Qualcomm at Bernstein Conference: Diversifying Beyond Handsets

On Wednesday, 28 May 2025, Qualcomm (NASDAQ:QCOM) presented its strategic vision at the Bernstein 41st Annual Strategic Decisions Conference. The company, led by CEO Cristiano Amon, outlined its efforts to diversify revenue streams beyond handsets, focusing on growth areas like data centers, automotive, and IoT. While addressing challenges in the handset market, Qualcomm emphasized its competitive advantages and future opportunities in AI and robotics.

Key Takeaways

• Qualcomm aims to generate $22 billion in revenue from non-handset sources by 2029.
• The company is focusing on AI at the edge and sees significant potential in robotics.
• Qualcomm is managing the decline in business from Apple with a clear offset strategy.
• The automotive pipeline is robust, with a focus on digital cockpits and ADAS/autonomy.
• Qualcomm plans to renew its licensing agreement with Apple.

Financial Results

• Handsets:

- No demand pull-forward observed due to tariffs.

- Expects increased volume with Xiaomi, despite their internal chip development.

- Projects a 70% market share for iPhone launches in 2025, decreasing to 20% in 2026 and 0% by 2027.

- Targets mid-single-digit growth in the premium Android tier.

• Automotive:

- Maintains a $45 billion pipeline, with equal contributions from digital cockpit, ADAS/autonomy, and telematics.

- Achieved over 50% year-over-year growth in the last quarter.

• IoT:

- Aims for $4 billion in PCs, $2 billion in VR/AR, $4 billion in networking, and $4 billion in edge industrial applications by 2029.

Operational Updates

• Data Center:

- Developing CPU chiplets and SOCs, collaborating with NVIDIA for CPU integration.

• Handsets:

- Signed a multi-year agreement with Xiaomi to ensure increasing volume commitments.

- Focused on the premium Android market, leveraging the Snapdragon platform.

• Automotive:

- Launching a joint ADAS stack with BMW in June, available to other OEMs.

• IoT:

- Expanding into PCs with Snapdragon X Elite.

- Growing presence in VR/AR with Meta glasses and other designs.

Future Outlook

• Data Center:

- Plans to reveal a detailed product roadmap by year-end, expecting long-term financial impact.

• Handsets:

- Anticipates AI-driven upgrades in handsets, with continued investment in software and ecosystem.

• Automotive:

- Expects sustained growth in digital cockpit, ADAS/autonomy, and telematics sectors.

• IoT:

- Targets a 12% market share in PCs by 2029, with growth in VR/AR and edge applications.

• Robotics:

- Identifies robotics as a promising area due to unique industry needs.

Conclusion

Readers are encouraged to refer to the full transcript for more detailed insights into Qualcomm’s strategic plans and market positioning.

Full transcript - Bernstein 41st Annual Strategic Decisions Conference:

Stacy Rasgon, Analyst, Bernstein: Good afternoon everyone. Thank you. I’m Stacy Rasgon. I cover The US semiconductor and semi cap space at Bernstein. And it’s my honor to introduce our guest today, Cristiano Amon, the President and CEO of Qualcomm.

If you have questions, you should have access to your the pigeonhole form. You can put them in there and we will have time to ask those at the end. Now, Qualcomm, look, I always say Qualcomm both as a company and a stock. It’s been through an awful lot, I think over the last five or ten years. But I’d say now, at least my own view sitting where we are today, I think it looks to be coming into its own.

I think both in their core handset franchise as well as developing a much more diversified portfolio with very strong execution around things like automotive and IoT and even data center today. And I think it should be a primary beneficiary of AI, especially as adoption increasingly migrates to the edge. They seem to be the way to play that. And I think to tell us all about all of that, it gives me great pleasure to welcome Cristiano. So thank you so

Cristiano Amon, President and CEO, Qualcomm: much for being on. Very much. Think microphones on.

Stacy Rasgon, Analyst, Bernstein: Yeah, looks like they’re on.

Cristiano Amon, President and CEO, Qualcomm: Okay, very good. Thank you for having me here. You bet, you bet. Thank you.

Stacy Rasgon, Analyst, Bernstein: Before I get into some of the nearer term stuff which I want to actually dive more first into some of the more recent data center announcements that we heard over the last week or two. There was the Saudi Arabia announcement. There was the I guess the NVIDIA open sourcing NVLink, I guess kind of goes hand in hand with that. Maybe you could talk a little bit about that. And we’ll get the handsets and everything else.

I’m sure you’re super eager to answer any Maybe we don’t. But this right, at least in the very near term, this has been, I think, top of mind, at least in terms of some of the newer opportunities that are in front of you. Can you tell us a little bit about what’s going on in the data center there? And then I want to talk about some of the other edge AI opportunities, but data center in particular. This is an area I know you guys bought Nuvia, which was a data center CPU company.

And and looked like you were sort of doing that for a while, then maybe it backed off. And then now it looks like like we’re going back into there again. So anything you can tell us about some of these new opportunities, I’d love to hear about it.

Cristiano Amon, President and CEO, Qualcomm: No. Thank you. Thank you for the question. Maybe I’ll start at very top. It’s a very natural, I think, evolution of of the new Qualcomm.

I think we have been really focused, as you know, leveraging our technology to create new growth markets, new diversified, I think, revenue and earnings. And we kind of go into everywhere we can go, within the edge. And the natural, I think, evolution for us in data center. And I and I’ll say we’ve been sort of looking of what will be the right entry point. And we’ve been talking about that before.

We started looking at this market somewhat opportunistic, understood where we can make a difference. And I think now with that clarity, you’ve started to see different data points here and there of what what we’re building. But but let me, with that frame, kinda tell you, where do we think we can add value and make a difference. First of all, we believe we have one of the best CPU teams in the world. And I think we had both the ability to execute to different CPU design points in record time.

We executed our new custom CPU for the PC, very competitive, disruptive. We’ll talk about We did that in phones, we did that in automotive, and we have the ability to do that at a very compelling, I think, performance and power for the data center. The data center’s changing. First, you have a lot of AI data centers, and those all of those GPUs need a CPU to go along with it. It creates an opportunity.

