Speaker 1: Bloomberg Audio Studios, podcasts, radio News.
Speaker 2: We're joined by the quowdcom CEO, Cristiano Amon, who's live
Speaker 2: in Maui from the Snapdragon Summit, and I keep think
Speaker 2: chief among what you're talking about is Snapdragon eight Elite, right,
Speaker 2: and the technology shift is to the in house design processor.
Speaker 2: But the question for you, Christiano, is the same as
Speaker 2: it's been for quite a long time, which is what
Speaker 2: is fundamentally different through this processor in how we use
Speaker 2: our smartphone the capabilities that an AI smartphone has.
Speaker 3: Very good ed Hello from Maui. Good talking to you,
Speaker 3: Like we're incredibly excited with the announcements were made yesterday
Speaker 3: and we have more announcements today. This is our nine
Speaker 3: edition of the Snapdragon Summing. And what's more exciting about
Speaker 3: what we're doing with eight Elite is going to be
Speaker 3: the snap the Snapdragon platform that does two things. With
Speaker 3: our new custom Orion CBU, you restore the leadership position
Speaker 3: in performance to the Android ecosystem. Smartphones powered by the
Speaker 3: Elite are going to be the fastest smart smartphones in
Speaker 3: the world, period. But that's that's only half the story.
Speaker 3: The other part of the story it is the platform
Speaker 3: that has incredible computing capabilities for AI, and we present
Speaker 3: a vision of the future how the constructs that we
Speaker 3: are used to in the smartphone of OSS and apps
Speaker 3: and apps stores are going to fundamentally change as we
Speaker 3: have agents that are going to do a lot of
Speaker 3: the use cages. First, one of the most exciting things
Speaker 3: for Qualking of genitive AI is that now computers can
Speaker 3: speak the language of humans. And that's where we are behind.
Speaker 3: There's a snap Dragon, there's a display, there's a human
Speaker 3: and that transition is about to happen. So we build
Speaker 3: the platform for that.
Speaker 2: The forecast is Christiano see the smartphone market growing driven
Speaker 2: by Android. And what surprised me about this generation processor
Speaker 2: is you get them into handsets quite quickly. Have you
Speaker 2: done the math on how you see that convert into
Speaker 2: market growth? How quickly the AI smartphone is a top
Speaker 2: line driver for you.
Speaker 3: Look, that's the multi billion dollar question. So I'm going
Speaker 3: to try to give you an answer. Even though it's
Speaker 3: very hard to predict, I think it's very easy to
Speaker 3: see and I have conviction in that. Well, think the
Speaker 3: next five years we're probably going to have all of
Speaker 3: us with an AI smartphone. The problem is you have
Speaker 3: to wait for the new use cases to come up.
Speaker 3: It reminds me of the transition from feature phones to smartphones.
Speaker 3: In the beginning we talk about apps, So we have
Speaker 3: ten apps and became hundreds of apps, then thousands of apps,
Speaker 3: and we started to see that happening. Right now we
Speaker 3: have like twenty AI different use cases, and maybe that's
Speaker 3: going to become one hundred. So I think we are
Speaker 3: on a trajectory to get to that point. Maybe five
Speaker 3: years is where it's that transition will be concluded. And
Speaker 3: hopefully what we all expect to see is the smartphone
Speaker 3: market is going to grow and we're going to see
Speaker 3: you great style.
Speaker 1: When we talk about though the growth in that market, Christiano,
Speaker 1: are we talking about new entrants into that space and
Speaker 1: I'm talking on the customer side here, or is this
Speaker 1: simply converting the existing customer base that's already out there.
Speaker 3: You know. I think the typical answer that you're going
Speaker 3: to provide to this question is you probably expect existing
Speaker 3: players in the smartphone world to just build AI capable smartphones.
Speaker 3: But it's really hard to predict every time we have
Speaker 3: a change in the industry. I think the mobile industry
Speaker 3: is one that every generation of wireless players did change,
Speaker 3: so that could happen too. I think what we really
Speaker 3: excited about it exactly not really the players, but how
Speaker 3: the experience is going to change, how the devices are
Speaker 3: going to change, and that's going to require a lot
Speaker 3: of computing power for AI and that's what Qualcome's going
Speaker 3: to do. Welcome's really been positioning itself to be the
Speaker 3: company doing ANI at the edge and that's not only
Speaker 3: phones as phones, as PC's, as cars, is smart glasses.
