Amazon AWS Partners With STMicro to Power Next-Gen AI Data Centres

Amazon is reinforcing its chip supply strategy by widening its collaboration with European semiconductor firm STMicroelectronics to meet the expanding demands of its cloud platform, Amazon Web Services (AWS). Under the new agreement, STMicro will supply a range of semiconductors used in hyperscale data centres, including chips for high-speed data connectivity and energy-efficient power management. These components are critical for running large data centres that support artificial intelligence and cloud computing workloads.

As part of the deal, AWS has received warrants that allow it to buy up to 24.8 million ordinary shares of STMicroelectronics. These warrants will vest gradually over time and are linked to AWS’s purchases of STMicro’s products. AWS can exercise the warrants over a seven-year period at an initial price of $28.38 per share. This marks at least the second time Amazon has invested directly in a semiconductor company, highlighting how important chip security has become for major cloud providers.

Following the announcement, STMicroelectronics shares jumped over 6 per cent in early trading, reflecting investor confidence in the partnership. The deal comes amid a global surge in data centre construction driven by rising demand for artificial intelligence. While companies like Nvidia and AMD lead in advanced AI chips, demand is also growing for analog and power management chips used in cooling, sensing, and energy efficiency.

STMicro, which supplies major customers such as Apple and Tesla, recently reported better-than-expected revenue for the first quarter, although recovery remains uneven across markets, especially in the automotive sector.

Source: Business Standard