Behind Qualcomm’s Data Centre CPU Comeback with Nvidia
The semiconductor manufacturer Qualcomm, has announced its return to the data centre market with plans to develop central processing units (CPUs) – the fundamental computing components that execute instructions and process data in server systems.
The company revealed its future chips will incorporate Nvidia technology to facilitate high-speed communication with Nvidia's graphics processing units (GPUs).
This move comes during a period of big expansion in the CPU market, with Nvidia also developing its own CPU called Grace using architecture from Arm, the chip design firm that licenses its intellectual property to manufacturers rather than producing silicon directly.
Global investment in GPU clusters for data centres has reached unprecedented volumes, with Nvidia maintaining a dominant market position in hardware for AI model training.
“With the ability to connect our custom processors to Nvidia's rack-scale architecture, we're advancing a shared vision of high-performance energy-efficient computing to the data centre,” says Cristiano Amon, Chief Executive Officer of Qualcomm.
Qualcomm CPU development
Qualcomm first attempted to enter the data centre CPU market in the 2010s, with its processors undergoing testing with Meta Platforms, the parent company of Facebook, Instagram and WhatsApp.
However, Qualcomm terminated these initiatives due to cost reduction measures and legal disputes, according to reporting from Reuters.
Following the acquisition of a team comprising former Apple chip designers in 2021, Reuters reports that Qualcomm quietly restarted its data centre CPU development efforts.
Additionally, the company has engaged in discussions with Meta regarding these initiatives and subsequently confirmed a memorandum of understanding with Humain, a Saudi Arabian artificial intelligence firm, to develop custom data centre processors.
This entry into the data centre market also forms part of Qualcomm's broader diversification strategy.
The company has historically concentrated on supplying processors and modem chips for mobile devices, but major customers including Apple are increasingly developing in-house chip solutions, potentially threatening Qualcomm's revenue streams.
The data centre CPU market presents substantial competition, with established players Advanced Micro Devices (AMD) and Intel Corporation maintaining leadership positions. Technology corporations including Microsoft and Amazon have further complicated the market by deploying their own custom-designed processors in their cloud infrastructure.
Qualcomm plans to differentiate its offerings by emphasising power efficiency and on-device AI capabilities - the ability to run AI algorithms directly on the hardware rather than relying on remote cloud processing.
This approach could potentially deliver performance advantages through reduced latency and enhanced data privacy.
“I think we see a lot of growth happening in this space for decades to come and we have some technology that can add real value added,” Cristiano told CNBC during an interview. “So I think we have a very disruptive CPU.”
Nvidia’s role for Qualcomm data centre success prospects
Addressing competitive challenges, Cristiano maintains that Qualcomm can establish a meaningful position within the data centre CPU sector despite significant barriers to entry.
He told CNBC: “As long as... we can build a great product, we can bring innovation and we can add value with some disruptive technology, there's going to be room for Qualcomm, especially in the data centre.”
The data centre market represents “a very large addressable market that will see a lot of investment for decades to come,” he says.
Establishing technical compatibility with Nvidia's infrastructure represents a crucial strategic element for companies entering the data centre segment, given the prominence of semiconductors in artificial intelligence development.
This consideration holds particular relevance in the US, where government and industry efforts aim to secure technological leadership in AI.
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