You also have a much more mature software ecosystem for instruction set. I think thanks to AWS and Graviton that did a lot of the heavy lifting on the software ecosystem, that opportunity exists. So the first one is, if you look at companies that are saying, even companies that are not traditionally chip companies saying, I’m gonna go build a CPU chiplet for the data center. Then you look at Qualcomm and you say, if you believe, you know, companies like Arm can do it, you believe Qualcomm can do it. Because we’re true we’re a real chip company.

We do 40,000,000,000 components a year. We have a lot of scale, the leading node. We have a leading node every year. We have been executing in so many markets and we have a great CPU team. So that’s one entry point.

The other entry point is there’s a lot of production of AI. Right? And you have all of those foundational companies continue to chase more and more. But for many applications, I think you started to see the AI is getting good enough to scale. And we go from creation to production at scale.

When you go to production of scale, then you need it to be very competitive. You just look of the conversation. Just step out and look at the conversation. When people are saying, I’m gonna go from here to The Middle East because there’s going to be this many cents per token. Because you chase where energy is going to be cheaper.

So performance per watt, performance per dollar matters. There’s plenty of room for inference. We have been doing a lot of the edge on prem and as a natural extension. So that’s kind of our angle. We believe there is plenty of SAM, continue to grow.

We have differentiated IP that we can put it to work in both on the CPU side as well as high scale inference that you’re doing at scale. And you started to see some of those signs. The first one you saw at Humane, I think we’re going to be part of the data center. You saw NVIDIA around Computex announce two partners. They announced two partners.

I expected to see more, I saw two. Us and Fuji Fuji too. For building CPUs in V Link. And we have a couple other things we’re working on. I think, hopefully, people will see all the pieces on the puzzle.

But it’s a natural expansion, another opportunity for Qualcomm.

Stacy Rasgon, Analyst, Bernstein: So what is this though? Is is it these are CPUs that are like, you know, the head node in in in GPU servers? Or are these, you know, CPUs for, like, for, like, stand alone general purpose data centers? Is is this like a merchant opportunity where you’ll sell them to anybody? Or like what are the dynamics of how you’re thinking about this market that you’re attacking?

Cristiano Amon, President and CEO, Qualcomm: Yes. All of the above. But here’s the simple way to describe it. Think about in terms of building blocks. We have an asset that you need.

And I think the industry has matured a lot. Right? You just look at the number of custom ASICs they’ve been building. You you have a lot of people looking in how to build a custom ASIC. You do a general purpose ASIC.

You have major companies providing their solutions. You have different boards that get built. Think about a building block. You’re gonna need a CPU. We can provide we can provide a CPU chiplet all the way to a full SOC in any combination.

We can provide it to anybody. We’re gonna be building interfaces, and that’s part of the NVLink announcement that you saw with with NVIDIA. The way the way you should think about it is this CPU asset is very competitive even if you start at a very simple building block, which is a CPU chiplet that can go into other things. And soon, hopefully at the end of the year, we’ll be able to provide a very detailed product road map of what we’re doing, how big the opportunity is, how that’s going to be financially impactful to Qualcomm in the long term. We’re not there yet.

Okay.

Stacy Rasgon, Analyst, Bernstein: So you don’t want me to ask that now? You want me to wait till the end

Cristiano Amon, President and CEO, Qualcomm: of the year? Well, that’s the answer I’m going to provide. I think the reality is we’ve been putting those things together, think, to tell the whole story. I think the acceleration of the announcements in The Middle East based on the present visit kind of run the clock on us. And Computex run the clock on us.

But you started to see that we’re building something interesting. And we’ll show what the roadmap is

Stacy Rasgon, Analyst, Bernstein: pretty soon. So that’s how we should think about it, at least right now. When you’re building something interesting, the opportunity in theory is very large.

Cristiano Amon, President and CEO, Qualcomm: And we’ll see where it how I should think about it. Remember our Investor Day, we said $22,000,000,000 by 2029, no on handset. Include zero. Zero. That was my next question actually.

That’s an optionality on the Qualcomm investment. I think we have two proven assets, a CPU. It go back to the simplicity of the argument. If you believe if you believe that a company like Arm is gonna build a CPU chip for the data center. If you believe they can do it, then I think you’ll believe and they can enter this space, then you definitely believe Qualcomm can do it based on our assets Okay.

Based on our CPU, based on our scale. The second thing is AI is getting scale. There’s something about Computex that I’ve are you going to ask about Computex later? Will shut up and wait. Go ahead.

Go ahead. There’s something about Computex that actually, I won’t say I was entirely surprised, but I was a bit surprised. There’s something very interesting. Actually, it was announced at Dell Tech World and was displayed at Computex, which is, there’s all of those laptops with Qualcomm Snapdragon X. And the conversation is, look at Qualcomm is providing the SOC for the laptop.

Instead of Intel and AMD, you have Qualcomm. But this one, it was one that was very interesting, and I it should give you a different frame to think about it. They show a laptop with the best, I think, that you can get from Intel. I think the CPU was actually Intel. It was at AirLink.

Mhmm. But they connected to that CPU a Quarkon AI 100, which is Mhmm. Yeah. In in a laptop form factor. That’s a laptop with Qualcomm AI 100 doing hundred billion parameter models in this PC.

So that should tell you that as as inference gets scale and it’s gonna be running everywhere, the data center has to compete with the edge. And I think that’s, we have a room to play there. Edge gets scale. In essence, those are the two assets, and I think that’s an optionality in Qualcomm. Not included in any of our forecast and not included in our $22,000,000,000 by 2029.

Okay.

Stacy Rasgon, Analyst, Bernstein: We’ll get to the longer term targets in a minute. I want to hit you over the head with handsets now. I’m sorry. But I’m going to. Let’s do it.

So look, I’m just and I’m going to fold in just briefly some of the near term stuff. I mean, there’s been a lot of noise around tariffs and people worried about like pull forward and then eventually demand destruction. Guess, just very briefly, what are you seeing? Like what’s the state of the universe right now in handsets and and and what you guys are seeing like, guess, in in the near term terms of the track? We we you know, we’ve had, you know, the subsidies in in China and people worry that that’s pulling forward and just like what how how do we think about this, like, over the near term?

