Qualcomm is poised to take a new step in its AI strategy. According to sources familiar with the negotiations, the chipmaker is in exclusive talks to acquire Modular, a relatively young company that develops software for AI infrastructure. The proposed acquisition price is reportedly around $4 billion.
Although the talks are at an advanced stage, a final agreement has not yet been signed. According to Bloomberg, the parties involved could make an announcement within a few weeks, though there is still a possibility that the negotiations could fall through or that the terms could be adjusted. Qualcomm declined to comment on the reports. Modular could not be immediately reached for comment.
The potential acquisition is part of a broader trend within the AI sector. Major chip companies are seeking to strengthen their positions in the rapidly growing AI systems market by acquiring technology and specialized talent. For Qualcomm, this is particularly important as the company aims to compete more directly with market leader Nvidia. Investors appear to have confidence in this strategy: Qualcomm’s stock has already gained about 30 percent in value this year.
A Fragmented Technological Landscape
Modular was founded in Silicon Valley in 2022. Founders Chris Lattner and Tim Davis previously worked together at Google and launched their company based on the belief that the AI industry is grappling with a fragmented technological landscape.
Investors recognized the company’s potential early on. Last September, Modular raised another $250 million at a valuation of $1.6 billion. This brought the total capital raised to approximately $380 million. Investors include General Catalyst, GV, Greylock Partners, and DFJ Growth, among others.
Interest in companies that provide AI inference technology is growing rapidly. This is also evident from recent transactions elsewhere in the market. For example, a deal was recently reported in which Nvidia would license Groq’s technology for billions of dollars. SambaNova Systems also managed to attract new capital. Such deals are driving valuations of specialized AI companies even higher.
For Qualcomm, the acquisition of Modular would be in line with a series of targeted acquisitions. After a much larger acquisition of NXP Semiconductors fell through years ago due to regulatory objections, the company has increasingly opted for smaller strategic acquisitions. A recent example is the acquisition of Alphawave IP Group, for which Qualcomm paid approximately $2.4 billion.