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Speaker 1: Bloomberg Audio Studios, podcasts, radio news.

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Speaker 2: Let's focus in on Qualcom shares right now down about

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Speaker 2: eight percent, on track for their biggest drop since last summer.

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Speaker 2: At one point in the session, we were down eleven percent,

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Speaker 2: on track for the biggest drop since March of twenty twenty.

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Speaker 2: The world's largest maker of smartphone processors issued a lackluster

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Speaker 2: revenue forecast, raising some concerns that memory supply constraints could

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Speaker 2: push prices higher, which in turn would weigh on the

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Speaker 2: handset demand. Joining us to discuss is Christiano Ammon qual Co.

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Speaker 2: Christiano A good morning, thank you for coming morning.

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Speaker 3: Bow Tech.

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Speaker 2: That I give you that what's happening in memory is

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Speaker 2: completely outside of your control, right but the forecast with

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Speaker 2: the current period of sales up to eleven billion dollars,

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Speaker 2: I suppose one way of looking at it is how

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Speaker 2: much better would that have been were the market not

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Speaker 2: so constrained by the supply of memory right now, but

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Speaker 2: also the pricing pressure that that supply deficit puts in place.

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Speaker 1: Yeah, look, it's a very interesting situation. You know, in

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Speaker 1: one hand, I'm incredibly happy with the business, like everything

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Speaker 1: is going well. Demand, the strong macroeconomic indicators are good.

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Speaker 1: Demand for Hans it is strong. We have seen we

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Speaker 1: had like a record quarter in Q one. We saw

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Speaker 1: all of our customers reporting sell true data better than expectations.

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Speaker 1: But then the industry is now defined by the availability

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Speaker 1: the memory that is is going to be available for

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Speaker 1: consumer electronics, and it creates, you know, a sudden change

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Speaker 1: in how OEMs look at their build plan and they say, look,

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Speaker 1: I have to size the size of the market not

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Speaker 1: based on demand, but the memory that I can get

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Speaker 1: for consumer electronics.

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Speaker 3: And that one makes it like this unique period there's

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Speaker 3: go ahead, let me drop it.

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Speaker 2: But you know, within that market, there are some specific

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Speaker 2: interesting case studies. Right, the premium segment is good, like

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Speaker 2: from a demand side, particularly in China. So usually like

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Speaker 2: in any hardware environment where your supply constrained but demand

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Speaker 2: is high, Like that's a good thing. And increasingly like

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Speaker 2: think about the content in the phone that you provide,

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Speaker 2: how can you kind of navigate this to your advantage?

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Speaker 3: Yes, and that's a great observation.

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Speaker 1: That's why I think there's a lot of I think

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Speaker 1: a lot of unnecessary I think speculation. Right now, here's

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Speaker 1: here's what's going to happen. We saw this with Covid.

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Speaker 1: OEM is the first thing they're going to do. They're

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Speaker 1: going to prioritize premium and high tier, you know, because

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Speaker 1: those are more resilient I think to price increases. They

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Speaker 1: are we are going to see probably adjustament in prices

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Speaker 1: on hences, and because you know demand it is strong,

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Speaker 1: it is very likely that the premium and the high

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Speaker 1: tier is going to be less impacted than the mass

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Speaker 1: tier on phones. And we have seen that the premim

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Speaker 1: teer continue to expand regardless regardless over the several years,

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Speaker 1: the premium teer is expanding, and we're more concentrated on

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Speaker 1: the premium and the high tier. So your theory is

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Speaker 1: one hundred percent correct. All that happened is OEM's had

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Speaker 1: thinking about as particular size of the year that got

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Speaker 1: resized by the memory availability. They're just in their build

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Speaker 1: plans and we're going to see how this is going

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Speaker 1: to play out in the next few quarters. That's really

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Speaker 1: the story. The good thing is demand as high.

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Speaker 4: So the second quarter chip sales guidance was what worried people,

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Speaker 4: but third quarter, fourth quarter, it's going to play out

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Speaker 4: over that time frame.

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Speaker 1: Do you think it's one thing that I carefully worded.