Cristiano Amon, President and CEO, Qualcomm: Okay. So maybe I’ll I’ll I’ll list some simple facts. Have not seen any pull forward. And we even said that in the last earnings call. No pull forward.

How would you know? At level because we look we know, every phone, remember, every phone, is licensed and pays royalty. We get activation data. We know what’s happening. We know the inventory levels.

We have not seen pull forward. Will will this situation change? I don’t know. But we have not seen it. Second data point.

No direct impact. If you saw what happened when there was an active embargo, right, between US and China with 134%, one and twenty five %, consumer electronics coming into The US was exempt. Chips going into China was exempt. So no direct impact. The real question that I don’t think anybody knows the answer.

Is there an indirect impact, which is consumer confidence when people buy new phones, buy new cars, gonna buy new PCs? I don’t know. We have not seen that yet in the numbers. It but it like, we are in the same boat as everybody else Yeah. Try to try to get ahold of the situation.

We have not seen that yet. We’ll monitor we monitor and and focus on the things that we can do. Mhmm. Got it. Got it.

Stacy Rasgon, Analyst, Bernstein: No, that makes sense. I wish I knew.

Cristiano Amon, President and CEO, Qualcomm: Like, I just don’t. If you know, just let me know. I

Stacy Rasgon, Analyst, Bernstein: mean, you know, the other indirect issues, talked about macro and consumer confidence. And I mean, look, all of a sudden, if iPhones are going to cost $5,000 I mean, I guess iPhones does that.

Cristiano Amon, President and CEO, Qualcomm: Well, if the Galaxy doesn’t, then I’ll be Yeah. Get to Apple

Stacy Rasgon, Analyst, Bernstein: in a minute. Want to ask about Xiaomi, because that’s the other big piece of handset news that’s been causing a lot of angst. They just have I can’t remember if it was o one or o three, whatever they call their chip. So they’re clearly your three biggest customers are Apple, Samsung, Xiaomi. And they all have various degrees of trying to internalize silicon.

And I think Xiaomi has tried this before and others have tried this before, but they’re trying to make a bigger push. And they’re delivering it. At the same time, you guys also just signed what you call a multiyear agreement and it said flagships. I don’t know if I meant all flagships, but flagships will contain Qualcomm chips and I guess the volume commitments are going go up every year and you’re going to work with them outside of the smart. Just how do we think about that zombie thing?

Because that’s probably the second biggest question I’m getting like right now.

Cristiano Amon, President and CEO, Qualcomm: Yeah, no, look, I’m going to unpack this. And I love talking to you because I think you’re very thoughtful You actually understand what’s going on. So I will use this opportunity, Stacie, to give you probably a more detailed answer. I’ll start with a very short one.

By the way, I’m not worried about it. And I’ve been getting questions. Qualcomm is turning forty years this year. I’ve been in the company about thirty. We’ve been getting questions about customers, they get big enough trying to do their own chip for about thirty years now, which is it’s okay.

I think that’s how the industry evolved. It keeps moving. But here’s the more detailed answer to the question. It’s important to understand what’s happening with the phone market and the dynamics of Xiaomi and the dynamics of the China market. First of all, if you analyze the China domestic market, Xiaomi is gaining share.

And you look, I don’t need to say it, but you can check on the two things that are happening. Who is losing share at the premium tier? And by the way, in China, when our premium tier customers, including Xiaomi, gain share is a multiplying effect on Qualcomm. It’s a six to seven x when instead of supplying a modem, I supply the whole Snapdragon eight Elite. Mhmm.

So one dynamic is the cost the premium Android is gaining share. Dynamic number one. Dynamic number two, the premium tier expanded. The China market is becoming like The US market, premium and low. The middle is contracting and I think the subsidy helped just accelerate affordability of a premium expanded the premium tier.

Number three dynamics happen in China. There is a market in China for a domestic chip. That is the Huawei phone. Mhmm. And because of the Huawei inability to go beyond seven nanometer, they exactly they qualify, but it’s a seven nanometer process.

Yeah. They have they are they’re they are hitting a little bit of a plateau. Xiaomi is in upswing, so they see an opportunity to serve the market that exists in China, doesn’t exist outside China, exists in China for a China domestic chip. So now, how do you put everything together? How do you put everything together?

And how that is consistent with the fact that we signed an agreement with Xiaomi, in that agreement, it says that our volume with Xiaomi will expect it to increase on annual basis.

Stacy Rasgon, Analyst, Bernstein: That’s from current levels?

Cristiano Amon, President and CEO, Qualcomm: Yes. Okay. Expect it to increase. How do you put it together? You’re gonna see that for the Xiaomi flagship, the the main flagship, the main customer base is gonna continue to be Snapdragon.

Xiaomi is becoming more relevant outside China, continue to be Snapdragon. There is going to be competition with Huawei for the segment in China that cares about domestic chip. That’s gonna be Xiaomi with their chip. So what actually means in the Qualcomm Xiaomi relationship? The only thing that means is Xiaomi for China domestic is gonna start to look a little bit more Samsung.

Mhmm. It doesn’t impact the Qualcomm volume, but it does impact the other suppliers that they that they have. You should think about what happens in Samsung. Samsung, look at the premium tier Samsung. Premium tier Samsung is Qualcomm and then is their own chip.

It varies one ear they’re there, the other ear they’re not there. And then everything else for the low, it’s a combination of Qualcomm and MediaTek and other suppliers. Xiaomi, it’s gonna look like that. And

Stacy Rasgon, Analyst, Bernstein: so I

Cristiano Amon, President and CEO, Qualcomm: said, it it doesn’t change anything. Mhmm. It explains the dynamic of of the China market. It speaks about Xiaomi exactly putting some competition Mhmm. With Huawei.

He continued to expand our position, the strength of Snapdragon in China with Xiaomi for the Mi series, for the flagship, and outside China. So overall, I think it’s like, I am I am, like, now we’re exactly happy about the Xiaomi relationship right now.

