Volkswagen has formed a multi-year partnership with U.S. chipmaker Qualcomm to improve automated driving technology, according to the German daily Handelsblatt on Monday.
In mid-April, Volkswagen CEO Herbert Diess traveled to Qualcomm's headquarters in San Diego, where they agreed on the terms of the deal, which Handelsblatt reports will cost VW around 1 billion euros.
The fact that Diess personally travels to the U.S. for negotiations demonstrates how important cooperation is to Europe's largest automaker and its CEO. The arrangement with Qualcomm is a success for the 63-year-old, with a significant signal effect.
It can demonstrate to detractors that the potential business with automated driving at the VW Cariad software unit is finally making progress.
Volkswagen has a serious commitment to the US chip company Qualcomm in the development of automated driving. From 2026 onwards, the automaker will use the "System-on-a-Chip" (SoC) developed specifically for automated driving on all brands worldwide. This was discovered by the Handelsblatt through corporate circles. Volkswagen has declined to comment on the report.
Volkswagen is the third German automaker to collaborate on long-term chip development, following BMW and Mercedes-Benz. BMW collaborates with Qualcomm, just like Volkswagen. Nvidia is used by Mercedes.
As both companies have long partnered on various driver assistance systems, the Intel Mobileye subsidiary has been considered the industry's favorite for a partnership with VW.
The contract with Qualcomm is set to expire in 2031. VW will receive the first chips in 2025. According to sources, the contracts could be worth up to one billion euros.
The automated driving software will be installed on the Qualcomm chip, which VW is currently developing with Bosch. In a second step, the chip should run the designed software for automated driving at the so-called level 4 level. Vehicles can now drive on the highway independently at any time.
The pressure on Volkswagen and the whole auto industry to innovate when it comes to communication and autonomous driving was the deciding factor in the deal. Qualcomm is considered an "accelerator" in the business world. The automaker can bring software developed with Bosch to market faster thanks to the US group's chips.
To remain competitive, Volkswagen and other German automakers will need to keep up with self-driving software and car operating systems over the next two to three years. Volkswagen and the company can only keep this window open if they receive hardware assistance from large chip companies.
