Speaker 1: We want to welcome our Bloomberg TV and radio audiences worldwide.
Speaker 1: Shares a Qualcomm under a bit of pressure. The company
Speaker 1: posted third quarter results showing a bit of lackluster growth
Speaker 1: in the smartphone market. But this story longer term has
Speaker 1: been a move into other areas. Delighted to say that
Speaker 1: qualt Com CEO Christiano rmon joins us now and you
Speaker 1: and I've discussed this so many times, the move into
Speaker 1: IoT and in particular automotive. So I thought that a
Speaker 1: good starting point would be to ask when smartphone and
Speaker 1: handset is no longer the majority of revenue and when
Speaker 1: that kind of tipping point or how close toward that
Speaker 1: tipping point is where your diversification efforts have shifted the
Speaker 1: business model.
Speaker 2: Very good, ed great talking to you. Look, I don't
Speaker 2: really understand what not to like about it. We have
Speaker 2: been consistently delivering what we said we're going to do.
Speaker 2: I think the company has changed. The company created a
Speaker 2: lot of growth opportunities. And to answer your question, we outline,
Speaker 2: I think in last year on our investor day a
Speaker 2: plan that we're going to have twenty two billion dollars
Speaker 2: of non handset business by fiscal twenty nine, and at
Speaker 2: that point we expect the company to be diversified at
Speaker 2: a fifty percent non handset revenue and we continue to
Speaker 2: execute on that plan. We're happy with it. We provided
Speaker 2: a new metric, the new metric that we provided as
Speaker 2: we as we provide guide for fiscal twenty five, we
Speaker 2: now expect that we will have this second consecutive year
Speaker 2: of QCT or chip business non Apple growth of fifteen percent,
Speaker 2: So we have second year double district growth on non
Speaker 2: Apple revenues. I think the company continued to diversify, continue
Speaker 2: to generate growth. Were executed what we said we're going
Speaker 2: to do, and we're happy with it. And we're creating
Speaker 2: optionality for the company in other areas for example, data center,
Speaker 2: in robotics, all of those which are going to be
Speaker 2: upside to the plan. So we're just going to continue
Speaker 2: to execute on our strategy.
Speaker 1: The data point is new right QCT x Apple revenues,
Speaker 1: and I was interested to read and understand it. You've
Speaker 1: also like communicated quite a lot about this this shift
Speaker 1: as Apple moves away from your modems for iPhone. May
Speaker 1: I ask, like what you think investors need to understand
Speaker 1: and remodel for or even what is it that miss
Speaker 1: investors are misunderstanding about that that process.
Speaker 2: Christiana, Look, I believe that investors are probably still over
Speaker 2: indexing on this short term and I and they've been
Speaker 2: focuning about Qualcom as a handset company. I think the
Speaker 2: handset market has been a market that has not been growing.
Speaker 2: And then you have this conversation about the fact that
Speaker 2: Apple's transition to their own modem. You have to step back,
Speaker 2: and you have to step back, and you have to
Speaker 2: understand the Qualcom has very very unique and competitive IP
Speaker 2: across many areas. We're no longer just a communications company.
Speaker 2: We have very compelling computing IP both on the CPU,
Speaker 2: on the GPU, on the AI accelerator of our NPU,
Speaker 2: and this IP is creating leadership position in other industries.
Speaker 2: Actually execute on our growth and diversification out of nowhere,
Speaker 2: we create an automotive business. We're now going into the
Speaker 2: era of AI at the edge with industrial Our IoT
Speaker 2: had a great quarter and exceeded expectations because of a
Speaker 2: new personal AI devices like the metaglasses, and we're growing
Speaker 2: on Android. We had outlined where we're going to be
Speaker 2: doing five percent. The market will grow on Android five
Speaker 2: percent per year at our investor day, we're doing in
Speaker 2: around ten percent, So the company is showing it's growth
Speaker 2: and earnings power fifteen percent.
Speaker 1: Yes, So I'm sorry to interrupt you. There's so much
Speaker 1: I want to get through because I understand the calculus
Speaker 1: on the long term. The thing that many were trying
Speaker 1: to understand is the pull forward effect of tariffs. Did
Speaker 1: you see in the data or anything that would suggest
Speaker 1: orders went in in one h or in the rose
Speaker 1: recent quarter and then won't show up in the second
Speaker 1: half of this year.
