WEBVTT - Qualcomm CEO Cristiano Amon Talks Lackluster Phone Chip Sales

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<v Speaker 1>We want to welcome our Bloomberg TV and radio audiences worldwide.

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<v Speaker 1>Shares a Qualcomm under a bit of pressure. The company

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<v Speaker 1>posted third quarter results showing a bit of lackluster growth

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<v Speaker 1>in the smartphone market. But this story longer term has

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<v Speaker 1>been a move into other areas. Delighted to say that

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<v Speaker 1>qualt Com CEO Christiano rmon joins us now and you

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<v Speaker 1>and I've discussed this so many times, the move into

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<v Speaker 1>IoT and in particular automotive. So I thought that a

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<v Speaker 1>good starting point would be to ask when smartphone and

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<v Speaker 1>handset is no longer the majority of revenue and when

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<v Speaker 1>that kind of tipping point or how close toward that

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<v Speaker 1>tipping point is where your diversification efforts have shifted the

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<v Speaker 1>business model.

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<v Speaker 2>Very good, ed great talking to you. Look, I don't

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<v Speaker 2>really understand what not to like about it. We have

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<v Speaker 2>been consistently delivering what we said we're going to do.

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<v Speaker 2>I think the company has changed. The company created a

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<v Speaker 2>lot of growth opportunities. And to answer your question, we outline,

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<v Speaker 2>I think in last year on our investor day a

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<v Speaker 2>plan that we're going to have twenty two billion dollars

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<v Speaker 2>of non handset business by fiscal twenty nine, and at

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<v Speaker 2>that point we expect the company to be diversified at

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<v Speaker 2>a fifty percent non handset revenue and we continue to

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<v Speaker 2>execute on that plan. We're happy with it. We provided

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<v Speaker 2>a new metric, the new metric that we provided as

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<v Speaker 2>we as we provide guide for fiscal twenty five, we

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<v Speaker 2>now expect that we will have this second consecutive year

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<v Speaker 2>of QCT or chip business non Apple growth of fifteen percent,

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<v Speaker 2>So we have second year double district growth on non

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<v Speaker 2>Apple revenues. I think the company continued to diversify, continue

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<v Speaker 2>to generate growth. Were executed what we said we're going

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<v Speaker 2>to do, and we're happy with it. And we're creating

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<v Speaker 2>optionality for the company in other areas for example, data center,

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<v Speaker 2>in robotics, all of those which are going to be

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<v Speaker 2>upside to the plan. So we're just going to continue

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<v Speaker 2>to execute on our strategy.

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<v Speaker 1>The data point is new right QCT x Apple revenues,

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<v Speaker 1>and I was interested to read and understand it. You've

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<v Speaker 1>also like communicated quite a lot about this this shift

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<v Speaker 1>as Apple moves away from your modems for iPhone. May

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<v Speaker 1>I ask, like what you think investors need to understand

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<v Speaker 1>and remodel for or even what is it that miss

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<v Speaker 1>investors are misunderstanding about that that process.

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<v Speaker 2>Christiana, Look, I believe that investors are probably still over

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<v Speaker 2>indexing on this short term and I and they've been

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<v Speaker 2>focuning about Qualcom as a handset company. I think the

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<v Speaker 2>handset market has been a market that has not been growing.

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<v Speaker 2>And then you have this conversation about the fact that

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<v Speaker 2>Apple's transition to their own modem. You have to step back,

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<v Speaker 2>and you have to step back, and you have to

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<v Speaker 2>understand the Qualcom has very very unique and competitive IP

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<v Speaker 2>across many areas. We're no longer just a communications company.

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<v Speaker 2>We have very compelling computing IP both on the CPU,

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<v Speaker 2>on the GPU, on the AI accelerator of our NPU,

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<v Speaker 2>and this IP is creating leadership position in other industries.

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<v Speaker 2>Actually execute on our growth and diversification out of nowhere,

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<v Speaker 2>we create an automotive business. We're now going into the

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<v Speaker 2>era of AI at the edge with industrial Our IoT

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<v Speaker 2>had a great quarter and exceeded expectations because of a

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<v Speaker 2>new personal AI devices like the metaglasses, and we're growing

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<v Speaker 2>on Android. We had outlined where we're going to be

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<v Speaker 2>doing five percent. The market will grow on Android five

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<v Speaker 2>percent per year at our investor day, we're doing in

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<v Speaker 2>around ten percent, So the company is showing it's growth

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<v Speaker 2>and earnings power fifteen percent.

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<v Speaker 1>Yes, So I'm sorry to interrupt you. There's so much

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<v Speaker 1>I want to get through because I understand the calculus

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<v Speaker 1>on the long term. The thing that many were trying

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<v Speaker 1>to understand is the pull forward effect of tariffs. Did

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<v Speaker 1>you see in the data or anything that would suggest

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<v Speaker 1>orders went in in one h or in the rose

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<v Speaker 1>recent quarter and then won't show up in the second

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<v Speaker 1>half of this year.