Stacy Rasgon, Analyst, Bernstein: Okay. What does multi year, by the way, mean in the context of that agreement?

Cristiano Amon, President and CEO, Qualcomm: Multi year means it’s more than one and it’s sometimes more than two.

Stacy Rasgon, Analyst, Bernstein: Okay.

Cristiano Amon, President and CEO, Qualcomm: Okay.

Stacy Rasgon, Analyst, Bernstein: Alright. You know, to to stick on the on the China situation, so you I’ve clearly talked about Huawei, and you’re no longer shipping any chips to Huawei at this point.

Cristiano Amon, President and CEO, Qualcomm: I I don’t have ability to.

Stacy Rasgon, Analyst, Bernstein: Yes. I was I surprised how big the four g was until I guess a year or so ago when it it a billion dollars a year. So there’s but that’s out. I guess they’re still not paying royalties either right now. You’re still in in in the midst of the renegotiation?

Yes. So so Not that big anymore.

Cristiano Amon, President and CEO, Qualcomm: So so here’s I I you know, I know there’s a lot of conversation about this. I’ll tell you exactly what we did. Mhmm. Exactly what we did. And I want you to take away from the answer I’m gonna provide it to you, how how we think about our licensing business in China and how, stable it is Yeah.

In China. Actually, I’d love to hear

Stacy Rasgon, Analyst, Bernstein: about the licensing business outside of China as well.

Cristiano Amon, President and CEO, Qualcomm: So yeah. So we renew, every one of our Chinese customers in China. K? We renew all of them. And and then we knew that Huawei gonna expire.

As you would imagine, Huawei, there’s a lot on their plate right now. Mhmm. So we as we said in the last earnings call, we are in conversations with Huawei, but we have not Mhmm. Renewed the agreement, and we’re not in a position to provide a deadline. But here’s what we did.

We knew that, we had one licensee that need us to get licensed that was transient. Mhmm. And transient, it’s about the size of the Huawei licensing business. So I wanted to make the Huawei licensee renewal because I’ve been saying Q Tel’s this annuity that is gonna is not the growth engine of the company, but it’s a great business. It’s annuity.

And the company, said, we wanna make the Huawei renewal an upside to the model, not a downside to the model. So we went to renew Transient. Actually, in Transient, we litigate against them in China, in the Beijing court. And we had a successful outcome. And they are licensed and now Huawei is an upset to the model.

We’ll continue the conversations with Huawei, but that’s how we should think about the QTL business.

Stacy Rasgon, Analyst, Bernstein: Got it. That makes sense. And to be clear, Huawei is not that big. By all numbers, it was zero one zero dollars maybe $0.15 of EPS in the context of the earnings part. It’s not that big.

Okay. The other headwind in handsets, which is known, is clearly Apple, right? And you were up here on stage years ago telling everybody to think about that business going away, it’s taken a lot longer than I think, maybe not longer than you thought maybe, but certainly longer than I think they thought it would. It is starting to roll off now. And maybe just to first of remind us to remind everyone in the audience if they’re not clear, like, how we should be thinking about the trajectory of that of that business going down.

Cristiano Amon, President and CEO, Qualcomm: Look. We have been and, I this one, I can I can, I go back even to the very first time? I spoke about it when I became CEO in 02/2021, and we have our first Investor Day. We have been incredibly transparent with the Apple relationship. Every time we have a contract, contracts have a beginning, a middle, and an end.

As soon as we have a contract, we say this is what the contract is. It starts here. It ends here. And I think that’s where we are with Apple. Look.

We we build great modems, as you expect. We have a great, we’re we are a great supplier. We build quality products to go into their products. They decided to build their own modem. And we have a contract with them that has a very well defined trajectory, which is starting where we are right now, we should expect the the iPhone, they launch in, 02/2025.

There is upcoming launches. We expect to have a 70% market share. The iPhone, they will launch in 02/1926. We expect to have about 20% market share. The iPhone, they launches in ’27.

We expect to be zero because we don’t our agreement ends. Mhmm. Now, we are continue to grow in Android. I think we when we had an Investor Day, we said 5% CAGR of 02/2029. I’m if you look what’s happening right now, if you look at

Stacy Rasgon, Analyst, Bernstein: That was the the market. Right? The Android

Cristiano Amon, President and CEO, Qualcomm: We’re saying we’re gonna grow we’re gonna grow with the market. Mhmm. It’s a reasonable projection to make. Right? So but here’s the how you should, think about it since that time.

Mhmm. I am excited about, the dynamics in China. Remember, every time every time one Android premium with Snapdragon eight Elite replaces a phone with our modem, it’s a multiplier of six to seven plus times Mhmm. For Qualcomm. Second, if you look at these announcements that you saw from Google IO, incredibly exciting where Android is on AI.

That’s great, too. That’s changing the dynamics. And the company is growing all the other areas, so we expect to grow to this period. We are planning our business a % with zero expectations Mhmm. That anything changes with Apple, from our 02/1927 projection.

We’re confident we’re gonna go to this period, you know, if you don’t have a crazy cyclical correction in the market because of the macro, the tariffs, and everything. Yeah. And that’s we’re just focused on the new quote. Mhmm. That’s it.

Stacy Rasgon, Analyst, Bernstein: That makes sense. That makes sense. What happens when Apple’s licensing agreement expires? What is it? April of twenty seven?

Cristiano Amon, President and CEO, Qualcomm: Look. I feel like you would expect. We will expect to renew that agreement. I feel we’re in a stronger position now than we’ve ever been for the license renewal. Just look at the landscape of the license renewal right now versus before.

It’s not going to be any different. And you know, that’s that’s how we should think about the licensing business. The licensing business is it’s this great annuity on Qualcomm. It’s about five point Yeah. X.

And the rest of the the growth is all about semis that is independent in Apple. And, we’ll see, you know, how the renewal’s gonna go.

Stacy Rasgon, Analyst, Bernstein: Yeah. No. That that makes it’s it’s funny too. When I started covering the company, licensing was all that mattered. It was like 80% plus of the profits back then.

