Speaker 1: Bloomberg Audio Studios, podcasts, radio news.
Speaker 2: You will know Qualcom as the world's biggest seller of
Speaker 2: smartphone processors, but the company is pushing into new markets
Speaker 2: and generating potentially up to twenty two billion dollars in
Speaker 2: additional annual revenue by fiscal twenty twenty nine. Look, eight
Speaker 2: billion dollars a year is going to be coming from
Speaker 2: an expansion into automotive chips. Fourteen billion dollars they say
Speaker 2: will come from the Internet of Things. Qualcomm CEO Christiana
Speaker 2: Amon was detailing that very vision yesterday and what your
Speaker 2: total addressable market now up to nine hundred million dollars.
Speaker 2: It is great to have you here after that investor meeting.
Speaker 2: You're looking out to twenty thirty. What gives you that confidence.
Speaker 1: Look, we have been, first of all, great to be
Speaker 1: here talking to you, but we have been on this
Speaker 1: trajectory since twenty twenty one, when we had our last
Speaker 1: investor day and we outline the plans to grow the
Speaker 1: company to other markets. We realize that the technology we
Speaker 1: produced for mobile could be very disrupt and we could
Speaker 1: build actually a leading position. What we did in automotive,
Speaker 1: what we did in PCs, and we thought we'll be
Speaker 1: the right thing to tell investors as we look in
Speaker 1: the next five years, how we're going to diversify the company.
Speaker 1: When you look at the company right now, most of
Speaker 1: our revenues mobile Mobile is a great market, but it
Speaker 1: doesn't grow as much until we have an ai A
Speaker 1: grade cycle. However, those other markets that we're going it
Speaker 1: will drive higher multiple.
Speaker 3: So as those revenues.
Speaker 1: From non mobile become a bigger percentage of Qualcom, we
Speaker 1: have an opportunity to actually see a multiple expansion. So
Speaker 1: we wanted outline to investors or trajectory, and what's exciting
Speaker 1: is really where we are right now. We're very happy
Speaker 1: with the results of the company in the near term.
Speaker 1: We show on the last earnings called we're growing in
Speaker 1: own markets including handsets, and we put out in five
Speaker 1: years we're going to have twenty two billion dollars of
Speaker 1: non handset revenue. But bearing any sickly calient on the market,
Speaker 1: we'll expect to continue to grow annually in that into
Speaker 1: those targets.
Speaker 2: Sharing any sickn catesy, can you just talk through, like
Speaker 2: what are the downside risks to automotive demands? Two people
Speaker 2: actually upgrading to new and refreshed android phones, which are
Speaker 2: going to remain probably.
Speaker 1: Yeah, what I mentioned about cyclicality, I think this in
Speaker 1: my conductor industry we have seen on the first the
Speaker 1: past few years, we had a bunch of different cycles,
Speaker 1: different markets, inventory corrections, we have capacity constraints. We're not
Speaker 1: assuming that going forward, but some of that you know
Speaker 1: could happen. But when you look off the normalization of
Speaker 1: the market we see right now, if that continues, we
Speaker 1: feel very good about the ability to grow annually. To
Speaker 1: your question, is cars is one that we're incredibly excited
Speaker 1: because people are now buying new cars because of the
Speaker 1: computational capabilities and those big screens in the digital capabilities
Speaker 1: of the car, and I think that's what actually creating
Speaker 1: demand for technology going in.
Speaker 2: Before we get to cars, the Internet of things is
Speaker 2: really going to be something that we've been talking about
Speaker 2: always for a decade. The mobile will congress and remember
Speaker 2: everyone's like Zuberan about Internet of things and then reality
Speaker 2: never quite gets there. And that's where previous times you've
Speaker 2: made targets and perhaps have had to fall short because
Speaker 2: the ecosystem doesn't build. What makes you sure it will
Speaker 2: get to that fourteen billion this time?
Speaker 1: Like, we're very confident, but I I would like to
Speaker 1: break that down for you. Yeah, so first PCs because
Speaker 1: actually what I need to tell you is we talk
Speaker 1: about Internet of Things, but the Qualcom Internet of Things
Speaker 1: revenue stream, there's a bunch of things in there. We
Speaker 1: have PCs, we have virtual reality, mixed reality devices, we
Speaker 1: have industrial we have networking and personal devices like wearables
Speaker 1: and watches. That's our Internet of things bucket. So we
Speaker 1: gave a target of four billion dollars in PCs. If
Speaker 1: you think what we're doing right now, Snapdragon X series
Speaker 1: is the fastest processor, is faster than Intel, faster than MD.
Speaker 1: We come in and within the industry as a new
Speaker 1: player with a lead platform, the only platform they could
Speaker 1: run Microsoft Copilot plus. If you look at this of
Speaker 1: the service market, the TAM or the SEM that will
Speaker 1: provided investigate of PCs in twenty twenty nine, it's thirty
Speaker 1: five billion.
