Qualcomm plans Dragonfly data center chips for China, targeting export-compliant AI accelerators

Qualcomm announced that it will bring all four Dragonfly data center product lines to China, including custom AI accelerators engineered to stay below U.S. export control thresholds. CEO Cristiano Amon told Nikkei Asia on Wednesday that Qualcomm is developing export-compliant versions of each product line and is "engaged in conversations" with Chinese customers. The first accelerator, the AI250, is due next year and uses Qualcomm's HBC near-memory design instead of HBM stacks.

Qualcomm told investors the data center unit is expected to generate $300 million in revenue this fiscal year and $5 billion in fiscal 2027, with a projected total addressable market exceeding $1 trillion by 2029. The company is banking on its existing relationships with Chinese phone makers and automakers to extend into data center sales. However, Qualcomm enters a market where export-compliant chip strategies have struggled: Nvidia's H20, built specifically for China, generated only $50 million by late last year, and CEO Jensen Huang has said Nvidia has "zero" China market share.

The venture faces headwinds from Chinese market protection policies. China's regulator opened an antitrust investigation into Qualcomm's Autotalks acquisition in October, and Chinese operators are being pressed by regulators to source at least 50% of chips locally while customers like Alibaba, ByteDance, and Tencent are being steered toward Huawei and Cambricon parts. Huawei's Ascend and Cambricon's accelerators are already scaling production well past current volumes.

For architects evaluating data center silicon outside the U.S.-China sphere, Qualcomm's Dragonfly entry signals the geopolitical stalling of foreign chip supply into China. The delay to fiscal 2027 availability, combined with entrenched domestic competition, suggests export-compliant silicon is unlikely to be a growth lever for any Western vendor in China. Operators should expect the bifurcation of the global data center chip market to deepen.