Speaker 3: And I think that's the story of the company right now.
Speaker 1: With regards to that story, and I'm almost asking this
Speaker 1: question on behalf of investors, and I would like you
Speaker 1: to answer it. For investors, to a certain extent, this
Speaker 1: stock has been left behind and with regards to the
Speaker 1: AI focus that this market has had all year long,
Speaker 1: does these new chips and the new products that they
Speaker 1: will go into, well that changed the narrative to the
Speaker 1: upside for investors on both the top and the bottom line.
Speaker 3: Look, I have a slightly different opinion if you look
Speaker 3: where the evaluation the company is right now. We're starting
Speaker 3: to get credit for the fact that we created new
Speaker 3: growth markets for Welcome beyond hnsins. You know the stock
Speaker 3: had a lower multiple in the past because most of
Speaker 3: our revenue, and there's to a number one business is
Speaker 3: mobile and mobile was not growing. But what we have
Speaker 3: done is something different. We realize there are new end
Speaker 3: markets for technology and we build an automotive position. I
Speaker 3: think the snapdrag and digital CHASHI now is the key
Speaker 3: asset for the industry and automo. If we have a
Speaker 3: forty five billion dollar contracted pipeline, one third of that
Speaker 3: is ADAS in autonomy. We enter the PC space and
Speaker 3: the transition of PC to Microsoft biler plus AIS and
Speaker 3: we're going to start building industrial So I actually we
Speaker 3: have been building new business for welcome and that has
Speaker 3: had a positive impact on our multiple. With that, this
Speaker 3: AI transitions about what happened from the data center to
Speaker 3: the edge, and which is preparing yourself for that.
Speaker 2: In the smartphone context, what's happening in China is so interesting.
Speaker 2: Let's compare with Apple right in the iPhone sixteen. They're
Speaker 2: being rewarded in that market on Apple intelligence features that
Speaker 2: aren't yet out in China and won't be for some time.
Speaker 2: So when you think about snap Dragon eight Elite and
Speaker 2: your kind of first mover advantage, do you feel you
Speaker 2: have a first mover advantage in China when it comes
Speaker 2: to the AI smartphone.
Speaker 3: So let me talk about our smartphone business in China.
Speaker 3: We have been powering the premium devices of all the
Speaker 3: Chinese brands, companies like Honor, One Plus, Opo, Vivo, show Me,
Speaker 3: and what we have seen the China Internet is a
Speaker 3: different ecosystem. All of those companies has been creating AI
Speaker 3: use cases and what we see in China that we like.
Speaker 3: The market has stabilized it, but we see consumers moving up.
Speaker 3: So while the market doesn't grow as much, what is
Speaker 3: really growing is the premium tier. Consumers want to buy
Speaker 3: a better device and what we have seen this over here.
Speaker 3: So we're actually happy with our position in China, and
Speaker 3: as we go into other markets, we see our partnerships
Speaker 3: in China increasing. One of the examples, we're now partnering
Speaker 3: with every single Chinese EV company as well for automotive.
Speaker 2: Because you're dedicating a day to those new chips and automotive.
Speaker 2: One of the questions from our audience is whether that's
Speaker 2: now becoming an isolated business where if there's a kind
Speaker 2: of flywheel effect through the diversification efforts that you kind
Speaker 2: of were helming.
Speaker 3: So thank you. Pretty question. Right now, on stage, we're
Speaker 3: announcing the most powerful process that we've ever done in
Speaker 3: the history of our company, which is our new platform
Speaker 3: for automotive. We're announcing two chips is Snapdragon Elite Cockpit
Speaker 3: and Snapdragon Elite Ride, and that has been designed for
Speaker 3: what we believe is going to happen with software defined vehicles.
