Qualcomm to buy Modular in $3.9 billion AI software bet

Qualcomm said it will buy Modular in an all-stock deal valued at about $3.92 billion, a move that puts software at the center of its push deeper into artificial intelligence. The company said the acquisition is meant to strengthen its software foundation for generative and agentic AI across data center and edge environments, with closing expected in the second half of 2026.

The attraction is not just another AI startup. Modular’s software is designed to let models run across different kinds of chips without requiring separate code for each processor, a capability that gives Qualcomm a clearer shot at the software layer that has helped Nvidia’s CUDA ecosystem keep developers inside its orbit. Qualcomm said the deal could issue up to 19.2 million shares, and the transaction size was calculated from Qualcomm’s prior closing price.

The acquisition fits into a broader campaign by Qualcomm to reduce its dependence on smartphones and build a larger business in data centers. At its investor day in New York City, the company said it now expects its data center business to generate more than $15 billion in annual revenue by fiscal 2029, up from roughly $0.3 billion in fiscal 2026. Qualcomm also raised its fiscal 2029 non-handset revenue target to $40 billion and said its data center AI and CPU platforms are part of a multi-generation roadmap built on an annual cadence.

Cristiano Amon has framed that strategy as a move toward developer-friendly, horizontal platforms that can work across compute environments and give customers more flexibility in where they deploy AI. Qualcomm’s materials emphasize inference performance, efficiency and total cost of ownership, a signal that the company is targeting the part of the AI market where models are actually run at scale, not just trained.

Qualcomm backed up the acquisition with a broader set of June 24 announcements. It expanded its relationship with Hugging Face to advance open, developer-driven AI from device to cloud, and it announced a multi-generation agreement with Meta on data center CPUs. Qualcomm also said its Dragonfly AI300 joins the previously announced Dragonfly AI200 and AI250 in its data center solutions portfolio, underscoring an annual cadence AI accelerator roadmap that now stretches beyond the handset business.

Modular said it was founded by Chris Lattner and Tim Davis after they met at Google. The startup said it had raised $250 million in a funding round and previously reported total funding of $380 million from investors including Alphabet’s GV and Greylock. With Qualcomm moving to own both the silicon and more of the software stack around it, the deal points to a larger industry shift: in AI, control of the developer layer is becoming as strategic as the chip itself.