Qualcomm has secured two major hyperscaler deals for its custom silicon initiatives, which are expected to contribute meaningful revenue starting at the end of this year. The company's Data Center Chief confirmed the agreements, signaling a strategic shift in its data center market approach. This revenue stream is projected to materialize in the period ending with the calendar year that commences in Q1 2027.

The company continues to advance its hardware roadmap alongside these commercial wins. Commercial sampling of the Qualcomm High Bandwidth Compute Gen 1 with AI250 is expected in mid-2027. Following this, Qualcomm plans to launch the second generation of the HBC chip in 2028, marking a deeper expansion into the server processor market.

Product Launch Timeline

The upcoming data center CPU represents Qualcomm's expansion beyond its traditional mobile and connectivity focus. The mid-2028 launch target provides a specific window for the market entry of this new hardware category, following the initial sampling phase of the Gen 1 chip.

Revenue Projections

Qualcomm projects that its custom silicon initiatives will begin contributing significant financial results starting in the period ending with the calendar year that commences in Q1 2027. This indicates a phased approach to monetizing its new data center technologies before the full CPU launch.

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.