Speaker 3: Cars are going to get better over time. Is feature
Speaker 3: proving the AI capabilities for GENI use cases when you're
Speaker 3: behind the wheel, Just as an example, is a twelve
Speaker 3: x increase in performance versus the prior automotive chip that
Speaker 3: we have. It's an order magnitude increase. And I think
Speaker 3: the way we look into this is we build a
Speaker 3: strong automotive business by being the digital platform of choice
Speaker 3: for all the car makers. Now we wanted to future
Speaker 3: prove that platform for the future JENI use cases running
Speaker 3: on cars at the edge.
Speaker 1: I've got to ask you the tough question here, Cristiano,
Speaker 1: and that's really about your ambitions to grow this company
Speaker 1: and expand it through acquisition. Of course, you've seen the
Speaker 1: media reports about your interests, your presumed interests in Intel.
Speaker 1: Do you have any intent on pursuing that deal anytime
Speaker 1: this year.
Speaker 3: I'm lately I'm getting this question all the time. Look,
Speaker 3: we don't comment on rumors, but let me tell you
Speaker 3: what we're actually busy doing. What we're busy doing is
Speaker 3: we have a unique opportunity for Qualcom for the PC space.
Speaker 3: We saw the entry point driven by two transitions. One
Speaker 3: transition is mobile PC conversions. The other one is PC
Speaker 3: becoming an AI platform with the Microsoft launge of fot
Speaker 3: Pilot plucks. So what we did We build the fastest
Speaker 3: process or platform, which is actually leads and right now
Speaker 3: it is still the fast performing processor. Both the incumbency
Speaker 3: in the PC based on our announcement creating new products
Speaker 3: and accelerated the new products compete with us and that
Speaker 3: wasn't anough. So we see now an incredible opportunity for
Speaker 3: us in the PC, and especially as PC makers have
Speaker 3: questions about the future, they look at WelCom as a
Speaker 3: great player.
Speaker 2: Christiana, the interest on the whole Intel story was because
Speaker 2: you made progress on your own on based processes, cloud
Speaker 2: con processes. So YX eighty six, just give yourself a
Speaker 2: score out of ten on how you did on AIPC
Speaker 2: so far.
Speaker 3: Look given the amount of skepticism that we got about
Speaker 3: people telling we will not succeed in PCs and would
Speaker 3: not be able to compete, I'll give us a very
Speaker 3: high grade. And the platform design traction is awesome. We
Speaker 3: launched twenty two different laptops across all bands, Dell, HP, Lenovo, Asus, Aser, Chansung,
Speaker 3: and we continue to see design traction, especially as Microsoft
Speaker 3: prepares a transition for Windows to an AI. And one
Speaker 3: thing that we were tasked by Microsoft to do and
Speaker 3: we did it, we restore the performance leadership of computing
Speaker 3: back to the Windows ecosystem. That's a great testimony of
Speaker 3: I think they qualcom engineering capability. In our focus and
Speaker 3: growing this business.
Speaker 1: There would certainly be a compliment though, to getting at
Speaker 1: least some part of Intel's business, whether it's the programmable
Speaker 1: chip division, which we already know that Intel has plans
Speaker 1: to try to spin off, and other aspects of that
Speaker 1: as well. Do you see a compliment there at all?
Speaker 3: Look, it's important to understand the POCOM strategy, and we
Speaker 3: have been very clear about that. Our strategy is very simple.
Speaker 3: We define our company. We have three assets everything wireless connectivity,
Speaker 3: and we take pride in being the number one in
Speaker 3: cellular and Wi Fi on everything wireless, high performance, low
Speaker 3: power compute, and artificial intelligence for the edge. And what
Speaker 3: we did we applied those street technologies to all markets
Speaker 3: that are growing and we could leverage our technology for phones.
Speaker 3: So we went from phones to cars to the PCs
Speaker 3: and now industrial and that has been part of a
Speaker 3: strategy we did all or organically. With some of the
Speaker 3: small acquisitions. We feel we have a very competitive roadmap
Speaker 3: and we're thinking about the new what is the new
Speaker 3: innovation that is coming for those markets, and that's where
Speaker 3: we're driving. I will remain focused on.
Speaker 2: That, Christiano. The crowdcome of today is very different to
Speaker 2: the one that that I first met six years ago.
