By Christina Kyriasoglou
Amazon.com Inc.’s cloud service AWS is deepening its ties with Franco-Italian chipmaker STMicroelectronics NV to secure semiconductor technologies for its data centres.
STMicro will supply various semiconductors to AWS, including chips to support high-bandwidth connectivity and for energy-efficient power management required for hyperscale data centre operations, STMicro said in a statement on Monday.
Under the agreement, AWS received warrants to acquire as many as 24.8 million ordinary STMicro shares. The warrants will vest in tranches over time, tied to payments for STMicro’s products. AWS can chose to exercise the warrants in one or more transactions over a seven-year period at an initial exercise price of $28.38. For AWS, it is at least its second investment in a chip company.
STMicro shares rose 6.5 per cent at market open to $26.51.
The global build-out of data centres to support artificial intelligence technologies is driving new business for semiconductor companies. Designers and manufacturers of advanced AI chips — including Nvidia Corp., Advanced Micro Devices Inc. and Taiwan Semiconductor Manufacturing Co. Ltd. — have been at the forefront of the boom. Makers of more mature analog chips have also seen rising demand for applications in AI data centres, including power management, sensors and cooling. German Infineon Technologies AG predicted 2.5 billion euros ($3 billion) in AI-related revenue in its 2027 fiscal year, it said last week – a tenfold increase in AI sales within three years.
STMicro, which is also a supplier for Tesla Inc. and Apple Inc., forecast first-quarter revenue two weeks ago that beat analysts’ estimates. Demand from consumer electronics customers showed signs of recovery at the end of last year after a prolonged demand slump. However, the company’s shares fell after the chipmaker’s report showed uneven recovery across different end markets. STMicro Chief Executive Officer Jean-Marc Chery said the automotive market is “not yet stable” in a call with analysts.
