Speaker 1: Bloomberg Audio Studios, podcasts, radio news.
Speaker 2: Let's focus in on Qualcom shares right now down about
Speaker 2: eight percent, on track for their biggest drop since last summer.
Speaker 2: At one point in the session, we were down eleven percent,
Speaker 2: on track for the biggest drop since March of twenty twenty.
Speaker 2: The world's largest maker of smartphone processors issued a lackluster
Speaker 2: revenue forecast, raising some concerns that memory supply constraints could
Speaker 2: push prices higher, which in turn would weigh on the
Speaker 2: handset demand. Joining us to discuss is Christiano Ammon qual Co.
Speaker 2: Christiano A good morning, thank you for coming morning.
Speaker 3: Bow Tech.
Speaker 2: That I give you that what's happening in memory is
Speaker 2: completely outside of your control, right but the forecast with
Speaker 2: the current period of sales up to eleven billion dollars,
Speaker 2: I suppose one way of looking at it is how
Speaker 2: much better would that have been were the market not
Speaker 2: so constrained by the supply of memory right now, but
Speaker 2: also the pricing pressure that that supply deficit puts in place.
Speaker 1: Yeah, look, it's a very interesting situation. You know, in
Speaker 1: one hand, I'm incredibly happy with the business, like everything
Speaker 1: is going well. Demand, the strong macroeconomic indicators are good.
Speaker 1: Demand for Hans it is strong. We have seen we
Speaker 1: had like a record quarter in Q one. We saw
Speaker 1: all of our customers reporting sell true data better than expectations.
Speaker 1: But then the industry is now defined by the availability
Speaker 1: the memory that is is going to be available for
Speaker 1: consumer electronics, and it creates, you know, a sudden change
Speaker 1: in how OEMs look at their build plan and they say, look,
Speaker 1: I have to size the size of the market not
Speaker 1: based on demand, but the memory that I can get
Speaker 1: for consumer electronics.
Speaker 3: And that one makes it like this unique period there's
Speaker 3: go ahead, let me drop it.
Speaker 2: But you know, within that market, there are some specific
Speaker 2: interesting case studies. Right, the premium segment is good, like
Speaker 2: from a demand side, particularly in China. So usually like
Speaker 2: in any hardware environment where your supply constrained but demand
Speaker 2: is high, Like that's a good thing. And increasingly like
Speaker 2: think about the content in the phone that you provide,
Speaker 2: how can you kind of navigate this to your advantage?
Speaker 3: Yes, and that's a great observation.
Speaker 1: That's why I think there's a lot of I think
Speaker 1: a lot of unnecessary I think speculation. Right now, here's
Speaker 1: here's what's going to happen. We saw this with Covid.
Speaker 1: OEM is the first thing they're going to do. They're
Speaker 1: going to prioritize premium and high tier, you know, because
Speaker 1: those are more resilient I think to price increases. They
Speaker 1: are we are going to see probably adjustament in prices
Speaker 1: on hences, and because you know demand it is strong,
Speaker 1: it is very likely that the premium and the high
Speaker 1: tier is going to be less impacted than the mass
Speaker 1: tier on phones. And we have seen that the premim
Speaker 1: teer continue to expand regardless regardless over the several years,
Speaker 1: the premium teer is expanding, and we're more concentrated on
Speaker 1: the premium and the high tier. So your theory is
Speaker 1: one hundred percent correct. All that happened is OEM's had
Speaker 1: thinking about as particular size of the year that got
Speaker 1: resized by the memory availability. They're just in their build
Speaker 1: plans and we're going to see how this is going
Speaker 1: to play out in the next few quarters. That's really
Speaker 1: the story. The good thing is demand as high.
Speaker 4: So the second quarter chip sales guidance was what worried people,
Speaker 4: but third quarter, fourth quarter, it's going to play out
Speaker 4: over that time frame.
Speaker 1: Do you think it's one thing that I carefully worded.