Speaker 2: When I speak to investors and analysts, they do worry
Speaker 2: about kind of billions of dollars of lost revenue, particularly
Speaker 2: with key customer Apple and Modem. But the question I
Speaker 2: get a lot for you is whether these kind of
Speaker 2: newer business lines snap Dragon eight ely the automotive side
Speaker 2: account for make up for some of that lost legacy
Speaker 2: business going forward from twenty twenty five.
Speaker 3: Look, I love answering this question because you know that
Speaker 3: has been the story of Qualcom, of the best evy
Speaker 3: investors saying, look, you have a you have the best
Speaker 3: modems in the world, you have a very strong position
Speaker 3: with Apple, but you know they're eventually going to do
Speaker 3: their own mode. I'm going to lose this business. So
Speaker 3: we took a completely different approach when I became COEO.
Speaker 3: I had an investor day in twenty twenty one and
Speaker 3: we said that they're going to be that revenue is
Speaker 3: going to be removed from the model, and we are
Speaker 3: going to be creating new growth markets for Qualcom and
Speaker 3: we have a much bigger SAM opportunity than we have
Speaker 3: with mobile. We're just executing on this and the results
Speaker 3: are showing. Look, forty five billion dollars of contracted pipeline
Speaker 3: and automotive. It's not a small number, and you have
Speaker 3: seen in our earnings results automotive has been record quarter
Speaker 3: over quarter. Because we're gaining share. That's the reason we
Speaker 3: are getting to the BC. That's the reason we're getting
Speaker 3: to the industrial because at the end of the day,
Speaker 3: it's not only about this one customer revenue, whether we
Speaker 3: have it or we don't have it. Exactly, can we
Speaker 3: operate in growth markets and expand the company's SAM and
Speaker 3: that's what we're doing.
Speaker 1: And this is exactly what we've heard from investors, exactly
Speaker 1: what we've heard from analysts. They want to see that diversification.
Speaker 1: And just to be fair, Christiano, they've given you a
Speaker 1: lot of pats on the back so far. There's still
Speaker 1: a long way to go. And I do want to
Speaker 1: circle as we end this conversation back to the automotive space,
Speaker 1: because we've been focusing a lot of that today on
Speaker 1: this show, and there are concerns here that we sort
Speaker 1: of reached some sort of bump in the road with
Speaker 1: the adoption of new vehicles, whether it's evs or autonomous
Speaker 1: vehicles or really just vehicles that are much more sort
Speaker 1: of technologically inclined. Where do you fit into that space
Speaker 1: longer term? Is that going to be a bigger market
Speaker 1: and more importantly, is going to be a bigger market
Speaker 1: for Qualcomm?
Speaker 3: Very good. So, look, Romaine, one of the unique things
Speaker 3: of our automotive business we are kind of immune to that.
Speaker 3: We're not Our position is not dependent on electrification or
Speaker 3: internet combustion. Our position is not really dependent off the
Speaker 3: shifts that you have in the share across different companies
Speaker 3: because what we have done, we saw that cars are
Speaker 3: going to become digital digital computers on wheels. Car companies
Speaker 3: are going to become tech companies, and we build the
Speaker 3: platform for the car companies. And what happened is that
Speaker 3: had resonated well. So we're designed across all brands, all
Speaker 3: the Koreans, all the Japanese, the Europeans, the Americans, the Chinese.
Speaker 3: Every single car company now is using some portion of
Speaker 3: the snaptrag and digital cockpit. And what is happening with
Speaker 3: our results results have been independent of the automotive market
Speaker 3: and more about gaining share, and as the new cars
Speaker 3: come out with our platforms, we're starting to see that
Speaker 3: going to revenue. We made the projection of four billion
Speaker 3: by twenty six and then nine billion by the end
Speaker 3: of the decade, and we're tracking that.
Speaker 1: All right, Christiana, we have to leave it there. We
Speaker 1: always appreciate your time, of course, out there in Hawaii.
Speaker 1: The CEO of Qualcom, Cristiano Amone, and are very special
Speaker 1: thanks to the co host of Bloomberg Technology, Ed Ludlow,