And it’s not trivial anymore, but still but it’s not 80%. I mean, the the growth in the chip business chip business must be five x better bigger now over the last ten or fifteen years versus where it was then. Oh, yes.

Cristiano Amon, President and CEO, Qualcomm: And look, I I want you to think about the chip business. But having said that, remember, just last year just last year, we we were, of all American companies, the number one company in patent applications of, you know, granted and pending. So we have probably one of the world’s best patent portfolio, and we’re not shy about it.

Stacy Rasgon, Analyst, Bernstein: Yeah. Used to have that slide in your in your quarterly deck. You took it out. But it’s still in our lobby.

Cristiano Amon, President and CEO, Qualcomm: You’ll have the patent wall in our lobby. True.

Stacy Rasgon, Analyst, Bernstein: That’s true. That’s great. Yeah. I wanna I wanna shift a little bit. I still wanna stay on handsets, but I wanna talk about the fun the more fun part of handsets.

Now, you talked about the Android, and clearly, there’s a big push toward AI content and, you know, and and I I won’t say pricing going up, but content certainly does seem to going up. I think we saw the same thing even during the five gs roll off where you used to say like your ASPs were your content would go up 50%, it went up a lot more than that. I think handsets are down, I don’t know, 15%, twenty % off the peak and your chip business, which is still mostly handsets, I mean, grew at something like a 20% CAGR even as handset numbers came down, like, on the back of content. And so then I look at, like, your it ties into your 2029 targets. You’re still looking for Android to grow, like, mid single digits.

It feels to me like it like it even in a in a flat market, why wouldn’t it especially given where you play, why wouldn’t it grow more than that? It feels like it ought to.

Cristiano Amon, President and CEO, Qualcomm: Look, I if you look at the of the past performance, you know, we’re very happy with it. I think, know, it’s Certainly grown more than than mid single digits, like like like Yes. And, you know, I think we’re trying to make reasonable estimates going forward. But here’s here’s the more qualitative answer to that question. There are two dynamics that is driving the growth in ASP Mhmm.

Enhances. The two dynamics. One is a lot more processing content. Mhmm. Those are becoming way more powerful devices.

And exactly gonna be even gonna be more content when you think about AI. There’s so much processing. Actually, one of the areas I’m incredibly excited is about what we can do with processing memory bandwidth and all those things with AI that’s driving content. That’s number one. Number two, mix expansion.

If you look historically, if you’re tracking the company Yeah. Quarter after quarter, year over year, premium tier expansion, that is a great, driver, for overall, revenue enhancement for us.

Stacy Rasgon, Analyst, Bernstein: Got it. Yeah, believe. Maybe you could talk a little bit about the actual silicon content that AI is driving for you. Mean, you have the NPU. You’re also doing a ton of work on the software and the ecosystem side.

I don’t know if you’re charging for that, if that’s just to help drive adoption. But but maybe talk a little bit about the specifics about what you’re

Cristiano Amon, President and CEO, Qualcomm: doing on on AI. Yes. Look. Can can I do one thing? Since, since we’re talking lot about handsets, can I just take, two minutes

Stacy Rasgon, Analyst, Bernstein: and talk about We’re gonna go off of handsets right after this question?

Cristiano Amon, President and CEO, Qualcomm: No, know. But I wanna take two minutes and talk about what’s really exciting about handset right now. Like, we’re really excited. And I am going to probably repeat this. I’m saying every opportunity I have.

I know folks and investors are very impatient to see this AI upgrade cycle. But I remember probably many of you in this room, many of you, from the iPhone launch until you gave up your BlackBerry, probably eighteen months to two years. And the main driver for that is really the third party application ecosystem. Like when iPhone launched about I don’t know the number, but about 20 apps. And people like playing with iTunes, playing with those instruments that you can choose, the battery, the guitar, and those little things.

But then eventually, you realize it wasn’t about the features and the apps that come with the OS and the OEM, but what’s coming on the third party ecosystem. I feel the inflection point, it’s now starting. We started with this AI transition. And the first thing you saw, same thing. You saw the use cases from the OEM, and you try to measure you try to measure whether this AI transition is happening based on the use case of the OEM.

Like I said, combined, you know, Galaxy S 25 when they launched combined Google and Samsung about 20 AI use cases. But the important thing is actually the third party ecosystem. And you saw, like, in the Google IO, incredibly exciting, that you’re starting to bring the third party ecosystem. Like any app, you can have a completely new app, which is free from the constraints of OS, and you see that happening in Glasses. In Glasses, the AI use cases are pure AI, agentic use cases.

There’s no constraints of OS in apps. You see that in glasses. But you’re going to start to see this hybrid when people integrate AI to their app, what is the front end. Those things are starting to happen. And I think that’s the exciting thing.

As third party applications start to go up, then we’re gonna get to the AI upgrade cycle. I can’t really predict it’s gonna be one year, it’s gonna be two, but just track that. And that’s why we’re doing so much work on the ecosystem, making sure that any model, all of the open source model Yeah. Those things are optimized can run on this. The other thing that is good is their new wearable AI devices.

And glasses is starting to converging is probably the place that this happened. And that is where you start to see those new use cases. So now going back to your question. We are doing the software work. In phones and PCs, the software work we could do was limited.

We’re just gonna have to support Android, support Windows, support Linux. But in automotive, in edge industrial, in what we’re doing with smart glasses, completely different. And we have built a lot of software assets in the company. Mhmm. We built a lot of software capabilities for AI.

You’ll see some acquisitions, Edge Impulse, Focus AI, very relevant. It’s building a direct developer platform because the development of AI is very different than what happened with apps. And in those markets, there’s plenty of opportunity to build a platform. Mhmm.

Stacy Rasgon, Analyst, Bernstein: Got it. Makes sense. I wanna switch away from handsets other things. So maybe to use your you just had the Analyst Day a few months ago and maybe to use your twenty twenty nine targets as a baseline. So if I run through the math, was roughly $50,000,000,000 in overall revenue and you said $22,000,000,000 in non handsets.

But the handset piece has no Apple in it at that point. I think it was what it was, it was $8,000,000,000 in auto by then and $14,000,000,000 in IoT and of the IoT $8,000,000,000 was kind of core and you had $4,000,000,000 in PCs and $2,000,000,000 in VRAR if I have. That is correct.

