Qualcomm nears $4bn Modular deal to rival Nvidia

Qualcomm is closing in on a deal to buy AI-software startup Modular for about $4bn. The Qualcomm Modular deal would hand the chipmaker fresh ammunition in its fight to rival Nvidia.

Qualcomm has entered advanced talks to acquire Modular, according to Bloomberg. The deal would value the AI-infrastructure software company at roughly $4bn.

An announcement could come within weeks. A final agreement remains uncertain, and the terms could still change. Qualcomm declined to comment, and Bloomberg could not immediately reach Modular.

Why Qualcomm wants Modular

Qualcomm built its name on the chips inside smartphones. It now wants a bigger role in AI, where Nvidia dominates.

Buying Modular would help. The startup builds software that ties together the messy, fragmented world of AI computing. It is the layer that decides how models run across the chips and data centres that power them.

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That software matters as the industry shifts from training models to running them, a phase known as inference. Control the software layer, and you can steer which hardware the work lands on.

For Qualcomm, that is a way to pad out its lineup and forge alliances. It beats trying to out-muscle Nvidia on raw silicon alone.

Who Modular is

Chris Lattner and Tim Davis founded Modular in 2022 in Silicon Valley. The pair met at Google, where they grew frustrated by how splintered AI infrastructure had become.

The company has raised $380mn in total. Its last round, in September, brought in $250mn at a $1.6bn valuation, it said at the time.

A $4bn price would more than double that figure in nine months. Backers include DFJ Growth, General Catalyst, Google Ventures and Greylock Partners.

The inference gold rush

Modular is not the only AI-infrastructure startup suddenly worth a lot more. The race to build inference chips, and the software around them, is reshaping valuations across the sector.

Recent deals have set the tone. Nvidia struck a reported $20bn licensing agreement for assets from chip startup Groq, and SambaNova lined up fresh funding.

Those moves have pushed incumbents to reassess what these startups are worth to them. As OpenAI and Anthropic push the frontier, deep-pocketed chipmakers are paying up for talent and technology at the cutting edge.

A buying spree

The Modular talks fit a pattern. Qualcomm has leaned on tuck-in acquisitions since US regulators sank its planned takeover of NXP Semiconductors.

Last year it agreed to buy London-listed Alphawave IP Group for about $2.4bn in cash. The Modular deal would be far larger, and far more central to its AI ambitions.

Qualcomm has plenty of company. Firms across tech are buying their way into the boom rather than building from scratch.

The bottom line

The timing looks deliberate. Qualcomm holds its investor day on Wednesday, where it wants to show progress beyond the smartphone. Its shares have climbed about 30 per cent this year.

There is risk in the price. Sceptics warn that AI valuations have raced ahead of revenue. A $4bn tag on a startup last valued at $1.6bn will test that nerve. For now, the bet is that whoever owns the software owns the next phase of AI.