Speaker 3: We say we're going to do four.
Speaker 1: It's very achievable target, especially when you think about we
Speaker 1: have the best platform the market today.
Speaker 2: But everyone does indeed love that Silicon our om Bloomberg
Speaker 2: Intelligence saying you're in s Silicon and the AIPC is great,
Speaker 2: but there's been so much cynicism around the adoption of
Speaker 2: on based PCs. What is stopping that.
Speaker 1: We actually see We see a little bit different. We
Speaker 1: launched this platform in May. We have twenty designs right now.
Speaker 1: From May to today, we increase the design traction by
Speaker 1: two point five times. We have fifty eight now platforms
Speaker 1: across the l HP, Lenovo sands on the Aszus.
Speaker 2: And people buying them.
Speaker 1: And these sales are exceeding our expectations.
Speaker 3: So that's why we feel confident. And if you think
Speaker 3: about the target, we're.
Speaker 1: Putting a four billion in the thirty five billion SAM
Speaker 1: is not that high. The other one is industrial. And
Speaker 1: you asked me about IoT. One thing Caroline did change
Speaker 1: the IoT in industrial is AI a d edge. The
Speaker 1: ability to run AI a d edge.
Speaker 3: We can run.
Speaker 1: Multi billion parameter model into a device at the edge.
Speaker 1: That changes the cost equation for a lot of companies
Speaker 1: that actually think that it's going to be cheaper than
Speaker 1: doing in the cloud, or they have specific needs. That
Speaker 1: inflection point is what gives us confidence we're going to
Speaker 1: get four billion in industrial by twenty twenty nine. And
Speaker 1: the other two billion we provided was for augmented reality
Speaker 1: and the ray band meta smart glass. Everybody talks about
Speaker 1: it is probably the favorite Christmas gift this season.
Speaker 2: Let's talk therefore about an inflection point when you go
Speaker 2: back to what had been your bread and butter, which
Speaker 2: is smartphones and cells. Are people upgrading? Are they going
Speaker 2: to upgrade particularly on the Android devices that you sit with,
Speaker 2: because Apple is cour is going to be pulling back
Speaker 2: for the next few years.
Speaker 1: Look, Android is is the largest global market for hnces,
Speaker 1: and we have been very focused on premion teer Android.
Speaker 1: What we see in the market that grows very You know,
Speaker 1: phones grow with GDP, right, it's flat to single digit
Speaker 1: growth because everybody has a phone. However, what we have
Speaker 1: seen is at the premiu teer they're growing significantly. We
Speaker 1: see a mix change when people buy their next phone,
Speaker 1: they want a better phone, and that that actually allow
Speaker 1: us to be growing in many cases like double digit on.
Speaker 1: A market doesn't grow by expanding content. So what we
Speaker 1: expect is that is the trend as we people buy
Speaker 1: a premium smartphone with more AI and eventually as the
Speaker 1: AI use cases start to be as big as apps,
Speaker 1: we're going to see an AI driven upgrade.
Speaker 2: We are sitting with the quol Com CEO Cristiano a'man
Speaker 2: for worldwide radio and TV audiences. The upgrade cycle growth
Speaker 2: with GDP, you're saying China's gdp're not looking so great.
Speaker 2: You have exposure to that economy. What does it feel
Speaker 2: like by now?
Speaker 1: Look, our China business is a business. We're very happy
Speaker 1: with it. As geopolitics evolve, Actually our business with China expended,
Speaker 1: especially because as we become relevant in automotive and industrial
Speaker 1: beyond phones, we have Chinese customers. I think, at the
Speaker 1: end of the day, regardless of GDP growth.
Speaker 3: China is a big market.
Speaker 1: If you are, as a my conductor company that you
Speaker 1: have a leading technology that cannot be replicated by a
Speaker 1: domestic product.
Speaker 3: You're going to have a big business in China. And
Speaker 3: that's what we have.
Speaker 2: They're fighting to make things domestically because of the new administration,
Speaker 2: and indeed the current administration still pushing back on China
Speaker 2: that you don't have any pause, any concern about taris rampup.
Speaker 1: For example, Look, you should think about our business. We
Speaker 1: are exporting semiconductors. We're in the right direction of trade
Speaker 1: for the United States, especially when you think about trade balance.
Speaker 3: And if we have a leading technology.
Speaker 1: We expect that China will be interesting continue to buy
Speaker 1: our chips, so we're not concerned about that.
Speaker 2: You don't have any procurement issues. You don't import anything.
Speaker 2: You're not having to stop pile now.
Speaker 1: We I think we have been We're a fabulous company,
Speaker 1: and we have been a big exporter of chips into China.
Speaker 2: You've got an amazing bird's eye perspective of the technological
Speaker 2: race that we like to talk of between US and China.