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Speaker 1: I think during our earnings call, I said the memory

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Speaker 1: availability in pricing will be the defining factor for the

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Speaker 1: size of the handsome market. And we talk about this

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Speaker 1: as a hands to market because we have visibility whole

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Speaker 1: market because of our licensing business. But now we're going

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Speaker 1: to see how this play out. And I'm a little

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Speaker 1: hesitant to make a very definitive prediction on how this

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Speaker 1: is going to play out in Q three and Q four,

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Speaker 1: But the pandemic was a good proxy. When we have

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Speaker 1: something like that and we have a semiconductor shortage, we

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Speaker 1: saw the PREMI teer has been more resilient, and you know,

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Speaker 1: we're going to be working with our customers as they

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Speaker 1: move the roadmap to kind of those type of devices.

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Speaker 4: And now you control the controllables, and those controllables have

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Speaker 4: been diversification in many ways. This speaks to why you've

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Speaker 4: been focusing in on new areas of growth, whether it

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Speaker 4: be autos or we connected devices, whether it be the

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Speaker 4: future of robotics, whether of course a BAI Christiana. How

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Speaker 4: much can you accelerate there to make up for the

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Speaker 4: handset issues.

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Speaker 3: Look, we.

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Speaker 1: You know it's not hopefully it's not lost on people

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Speaker 1: that we had another record in automotive. We had actually

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Speaker 1: a record in the company in Q one, and not

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Speaker 1: only we continue to be satisfied with the direction the

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Speaker 1: company is going on diversification, we add a new things

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Speaker 1: like robotics. For example, we had a record in automotive.

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Speaker 1: A couple of things that happen in the.

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Speaker 3: Quarter that are very very important.

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Speaker 1: One is we announce a broad partnership of Volkswagen Group

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Speaker 1: across all the brands to build the Snapdragon digital chasis

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Speaker 1: for Volkswagen. We saw the launch of the Rat four

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Speaker 1: or one of the tough selling cars in the world.

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Speaker 3: For digital cockpit, and IoT is growing.

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Speaker 1: We enter robotics in a short period of time with

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Speaker 1: some major customers.

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Speaker 3: So we're excited about that. The fundamentals of.

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Speaker 1: The company are actually incredible, and we're just navigating to

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Speaker 1: another phone cycle.

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Speaker 2: Christiano, second consecutive quarter where automotive is above a billion dollars.

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Speaker 2: And I remember over years us discussing what was a

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Speaker 2: backlog in automotive. Right, apply that story and that experience

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Speaker 2: to your hopes in data center. You know you've told

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Speaker 2: us when this will happen and who it will happen

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Speaker 2: with first, But how do you see that translating from

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Speaker 2: your order backlog to revenue growth and hitting milestones like

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Speaker 2: a billion dollar quarter.

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Speaker 3: Yes, we.

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Speaker 1: Restated the data center will start showing up in fiscal

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Speaker 1: twenty seven. We have been talking for a while that

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Speaker 1: the data center is going to change. It's going to

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Speaker 1: go from the current focus on training into inference. We

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Speaker 1: have been saying, I think before what's popular, that a

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Speaker 1: different architecture will be required. I think the post GPU

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Speaker 1: architecture interesting that the Grock development is kind of validating that,

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Speaker 1: and we're getting a lot of good feedback. We have

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Speaker 1: a new architecture, including for memory. We don't need HBM

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Speaker 1: which is causing all of this memory situation, and it's

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Speaker 1: we have been very encouraged by you know, detraction we're getting.

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Speaker 1: So it's going to be material in twenty seven, and

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Speaker 1: you know, we're going to provide a lot of details

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Speaker 1: in ourcoming investor event.

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Speaker 4: Just broadly, how are you thinking about the actual consumer

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Speaker 4: right now as well, Christiana?

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Speaker 1: Just briefly, Yes, so phone is a great proxy for

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Speaker 1: consumer microeconomic indicators are strong, consumer demand very strong, and

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Speaker 1: one of the things I said in the earnings called

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Speaker 1: sell true data on phones and we have visibility because

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Speaker 1: of our licensing business exceeded all expectations. Phones are getting

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Speaker 1: off the shelf, so it's not a demand issue.

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Speaker 3: It's it's just a memory supply issue.

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Speaker 4: We'll come see Christiano a'mon. We so appreciate you joining

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Speaker 4: on this day after the earnings