On June 24, Qualcomm Inc. announced its plans to acquire the AI startup Modular for approximately $4 billion in an all-stock transaction, which will allow the company to harness software capable of operating AI models across various chips without the need to develop unique code for each processor.
This acquisition places Qualcomm in direct competition with CUDA, the software framework that has significantly bolstered Nvidia’s dominance in the AI sector by linking millions of developers to its $5 trillion chip ecosystem.
As part of the acquisition, Qualcomm anticipates issuing up to 19.2 million shares of its common stock to the stakeholders of Modular. The total value of the transaction amounts to $3.92 billion based on Qualcomm's last closing share price prior to the announcement.
In early trading, Qualcomm’s stock dipped around 4%. The chip maker is actively striving to enhance its position within the data center market, which is witnessing an exponential rise in demand for generative AI. Qualcomm already has plans to deliver processors and AI chips tailored for data center applications by the year's end.
Analyst Jacob Bourne from Emarketer noted that Qualcomm aims to claim a stake in the data center segment by acquiring software that maximizes hardware efficiency for AI inference.
Modular's technology is primarily focused on executing AI models—a space that has become increasingly competitive as Nvidia seeks to fend off rivals developing customized chips for internal use. The startup is designed to function as a neutral software layer for AI processing, accommodating chips from various manufacturers, including Nvidia and AMD.
Cristiano Amon, CEO of Qualcomm, stated, “We believe the future belongs to developer-friendly, horizontal platforms that can run across diverse compute environments and provide customers with real choices in how and where they deploy AI.”
The deal is projected to finalize in the latter half of this year as Qualcomm aims to solidify its presence in the AI and data center markets, thereby decreasing its reliance on the smartphone chip sector, which remains its primary revenue source.
Moreover, Qualcomm is reportedly in negotiations to acquire AI chip startup Tenstorrent for a price estimated between $8 billion and $10 billion, as per a recent Information report.
