Qualcomm is shifting its strategic focus toward data center chips as its core smartphone business faces a significant downturn. During the company’s fourth quarter 2026 earnings call, executives outlined plans to expand its presence in the AI data center market through partnerships with major technology firms including Amazon and Meta.
Smartphone sales have fallen by approximately 20 percent compared to 2025 levels. This decline has prompted the chipmaker to look for alternative revenue streams to support its financial performance. The company stated that data center chips are expected to eventually account for 30 percent of its total business.
Revenue Projections for Data Center Chips
Qualcomm provided specific financial targets for its data center segment. The company forecasts around $650 million in data center revenue for the first quarter of 2027. It anticipates that figure will grow to $5 billion by the end of 2027 and reach $15 billion by 2029.
These projections represent a substantial portion of the company’s overall earnings. Qualcomm reported total revenue of $10.4 billion for the full year 2026. If the data center segment reaches $15 billion in 2029, it would constitute a major share of the company’s income.
Competitive Landscape and Market Demand
The company’s ambitions in the data center space are notable, though they differ from some competitors. AMD has stated that it expects over 80 percent of its revenue to eventually come from data centers. Qualcomm’s target of 30 percent is less aggressive but still indicates a strong belief in the sector’s potential.
The shift suggests there is significant demand for AI infrastructure that needs to be filled. The company believes there is enough investment in AI to support this growth. Partnerships with Amazon and Meta, announced earlier this year, are key components of this strategy.
Qualcomm’s move into data centers comes at a time when the mobile market is contracting. The company is attempting to balance its portfolio by reducing reliance on smartphone sales. The data center segment is seen as a critical area for future growth.
Source: The Verge