Speaker 2: Now, and that's reflected in our in our guide, we
Speaker 2: had a strong guide and handsets for the next quarter.
Speaker 2: I think we'll remind folks that we don't have flagship
Speaker 2: lines in this quarter and we have seen no pullings.
Speaker 1: If you're listening live on Bloomberg TV and Radio, we're
Speaker 1: speaking to the qualcom CEO, Christiano. I'm on Christiano. I
Speaker 1: don't know if you remember, but you know two years ago,
Speaker 1: almost of the day you and I sat on stage
Speaker 1: and did a demo of an on device running of
Speaker 1: an LM in aeroplane mode. Two years on, I'd like
Speaker 1: to ask if that shows up yet in revenues and
Speaker 1: how that's playing out in the real world.
Speaker 2: Yes, you have to. You have to look on how
Speaker 2: people are using those devices. And we provide an interesting
Speaker 2: data point with the Samsung galax S twenty five, that
Speaker 2: is to what they're selling right now compared to the
Speaker 2: prior phone. The Galaxy has twenty four. The use of
Speaker 2: Google Gemini is three x triple. So what you're starting
Speaker 2: to see more and more you have people using AI.
Speaker 2: It's a mistake to be talking about is this cloud connected?
Speaker 2: Is this on device connected? Is both? The smartphone is
Speaker 2: the most cloud connected device in the world, and we
Speaker 2: have a lot of processing power in our devices and
Speaker 2: we see that playing out. And in this quarter we
Speaker 2: said something very unique head We said, first time ever
Speaker 2: we show one billion parameter model running on a glass,
Speaker 2: on the smart glass. So think about, for example, the
Speaker 2: use case of everything you say to the glass. You
Speaker 2: can have an immediate response with the model running local sites.
Speaker 2: And this is how this is going to evolve.
Speaker 1: You know, I'm probably one of the few journalists on
Speaker 1: the planet that likes to rip apart things, including cars
Speaker 1: and servers. I've been thinking a lot about your automotive business.
Speaker 1: You've made gains, sales are up, but I wanted you
Speaker 1: to talk through the equation of content per vehicle and
Speaker 1: whether that's the key metric that's going to drive growth.
Speaker 2: The most of our growth right now is exactly converting
Speaker 2: our pipeline into revenues. Remember we outline a very large
Speaker 2: pipeline of design wins. As those cars are being launching,
Speaker 2: they're launching, they're getting to sop those started to show
Speaker 2: on their revenue. That's what's driving our growth. We're actually
Speaker 2: not our growth has not been driven by the side
Speaker 2: of the market is by converting. It's above share gain
Speaker 2: converting the pipeline. Having said that, we see content and
Speaker 2: automotive accelerating. More and more computing is going to the
Speaker 2: car in the digital cockpit for GENAI use cases. A
Speaker 2: lot of OEMs are adding use cases on the dashboard
Speaker 2: of the car, on the entertainment because we're going to
Speaker 2: be working from the car, get entertained from the car,
Speaker 2: we're going to talk to the car. The second thing
Speaker 2: that we see is content for AIDS and autonomy, and
Speaker 2: that is adding a lot of processing content. And we
Speaker 2: have a runway ahead as a lot of these software
Speaker 2: defined vehicles change micro controllers into a central computing So
Speaker 2: we have a roadmap to continue to increase content.
Speaker 1: Christiano, I asked this same question earlier in the hour
Speaker 1: to arm CEO Rene has So I'm going to ask
Speaker 1: you the same question out of share objectivity and fairness
Speaker 1: long time partners, when will you bury the hatchet? My
Speaker 1: understanding is investors want to see movement towards that.
Speaker 2: Look. The most important thing, we had a trial. We
Speaker 2: are incredibly happy with the trial outcome. It determined that
Speaker 2: Qualcom is fully licensed for Orion CPUs and we'll continue
Speaker 2: to be able to build armed compatible CPUs. So, from
Speaker 2: our perspective as our ability to continue to build incredible
Speaker 2: products and ship to our customers win great shape. And
Speaker 2: I think you should be looking at Welcome as a
Speaker 2: company that has the ability to provide one of the
Speaker 2: best armed compatible CPUs, and we're going to bring that
Speaker 2: across every one of our markets.
Speaker 1: Cristiana, I'm on Qualcom CEO. Thank you for your time
Speaker 1: here on Bloomberg Tech.