary closing conditions and applicable regulatory approvals.

At the closing of the acquisition, the issuance and sale of the shares of Company common stock will be made in a private placement undertaken in reliance on the exemptions from the registration requirements of the Securities Act of 1933, as amended (the "Securities Act"), pursuant to Section 4(a)(2) of the Securities Act and Rule 506 of Regulation D promulgated thereunder. This acquisition confirms the advanced discussions previously reported and marks a strategic shift for QUALCOMM as it seeks to expand its artificial intelligence chip capabilities.

Modular, founded in 2022 by Chris Lattner and Tim Davis, develops software infrastructure that helps companies build and deploy AI applications across different hardware and cloud platforms. The startup was formed as its founders were "frustrated by AI’s fragmented infrastructure," aiming to provide a unified framework for AI deployment. Previously, Modular raised $250 million in a funding round in September that valued it at $1.6 billion.

The agreement with Modular follows previous reports that QUALCOMM was in talks to acquire Tenstorrent for $8 billion to $10 billion. While those discussions were ongoing, the focus has now shifted to Modular. This move aligns with CEO Cristiano Amon's strategy of developing more than 40 new AI-powered devices, betting on the adoption of smaller, personalized AI hardware such as smart jewelry, camera-equipped earbuds, and watches acting as personal AI agents.

Strategic Acquisitions and Partnerships

QUALCOMM has recently secured several deals to bolster its AI position. In May, the company reportedly reached a deal to supply TikTok parent ByteDance with application-specific integrated circuits (ASICs) for AI data centers. In April, QUALCOMM inked a multi-year deal with Snap Inc. to power future generations of "Specs" with Snapdragon system-on-a-chip (SoC) solutions.

Key Strategic Developments

QUALCOMM's entire roadmap is currently undergoing an upgrade to prepare for this future, focusing on more powerful and energy-efficient chips for smaller form factor devices. Shares of QCOM closed 1.86% lower on Monday at $221.90, and fell further 0.72% in after-hours trading.

Global chip supplier Qualcomm is reportedly in talks with China’s ByteDance to provide custom chip-design services. If the deal materializes, the TikTok parent would become an early customer of Qualcomm’s chip-design services operation, Reuters reported. The proposed chips for ByteDance would partially utilize technology from AlphaWave Semi, a high-speed connectivity company acquired by Qualcomm last year. Discussions reportedly involve the design of video processing units (VPUs), with the aim of starting mass production by the end of the year. Talks are ongoing, and ByteDance may ultimately pursue alternative partners, according to the report.

AI Deals Drive Qualcomm’s Next Phase

The report comes as Qualcomm is expanding into the fast-growing data center chip market, developing CPUs, AI inference accelerators, and custom ASICs for customers. This positions the company against rivals such as Broadcom and Marvell Technology. Qualcomm has been in talks to acquire AI chip startup Tenstorrent to expand its AI chipmaking capacity and is also reportedly eyeing a $4 billion deal for AI company Modular. The reported ByteDance talks come at a critical time for Qualcomm, which is grappling with higher memory-chip costs and a slowdown in smartphone demand, as global handset shipments are projected to post a record annual decline this year.

Strategic Context and Market Position

The discussions coincide with Qualcomm CEO Cristiano Amon’s push into AI hardware, as he revealed the company is developing over 40 AI-powered devices. These include smart jewelry, AI-enabled earbuds, pins, and watches designed to act as personal AI assistants. The talks also highlight that U.S. technology companies remain eager to pursue business opportunities in China despite growing U.S.-China tensions over AI chip exports. However, ByteDance was recently reported to be doubling down on domestic companies, being in talks with China’s Iluvatar CoreX and Baidu to acquire AI chips.