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.

Bank of America Securities analyst Vivek Arya maintains an Underperform rating on Qualcomm Inc and raised the price target to $195 from the previous $165. The cautious stance comes ahead of Qualcomm's Investor Day on June 24, where the company is expected to unveil new AI efforts. Despite the higher price target, the analyst questions if Qualcomm is too late to become a significant entrant in a crowded market.

Rating and Price Target Details

The revision reflects a review of Qualcomm's position in the market. The Underperform rating suggests a cautious outlook relative to broader market performance, even as the price target acknowledges recent stock momentum.

AI and Data Center Challenges

Arya expects Qualcomm to share details on its AI opportunity, roadmap, and engagements, as well as diversification efforts away from handsets. The analyst estimates a near-term addressable opportunity of $2 billion to $5 billion by FY27/28E. The goal of the Investor Day is to demonstrate that Qualcomm can derive the majority of its revenue from non-smartphone segments such as data centers, AI, automotive, and the internet of things.

However, the analyst believes Qualcomm is re-entering a fast-growing but hyper-competitive AI market dominated by large incumbents. Key competitors identified include NVIDIA Corp, Broadcom Inc, and Advanced Micro Devices Inc. Arya estimates $10 billion in data center and AI sales for calendar year 2028 but suggests this success may already be priced into the stock following a recent rally. Qualcomm is also expected to address media reports regarding potential M&A to expand its data center footprint.

Stock Performance

Qualcomm stock is down 8.50% to $203.04. The stock has a 52-week trading range of $121.99 to $259.92. Year-to-date in 2026, the stock is up 18.1% and has gained 33% over the last 52 weeks.