Speaker 1: I think during our earnings call, I said the memory
Speaker 1: availability in pricing will be the defining factor for the
Speaker 1: size of the handsome market. And we talk about this
Speaker 1: as a hands to market because we have visibility whole
Speaker 1: market because of our licensing business. But now we're going
Speaker 1: to see how this play out. And I'm a little
Speaker 1: hesitant to make a very definitive prediction on how this
Speaker 1: is going to play out in Q three and Q four,
Speaker 1: But the pandemic was a good proxy. When we have
Speaker 1: something like that and we have a semiconductor shortage, we
Speaker 1: saw the PREMI teer has been more resilient, and you know,
Speaker 1: we're going to be working with our customers as they
Speaker 1: move the roadmap to kind of those type of devices.
Speaker 4: And now you control the controllables, and those controllables have
Speaker 4: been diversification in many ways. This speaks to why you've
Speaker 4: been focusing in on new areas of growth, whether it
Speaker 4: be autos or we connected devices, whether it be the
Speaker 4: future of robotics, whether of course a BAI Christiana. How
Speaker 4: much can you accelerate there to make up for the
Speaker 4: handset issues.
Speaker 3: Look, we.
Speaker 1: You know it's not hopefully it's not lost on people
Speaker 1: that we had another record in automotive. We had actually
Speaker 1: a record in the company in Q one, and not
Speaker 1: only we continue to be satisfied with the direction the
Speaker 1: company is going on diversification, we add a new things
Speaker 1: like robotics. For example, we had a record in automotive.
Speaker 1: A couple of things that happen in the.
Speaker 3: Quarter that are very very important.
Speaker 1: One is we announce a broad partnership of Volkswagen Group
Speaker 1: across all the brands to build the Snapdragon digital chasis
Speaker 1: for Volkswagen. We saw the launch of the Rat four
Speaker 1: or one of the tough selling cars in the world.
Speaker 3: For digital cockpit, and IoT is growing.
Speaker 1: We enter robotics in a short period of time with
Speaker 1: some major customers.
Speaker 3: So we're excited about that. The fundamentals of.
Speaker 1: The company are actually incredible, and we're just navigating to
Speaker 1: another phone cycle.
Speaker 2: Christiano, second consecutive quarter where automotive is above a billion dollars.
Speaker 2: And I remember over years us discussing what was a
Speaker 2: backlog in automotive. Right, apply that story and that experience
Speaker 2: to your hopes in data center. You know you've told
Speaker 2: us when this will happen and who it will happen
Speaker 2: with first, But how do you see that translating from
Speaker 2: your order backlog to revenue growth and hitting milestones like
Speaker 2: a billion dollar quarter.
Speaker 3: Yes, we.
Speaker 1: Restated the data center will start showing up in fiscal
Speaker 1: twenty seven. We have been talking for a while that
Speaker 1: the data center is going to change. It's going to
Speaker 1: go from the current focus on training into inference. We
Speaker 1: have been saying, I think before what's popular, that a
Speaker 1: different architecture will be required. I think the post GPU
Speaker 1: architecture interesting that the Grock development is kind of validating that,
Speaker 1: and we're getting a lot of good feedback. We have
Speaker 1: a new architecture, including for memory. We don't need HBM
Speaker 1: which is causing all of this memory situation, and it's
Speaker 1: we have been very encouraged by you know, detraction we're getting.
Speaker 1: So it's going to be material in twenty seven, and
Speaker 1: you know, we're going to provide a lot of details
Speaker 1: in ourcoming investor event.
Speaker 4: Just broadly, how are you thinking about the actual consumer
Speaker 4: right now as well, Christiana?
Speaker 1: Just briefly, Yes, so phone is a great proxy for
Speaker 1: consumer microeconomic indicators are strong, consumer demand very strong, and
Speaker 1: one of the things I said in the earnings called
Speaker 1: sell true data on phones and we have visibility because
Speaker 1: of our licensing business exceeded all expectations. Phones are getting
Speaker 1: off the shelf, so it's not a demand issue.
Speaker 3: It's it's just a memory supply issue.
Speaker 4: We'll come see Christiano a'mon. We so appreciate you joining
Speaker 4: on this day after the earnings