Qualcomm speeds up "phoneless" trend! Reportedly in talks with ByteDance to discuss customized chip design service.

According to four informed sources, Qualcomm is currently in negotiations with the Chinese company ByteDance regarding providing chip design services. This move indicates that the American chip giant is seeking to reduce its dependence on its largest source of revenue, the smartphone market. If the negotiations are successful, ByteDance will become an early customer of Qualcomm's chip design services. Qualcomm is the world's largest supplier of smartphone modem chips, which are responsible for managing cellular communication functions. According to three of the sources, Qualcomm is discussing designing custom chips for ByteDance. Two sources revealed that the chip will be partially based on technology owned by AlphaWave Semi, a high-speed connectivity specialist company acquired by Qualcomm last year. The three sources stated that the negotiations are still ongoing, and the final outcome is uncertain. They pointed out that it is currently unclear whether these negotiations will ultimately result in a complete chip design and enter the manufacturing stage, and ByteDance may also seek other partners. Other details about the chip have not been disclosed. One of the sources mentioned that discussions involve the design of a video processing unit (VPU) and are expected to start mass production by the end of the year. According to previous reports, ByteDance is developing AI chips for inference tasks and custom central processing units (CPUs). Both Qualcomm and ByteDance have not responded to requests for comments. If an agreement is reached, it will be a significant victory for Qualcomm. The company is facing uncertainty in smartphone manufacturer orders this year due to rising prices of storage chips, and global smartphone shipments are expected to see the largest annual decline in years. Qualcomm is actively entering the thriving data center chip market and working with customers to develop three types of chips: CPUs, inference accelerators, and custom chips known as ASICs (application-specific integrated circuits). This is a rapidly growing market, with competitors such as Broadcom Inc. and Marvell Technology, Inc. making efforts in this area. From an industry perspective, global data center capital expenditure is expanding at an unprecedented rate expected to reach $435 billion in 2024, $593 billion in 2025, and surpass $1 trillion by 2028. In this context, the ASIC market is experiencing explosive growth. ASICs have better energy efficiency and lower total cost of ownership (TCO) compared to NVIDIA Corporation GPUs in specific workloads. As AI workloads diversify and cloud service providers pursue cost efficiency, the share of ASICs in the AI computing market is expected to increase from approximately 25% currently. It is worth mentioning that Qualcomm has been making frequent moves in AI chip acquisitions recently. On Tuesday, it was revealed that Qualcomm is in detailed negotiations to acquire the AI chip startup Modular Inc., with an estimated deal value of about $4 billion. Sources said the deal may be officially announced in the coming weeks, but a final agreement has not been reached yet, and the negotiations could still break or change terms. If this acquisition is completed, it will be Qualcomm's second major AI chip acquisition in a short period of time. Earlier this month, reports indicated that the chip giant is in deep negotiations with the AI chip startup Tenstorrent, with a potential deal value between $8 billion and $10 billion. If both deals are successfully completed, Qualcomm will spend nearly $14 billion in the next few weeks, reshaping its AI chip business landscape.