Cristiano Amon, President and CEO, Qualcomm: Okay. So those are all. Maybe we take

Stacy Rasgon, Analyst, Bernstein: those one as well. Let’s talk about auto first because I think that’s been the sort of the clearest evidence of this diversification story and that the growth there has been like I mean, even in auto market that’s not been all that great recently, that business has been growing by leaps and bounds. You did some acquisitions there. You got the Arriver self driving software. You’re one of I mean, there’s three guys out there with sort of a full stack self driving solutions, you and NVIDIA and Mobileye.

But maybe talk about the auto growth. Maybe talk about the pipeline you’ve got. What gives you confidence in your visibility in some of those revenue targets that are out there? Maybe just generally, like what are you actually selling in that business driving that growth?

Cristiano Amon, President and CEO, Qualcomm: Okay. It’s a lot of questions.

Stacy Rasgon, Analyst, Bernstein: A lot questions. But all

Cristiano Amon, President and CEO, Qualcomm: the rest are on Let me go let me go in reverse order. Yeah. So what are we selling in the business today? And I actually think we got we got the right anchor. We got the right center point in the car.

So what we’re selling in in the car today, we sell all of the computing for what we call the digital cockpit is high performance computer powers every screen in the car. Not only that, it powers the dashboard is safety grade is ASO compliant, We have built a lot of software assets. We have our hypervisor. You can build. It’s supporting the safety system, the driver camera and everything, powers the sensor island.

And at the same time, on top of the hypervisor, you you can run gas. You can run other, different ecosystems on it. And it became the platform of choice for virtually every OEM. We’re working with all the Americans, all the Japanese, all the Koreans, all the Europeans, all the Chinese Okay. On on on the digital cockpit.

That digital cockpit that we provide this computing solution is now also evolving for the software defined vehicle Mhmm. As the central computing on the car. And functionality started to get accumulated in zonal, you know, controllers and or different domains, and some of that started to run as software. The Chinese did a lot of that. A lot of microcontrollers became a software application on our center computing of the car.

That’s the first thing we sell. The second thing we sell is the connectivity. Engine of the car connects the car with Wi Fi, Bluetooth, and cellular. And then we have the processor for ADAS and autonomy. And in the process for ADAS and autonomy, we work with any stack.

So so that’s kinda the first thing that we sell to the car. So a lot of chips. There’s a lot of software on it, including the platform that the OEMs use for core to cloud Mhmm. Services. Okay.

The next part of your question. We have disclosed the pipeline. I think the pipeline continues to grow, but I

Stacy Rasgon, Analyst, Bernstein: Cameron, is this? Is it 45,000,000,000? I can’t remember.

Cristiano Amon, President and CEO, Qualcomm: 45,000,000,000. I won’t do the additional disclosure today. But I think we have been talking about it. You see in a quarterly result, we continue to win new designs. That 45,000,000,000 is about one third of that is the digital cockpit.

One third of that is processor for ADAS and autonomy. We work like with any stack. And then one third of that is the legacy telematics. Mhmm. They continue to grow.

Okay. The other thing we’re doing on cars. We took a platform approach and we have something very unique, which is Flex. Flex basically is leveraging on our software capabilities and high performance compute. We now can split and run the digital cockpit, the central computing on the card, and ADAS on the same SoC.

Oh. That has been incredibly powerful for brands. They have multi tiers. Think about companies like Stellantis. Think a lot of the Japanese providers.

They have multi tier. You can bring ADAS down to the entry levels with single SoC. So I actually like the position that where we are in the control point of the car. Think about we add ADAS to the central computing of the car. The other thing that we have in Alto that we have not commercialized, and you don’t see it in the numbers, is our stack.

So what we did with the stack was something very unique. We bought Arriver, we combined the Arriver R and D with BMW R and D, we jointly developed, and now people will be able to see it. You’ll be able to go in the field and measure. We are May 28. Next month, we’re gonna launch it for the first time.

We’re gonna launch it in a hundred countries. And once it launches, I have the ability to get the stack and offer to every other OEM, and you’ll be able

Stacy Rasgon, Analyst, Bernstein: to see how it performs. So you’re not locked into BMW with that then?

Cristiano Amon, President and CEO, Qualcomm: No. No. No. It’s a it’s a very unique partnership that we did. For them, it’s a benefit the more scale we get.

We’ve been we have something very unique. We’ve been training we’ve been training that stack on several millions of miles. We’re also using AI data, synthetic data. We created something very unique. We have a Gen AI path.

And for safety, we have a rule based machine learning path that overrides for safety. It’s been a lot of work and it’s now coming to the market in June. People will be able to measure. They will see how the stack performed. It’s an option for the OEMs that’s not in our numbers.

I’m excited about the Alto business. I think we put that in execution mode. I think it was the first way to demonstrate, the power of Qualcomm and learn new core competencies and go to different markets, and we’re gonna kinda repeat that in some of the other initiatives we have. Okay. Got it.

Got it.

Stacy Rasgon, Analyst, Bernstein: And and just for the record, mean, this business is doing close to a billion dollars a quarter now. Like, this is this is a real business now. Yeah.

Cristiano Amon, President and CEO, Qualcomm: Record consecutive quarters. And, like, the last one, I believe, last quarter, we’re growing year over year in excess of 50%. Yeah. Got it.

Stacy Rasgon, Analyst, Bernstein: Got it. Now on the IoT side, I I mean, if I take the three components, you have the core piece. So I know target was like 8,000,000,000. You’re running a little over, I don’t know, can’t remember, 5 plus right now. It was at 8, right?

It was doing a 2,000,000,000 a quarter run rate during the peak of COVID. And so I guess to me, getting back to peak levels in the next like five years doesn’t seem crazy. But is there anything more that’s required to get there beyond just sort of like cyclical recovery over No.

Cristiano Amon, President and CEO, Qualcomm: Look, I think we have very reasonable estimate. So maybe I will start by providing clarification. When we talk about the revenue stream of IoT, there’s a lot of things in there. So I’m going talk about what’s really important. And we did break that down in our Investor Day.