Speaker 2: For example, you've got an array of large language models
Speaker 2: within your snap Dragon mobile system and platform. Some of
Speaker 2: those Chinese large language models, how do they perform compared
Speaker 2: to the US ones?
Speaker 1: Look, we can talk about this all day, but I'm
Speaker 1: going to try to summarize a few things.
Speaker 3: There's a there's a very large.
Speaker 1: Number of models becoming available, and they're very specialized. I
Speaker 1: think we're heading towards AI as being a new computing
Speaker 1: and you have models that specialize in voice, major specialized
Speaker 1: in imaging, like large visual models, et cetera. What we're
Speaker 1: starting to see is a lot of those models are
Speaker 1: becoming regionalized, especially when you think about text and converse
Speaker 1: or conversation. As the computer starts to speak the language
Speaker 1: of humans. Every region has a unique aspect that is
Speaker 1: driving a lot of regional models. We expect the future
Speaker 1: is going to be like that. China's going to have
Speaker 1: their models. You know, Europe is going to have their models.
Speaker 1: We're going to have our models, and they're going to
Speaker 1: be model specialized for different things. And we're just the
Speaker 1: beginning of this exciting new transition.
Speaker 3: You could talk.
Speaker 2: About it all day. The thing that the markets that
Speaker 2: media have wanted you to talk about all day is
Speaker 2: whether you'll be making any acquisitions and whether you will
Speaker 2: potentially making any acquisitions of Intel parts the businesses. Your
Speaker 2: CFO outline that look, you're actually gonna be giving money
Speaker 2: back to investors is M and A therefore not on
Speaker 2: the agenda.
Speaker 1: Look, we have always been looking for opportunities. A lot
Speaker 1: of the Equalker M and A framework with the outline
Speaker 1: has been apportunistic or been very target to accelerate our plans.
Speaker 1: We has showed that with the M and A that
Speaker 1: we've done for auto, the M and A that we've done.
Speaker 3: To enter the PC space.
Speaker 1: So you're probably going to continue to see qualk and
Speaker 1: doing that right now. At this point, we have not
Speaker 1: identified any large acquisition that is necessary for us to
Speaker 1: execute on this twenty two billion, and we're super focused
Speaker 1: on executing on the twenty two billion in the next
Speaker 1: five years.
Speaker 2: So give us the confidence. Give the investor base that's
Speaker 2: currently seeing perhaps your share price off by six per
Speaker 2: cent a moment, give them the confidence that this transition
Speaker 2: away from Apple and focusing on an Android but focusing
Speaker 2: in on the Internet of things opportunity that you articulated
Speaker 2: the autos, you're going to get that smoothly and with
Speaker 2: clarity on time frame.
Speaker 1: Yeah, look the way I see it, and I think
Speaker 1: that's probably you know, I can't really you know, talk
Speaker 1: about what's happening with the stock, but I think there
Speaker 1: may be some confusion.
Speaker 3: Our plan in the.
Speaker 1: Investor day is to tell investor there are strategies working.
Speaker 3: We don't need a new strategy. It is working.
Speaker 1: We had executed on what we said we're going to
Speaker 1: do in those new markets like Alto, for example, we
Speaker 1: have been have five consecutive quarters of record growth, and
Speaker 1: we would grow even when the market doesn't grow because
Speaker 1: we're gaining share. We had deliver on our entrance on
Speaker 1: the PC and well positioned to ramp, and we told
Speaker 1: investors how this is going to play out with the
Speaker 1: other markets. We had said since the beginning that our
Speaker 1: planning assumptions assume that Apple is coming off the model.
Speaker 1: We had said our contract implies that we have twenty
Speaker 1: percent share.
Speaker 3: In twenty six. Will that be the case, I don't know.
Speaker 1: I think we have had two renewals of Apple, but
Speaker 1: we have to make a planning assumption that Apple's coming
Speaker 1: off the model. Even with that, we are well positioned
Speaker 1: to continue growing to the period and get to a
Speaker 1: point the in twenty twenty nine that we have twenty
Speaker 1: two billion of revenue non mobile, and when we get
Speaker 1: to the end of the decade, we have a potential
Speaker 1: about but fifty to fifty mobile is about fifty percent
Speaker 1: fifty percent of the revenue.
Speaker 3: From growth market.
Speaker 1: So I don't know what the anxiety is, but I
Speaker 1: think we feel confident about the plan and we'll continue
Speaker 1: to execute.
Speaker 3: On that plank.
Speaker 2: Let's get Hannah. Analyst Christopher Roland saying, we continue to
Speaker 2: have confidence in CEO Amount's ability to move Quillcom beyond
Speaker 2: Modem and Cellula ip company. We appreciate you, thank you
Speaker 2: for being herequil Come CEO Cristiano Almo,