German automaker Volkswagen has negotiated a long-term commitment with Qualcomm to source the latter's system-on-chip, specifically developed for automated driving, according to a Handelsblatt report.
Volkswagen will reportedly use the chips across its brands, starting in 2026. The contract, valued at around one billion euros ($1.05 billion), will run through 2031, the report noted.
The development comes as a surprise, as Volkswagen has had a longstanding relationship with Intel Corporation's (NASDAQ:INTC) Mobileye unit, Handelsblatt ewpoerws.
The report also noted that the Volkswagen chip deal comes after a similar long-term automated driving chip contract negotiated by rival German car companies such as Bayerische Motoren Werke AG (OTC:BMWYY) and Mercedes-Benz Group AG (OTC:DDAIF).
Qualcomm closed Friday's session down 5.74% at $139.69, according to Benzinga Pro data.