So within that segment, let’s go one by one. First of all, we said PCs. PCs, we said 4,000,000,000 by 02/1929, which assumes a 12% market share. Mhmm. 1212% market share of our SIM.

Okay. With the market that we that we serve, which is laptops, we assume 12% market share to get to 4,000,000,000 revenue. And the reason the number is 12 Mhmm. Is because those 4,000,000,000 was the plug number that that accounts to 12% market share.

Stacy Rasgon, Analyst, Bernstein: That’s a revenue share, I guess?

Cristiano Amon, President and CEO, Qualcomm: Or Yes. Okay. Now oh, 02/1929. Where are we doing right now? We’re doing okay because we have about 85 designs across all the PC makers.

It’s going to go to 100 now that is going to be in the market as we get to next year.

Stacy Rasgon, Analyst, Bernstein: And

Cristiano Amon, President and CEO, Qualcomm: within that, the markets that we launch, we only launch domestic US retail and now the European top five, we’re in the 9%, ten %. So not an unreasonable target when you think about 2029 based on where we are right now. That’s the first one. Second one, we said $2,000,000,000 in in VR, AR. And when we look what’s happening with smart glasses

Stacy Rasgon, Analyst, Bernstein: How big is that now, by the way?

Cristiano Amon, President and CEO, Qualcomm: I don’t think we’re Kashy is just shaking his head. I cannot provide a disclosure. I tried. Sorry. But but I tell you right now, the forecast on this meta glasses continue to increases.

We had the meta glass now. Just on last quarter, we got 15 different designs. This thing is multiplying like rabbits. It’s the AI that you can wear. I think that’s a very reasonable estimate.

Let’s go to the next one. We said about 4,000,000,000 in networking. That’s already a mature business for us. And then 4,000,000,000 in this edge industrial. I’m very excited about that.

That’s the large sum. And that’s all of the stuff that you see now AI running at the edge, especially that you can you have models that are smaller and very efficient.

Stacy Rasgon, Analyst, Bernstein: Got it. That makes sense. Let’s dig into those PC assumptions a little bit because I know people got very excited about that last year and I always look at this I mean, my view on this for you guys is like, look, I actually don’t know if it’s going to be a thing or not. They’re not And I would also say like quite often I hear you guys talk about this in the context of AIPCs. And I sort of view like AIPCs and ARM PCs as sort of orthogonal to each other.

To me, it’s more it seems to me like you’re trying to use the AIPC push to drive consumers toward, which is fine. But ARM PC has been around for a long time. Mean 2012, I think, was the first Microsoft Surface tablet was the first one. You guys have actually sold into this market since like 2016. I mean, could go into a Microsoft store and buy a Surface laptop since then with a Qualcomm chip.

Didn’t sell very many of them back then, but they sold them. What’s different now that actually starts to drive like material amounts of adoption?

Cristiano Amon, President and CEO, Qualcomm: Oh, This a great question and I think it’s just your memory lane. I was actually at the launch event. No. It’s great. It’s a great question.

And remember, we also started this when, Microsoft bought Nokia. And they and Nokia wanted to make a PC, was an ARM based, and this is a while ago. Let me just, cut to the chase. Right? So ARM wasn’t real, until Microsoft actually, launched an emulator that could run Win 32 and Win 64 x 86 apps.

The ability to run Win 64 apps was not ready until Windows 11. Mhmm. So so before that, I think was try to build a converged device between it’s like a competitor to iPad as an extension of the phone, and and there was no room for that in the Windows because there is no second class Windows. It’s Windows or it’s not Windows. So and so what is real now and wasn’t before is the Microsoft decision to transition to one.

And then and and it combines with number of things. Right? There are many things that drove this point that we are today. The first one is Apple successfully executed on the m series Yeah. And that was the performance benchmark for a personal computer.

Stacy Rasgon, Analyst, Bernstein: They’ve done a good job. Yeah. Sure. Yeah.

Cristiano Amon, President and CEO, Qualcomm: Yes. They and I think we’re we’re very happy with the CPU team that we have right now. Okay. So so that’s the first former So that’s the first, there’s the first, data point. The second data point is, Intel no longer could provide technology leadership for that.

And Windows is very important for Microsoft. Right? The number three data point is a transition of PC into next generation devices for the age of AI, which I’ll get to that in that point. So that’s what’s different. So we knew that we needed to check those boxes.

The performance one is on us. The compatibility with, x, 86 is on on the Microsoft front and the transition. That was a great combination. That landed with Snapdragon X Elite, which it was when they launched, incredible. And the one we’re gonna launch in Snapdragon Summit this year is gonna be even more incredible.

So then we started this business on those premises that is that entire SAM is gonna switch to warm. And the first thing that you see, now I’m gonna get to the first part of your question. The first thing that you’re gonna see is we can build better, thinner, multi battery day multi day battery life laptops. And that’s what you start to see right now. The attract the attraction on the design.

The reason we get designs is because people say, I can build this device. It’s very competitive, and it has high performance if the Apple compete, and it has multi day battery life. We’re not yet into the AIPC. We’re not yet. But we will be there.

Right? Because what happened is you started to have the ability for many of the things you run on a PC to include an AI front end, an AI assistant. The third party ecosystem is what’s gonna drive scale. Copilot plus features are awesome, but those are what comes with the OS. Same conversation we had on the phone.

When that happens, then you’re going to see something different. Do you have the ability to run AI pervasively on that device without compromising battery life? Because that’s not gonna be a gaming rig anymore. It’s gonna be an everyday laptop. I think that’s where our platform is gonna shine.

Right now, we’re winning designs on fast, multi day battery life, cool PC. AI is coming and we’re ready for it. Got it.

Stacy Rasgon, Analyst, Bernstein: Okay. We have about five minutes left. You want to move to the lightning round? Yes. Got a few questions.

Okay. Here’s here’s a PC one. There’s a trend of PC companies reportedly working on their own custom ARM based chips including Lenovo and Huawei. Considering this, gives you confidence in hitting your targets? And I would actually add to that question, are more players in ARM PCs good or bad for you?

