Qualcomm seeks AI expansion with possible Alphawave buy

Qualcomm Inc., a top supplier and developer of mobile phone chipsets, has made acquisition moves to bolster its efforts to diversify its portfolio and expand into the fast-growing AI market.

This week, Qualcomm confirmed in a filing with the London Stock Exchange that it could make an offer to acquire U.K.-based semiconductor maker Alphawave IP Group. The company makes high-speed connectivity technology for AI applications in the data center.

"Networking is becoming increasingly critical in AI systems on a chip, and this would help them, primarily in the lower-to-mid range of the [enterprise] market," said Jack Gold, principal analyst at J.Gold Associates.

Qualcomm said the acquisition is not certain, and under U.K. takeover regulations, the company has until April 29 to decide.

Qualcomm also reported the acquisition of MovianAI, VinAI's generative AI division. VinAI is a subsidiary of the Vingroup conglomerate in Vietnam. Hung Bui, formerly of Google DeepMind, leads MovianAI, which specializes in advanced AI research.

"This acquisition underscores our commitment to dedicating the necessary resources to R&D that makes us the driving force behind the next wave of AI innovation," said Jilei Hou, Qualcomm Technologies' senior vice president of engineering, in a statement.

Qualcomm's revenue mostly comes from mobile phone manufacturers. In its 2024 fiscal year ending last September, Qualcomm reported over $24 billion from mobile handset chips, or about 64% of its total revenue.

However, the company must expand into other markets because mobile phone sales are projected to grow in the low single digits through 2029. Adding urgency to the company's diversification efforts is Apple's three-year phaseout of Qualcomm modems in iPhones, starting with the iPhone SE this year. Apple will replace Qualcomm with its in-house chips.

"If Samsung [Electronics] does the same thing, then Qualcomm is going to definitely need some new market segments to drive the growth they can potentially lose," IDC analyst Mario Morales said.

Samsung is the second-largest smartphone maker behind Apple and manufactures smartphone processors and memory chips.

Qualcomm has the Cloud AI 100 Ultra AI accelerator for model inference. Still, the company needs more AI infrastructure, like storage and the networking technology it would get from the Alphawave acquisition, Morales said. AI accelerators, networking and storage will eventually converge as a platform for running AI applications.

"It makes a lot of sense overall for Qualcomm," Morales said. "Now is the time to find the next areas of growth for the company."

The more AI technology Qualcomm can own, the better for the company, said Ryan Shrout, president of technology consulting company Signal65. "If you're going to compete against Nvidia to some degree, and against Intel or AMD, then you need to have some pieces [of AI infrastructure], or all of it."

In computing, Qualcomm sells Arm-based processors for PCs, cars and IoT devices. However, it is transitioning to its custom Oryon CPU architecture due to an ongoing licensing dispute with Arm Holdings, the creator and licensor of the Arm architecture.

Antone Gonsalves is an editor at large for Informa TechTarget, reporting on industry trends critical to enterprise tech buyers. He has worked in tech journalism for 25 years and is based in San Francisco. Have a news tip? Please drop him an email.