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Before the open, Qualcomm (QCOM) announced a $2.4 bln acquisition of Alphawave IP Group, a UK-based semiconductor company, with the transaction expected to close in 1Q26. Alphawave specializes in high-speed wired connectivity and compute technologies, delivering intellectual property, custom silicon, connectivity products, and chiplets that enable faster, more reliable data transfer with high performance and low power consumption. Its serializer/deserializer technology, critical for AI-driven data processing, supports high-speed data movement in data centers, networking, and storage applications, underpinning the custom chip businesses of companies like Broadcom (AVGO) and Marvell Technology (MRVL).

• Alphawave's capabilities complement QCOM’s portfolio, particularly its Oryon CPU and Hexagon NPU processors, enhancing its ability to deliver power-efficient, high-performance computing solutions for AI and data center workloads.
• QCOM's pivot to diversify revenue streams beyond the seasonal and volatile handset market has been a cornerstone of its recent growth, as evidenced by its strong 2Q25 results announced on April 30, where Automotive revenue surged 59% yr/yr and IoT revenue grew 27% yr/yr. The acquisition of Alphawave represents a continuation of this strategy, following moves like the 2021 acquisition of Nuvia to bolster custom ARM-based CPU designs.
• By integrating Alphawave’s connectivity IP, QCOM strengthens its technological foundation in high-growth sectors like data centers and AI, reducing reliance on smartphone chips - a market facing low single-digit growth projections through 2029 - and challenges like Apple’s (AAPL) shift to in-house modems. This diversification aligns with QCOM’s broader push into automotive, IoT, and AI-enabled PCs.
• The acquisition significantly expands QCOM’s footprint in the data center market, an area where it previously had limited exposure after exiting in 2018 due to challenges competing with Intel (INTC). The explosive growth in AI-driven workloads has fueled robust demand for data center processors, as demonstrated by NVDA’s dominance in AI GPUs and AMD’s strong growth in EPYC server CPUs, with both companies capitalizing on a data center CPU total addressable market projected to grow at a 10% CAGR and an AI inference market expanding at over 20% CAGR through 2027.
• Alphawave’s high-speed connectivity IP enhances QCOM’s ability to deliver integrated solutions for AI infrastructure, complementing its Nuvia-derived CPU capabilities. While this positions QCOM to compete in the data center space, it poses limited immediate competitive risk to NVDA, AMD, or INTC. NVDA's strength lies in its GPU-centric AI ecosystem, while AMD and INTC dominate server CPUs. QCOM’s focus on connectivity and custom silicon targets a complementary niche, potentially enabling partnerships rather than direct competition.
• Financially, the acquisition is unlikely to provide a material near-term boost to QCOM’s performance, given Alphawave’s ~$300 mln in 2024 revenue compared to QCOM’s $24 bln from mobile chips alone in FY24. However, long-term benefits are more significant. Alphawave’s IP and custom silicon capabilities enhance QCOM’s ability to capture a share of the $39 bln data center TAM by 2027, while synergies from combining Alphawave’s connectivity with QCOM’s processors could improve margins and accelerate growth in AI and data center markets.

QCOM’s $2.4 bln acquisition of Alphawave is a strategic move to bolster its data center and AI capabilities, aligning with its diversification strategy to reduce handset market dependence. While near-term financial impacts are modest, the long-term potential to capture high-growth data center markets and enhance technological competitiveness justifies the investment, positioning QCOM as a stronger player in AI infrastructure.