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<v Speaker 2>Now, and that's reflected in our in our guide, we

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<v Speaker 2>had a strong guide and handsets for the next quarter.

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<v Speaker 2>I think we'll remind folks that we don't have flagship

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<v Speaker 2>lines in this quarter and we have seen no pullings.

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<v Speaker 1>If you're listening live on Bloomberg TV and Radio, we're

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<v Speaker 1>speaking to the qualcom CEO, Christiano. I'm on Christiano. I

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<v Speaker 1>don't know if you remember, but you know two years ago,

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<v Speaker 1>almost of the day you and I sat on stage

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<v Speaker 1>and did a demo of an on device running of

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<v Speaker 1>an LM in aeroplane mode. Two years on, I'd like

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<v Speaker 1>to ask if that shows up yet in revenues and

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<v Speaker 1>how that's playing out in the real world.

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<v Speaker 2>Yes, you have to. You have to look on how

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<v Speaker 2>people are using those devices. And we provide an interesting

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<v Speaker 2>data point with the Samsung galax S twenty five, that

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<v Speaker 2>is to what they're selling right now compared to the

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<v Speaker 2>prior phone. The Galaxy has twenty four. The use of

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<v Speaker 2>Google Gemini is three x triple. So what you're starting

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<v Speaker 2>to see more and more you have people using AI.

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<v Speaker 2>It's a mistake to be talking about is this cloud connected?

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<v Speaker 2>Is this on device connected? Is both? The smartphone is

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<v Speaker 2>the most cloud connected device in the world, and we

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<v Speaker 2>have a lot of processing power in our devices and

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<v Speaker 2>we see that playing out. And in this quarter we

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<v Speaker 2>said something very unique head We said, first time ever

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<v Speaker 2>we show one billion parameter model running on a glass,

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<v Speaker 2>on the smart glass. So think about, for example, the

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<v Speaker 2>use case of everything you say to the glass. You

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<v Speaker 2>can have an immediate response with the model running local sites.

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<v Speaker 2>And this is how this is going to evolve.

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<v Speaker 1>You know, I'm probably one of the few journalists on

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<v Speaker 1>the planet that likes to rip apart things, including cars

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<v Speaker 1>and servers. I've been thinking a lot about your automotive business.

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<v Speaker 1>You've made gains, sales are up, but I wanted you

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<v Speaker 1>to talk through the equation of content per vehicle and

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<v Speaker 1>whether that's the key metric that's going to drive growth.

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<v Speaker 2>The most of our growth right now is exactly converting

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<v Speaker 2>our pipeline into revenues. Remember we outline a very large

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<v Speaker 2>pipeline of design wins. As those cars are being launching,

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<v Speaker 2>they're launching, they're getting to sop those started to show

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<v Speaker 2>on their revenue. That's what's driving our growth. We're actually

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<v Speaker 2>not our growth has not been driven by the side

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<v Speaker 2>of the market is by converting. It's above share gain

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<v Speaker 2>converting the pipeline. Having said that, we see content and

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<v Speaker 2>automotive accelerating. More and more computing is going to the

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<v Speaker 2>car in the digital cockpit for GENAI use cases. A

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<v Speaker 2>lot of OEMs are adding use cases on the dashboard

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<v Speaker 2>of the car, on the entertainment because we're going to

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<v Speaker 2>be working from the car, get entertained from the car,

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<v Speaker 2>we're going to talk to the car. The second thing

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<v Speaker 2>that we see is content for AIDS and autonomy, and

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<v Speaker 2>that is adding a lot of processing content. And we

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<v Speaker 2>have a runway ahead as a lot of these software

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<v Speaker 2>defined vehicles change micro controllers into a central computing So

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<v Speaker 2>we have a roadmap to continue to increase content.

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<v Speaker 1>Christiano, I asked this same question earlier in the hour

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<v Speaker 1>to arm CEO Rene has So I'm going to ask

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<v Speaker 1>you the same question out of share objectivity and fairness

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<v Speaker 1>long time partners, when will you bury the hatchet? My

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<v Speaker 1>understanding is investors want to see movement towards that.

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<v Speaker 2>Look. The most important thing, we had a trial. We

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<v Speaker 2>are incredibly happy with the trial outcome. It determined that

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<v Speaker 2>Qualcom is fully licensed for Orion CPUs and we'll continue

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<v Speaker 2>to be able to build armed compatible CPUs. So, from

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<v Speaker 2>our perspective as our ability to continue to build incredible

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<v Speaker 2>products and ship to our customers win great shape. And

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<v Speaker 2>I think you should be looking at Welcome as a

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<v Speaker 2>company that has the ability to provide one of the

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<v Speaker 2>best armed compatible CPUs, and we're going to bring that

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<v Speaker 2>across every one of our markets.

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<v Speaker 1>Cristiana, I'm on Qualcom CEO. Thank you for your time

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<v Speaker 1>here on Bloomberg Tech.