Because I could actually argue with both ways.

Cristiano Amon, President and CEO, Qualcomm: Okay. Two very simple answers to the question. First of all, transition to more companies working on ARM is awesome. It’s awesome. One of the best thing that happened for us was NVIDIA, which has been on the PC forever providing the RTX graphics card, decided to add an ARM CPU next to it to replace Intel.

That is moving the entire gaming ecosystem. That was the hardest part for us to do, and the gaming ecosystem moving. Great news. Second thing, remember, Windows is not Android. Windows is not open source.

So every time you add a new silicon, Microsoft needs to put an engineering team to do the work. And how many they will be willing to take? That’s a question for you to ask them.

Stacy Rasgon, Analyst, Bernstein: That makes that makes sense. Question on the Apple loss. Basically what it’s asking is, as that Apple business goes away, will you take costs out to mitigate, I guess, the EPS hit?

Cristiano Amon, President and CEO, Qualcomm: Look, we have been clear about the operating model of the company. When we look at what is how much we invest in R and D, how much is the operating margin profile. And we communicated in our Investor Day when we look at our targets, that’s how we’re going to operate the company. So we’re investing the new areas. We’re rationalizing OpEx in the areas that are not growing.

We’re not changing the operating margin profile of the company.

Stacy Rasgon, Analyst, Bernstein: Got it. I mean, I’ll ask it. I’ll add a question of my own to there. So you’ve talked about your I know you guys don’t report a chip gross margin, but it’s not that hard to back it out. And you’ve kind of talked about 48% to 50%.

And I guess, as the Apple business goes out, do you expect any changes to those gross margin ranges?

Cristiano Amon, President and CEO, Qualcomm: Look, how we’ve been talking about the overall company, different we’re now in so many different industries, and they have different margin profiles. Overall company, where we’re reporting and where we’re saying we’re going to be, that’s what we’re going to be.

Stacy Rasgon, Analyst, Bernstein: Got it. Okay. I hear someone wants you to front run your roadmap, let’s see. What further improvements in energy efficiency can we expect from Qualcomm’s future production innovations, especially generation Snapdragon chips?

Cristiano Amon, President and CEO, Qualcomm: I think this is a great question. The biggest opportunity, and it’s a technical challenge, but it’s the biggest opportunity. You’re going to do a lot of AI processing at very high performance AI, especially going to measure the amount of tokens you have to generate on the devices at the edge. And phone is very unforgiving. Phone, is no compromise on multi the entire day your battery need to last, terminals and size.

And you cannot deal with the phone the way you deal with the data center, but you still need memory bandwidth increase. You need the processing. You need power consumption. So we have some great innovation in this area. I think if people come to Snapdragon Summit every year to see where we up on our flagship, you’re gonna be impressed Mhmm.

What we’re doing. When is that, by the way? It’s usually around, you know, August, September tenth. Okay. Got

Stacy Rasgon, Analyst, Bernstein: it. Alright. Great. I have a question for you. And it sort of relates to the current valuation of the stock.

Mean, and you guys are upping your cash return this year. You’re returning more. Is that strictly just a view on the stock valuation? Are there other reasons? And is there is it does it make sense to think about that change in cash return strategy as potentially being more permanent?

Cristiano Amon, President and CEO, Qualcomm: Look. It’s opportunistic. I think we the the reason to do it is we believe in the company. We think, you know, the company has been trading at low multiples, especially we trade as an Apple supplier and a mobile supplier. And I think we have all those other things that we’re doing.

It’s opportunistic. I think we’re always going to balance that between that and the opportunity in our industry to have flexibility for m and a. Mhmm. And so no big change in how we operate.

Stacy Rasgon, Analyst, Bernstein: Okay. So, look, I guess, along those lines, I think we got about one minute left. As as always, you know, you’ve got a room packed room here. I will give you your soapbox. Why why should everybody in this room buy Qualcomm stock?

Cristiano Amon, President and CEO, Qualcomm: Okay. One other thing we didn’t talk about, but

Stacy Rasgon, Analyst, Bernstein: I will answer your question,

Cristiano Amon, President and CEO, Qualcomm: is we’re also, incredibly excited about, two things. We didn’t talk about it. You didn’t ask that question, so I’m just gonna use the microphone to to talk about it. One thing that people are not paying attention to what we’re doing, but you should because the teases is very simple. I cannot think of a device that look like a phone like this.

There’s a lot of interesting thing happening with Qualcomm and robotics. Because remember, a robot is untethered. It’s mobile. It needs That

Stacy Rasgon, Analyst, Bernstein: is not a market that I think investors typically think about for Qualcomm, by way.

Cristiano Amon, President and CEO, Qualcomm: Yes, I know. Yeah. I’ll show you some of the stuff we’re doing. I have some videos of some of our customers. Very interesting.

It’s mobile. It requires a lot of computing power. It requires to run AI locally. It needs to have battery. It needs to go to manufacturing at scale.

Needs to leverage a bill of materials that you see in markets like phones. Very exciting opportunity for Qualcomm. But now with that, I’m going answer your question. If your mindset as an investor is thinking about Qualcomm about ten years ago, fifteen years ago, or even five years ago, you’re probably obsessed about the licensing business, obsessed about are we going to have Apple or not going to have Apple, and probably not understanding how different this company is. I’m going to say something I said in a conference that was in Shanghai.

When people were looking at China, and everything that’s happening in China, and I said, you know, two types of CEOs can be very dangerous to their business. One is the CEO that never been to China. But more dangerous is the CEO that been to China Ten Years ago and thinking understands China. So let’s just use this same metaphor. I think if you were thinking of Qualcomm about ten years ago, you’re probably putting the focus not where the company is going.

Because if you look at what we did in automotive, that was a standalone business, you can probably have significantly higher multiples. If you look at the position that we’re building for AI at the edge, if you look at all of those exciting markets, and this is a company that have in each and every market we chose to enter, In spite of all this skepticism, we actually built a leading platform. We didn’t show up as a commodity solution. We built a leading platform. And the company’s proven that we can learn new tricks and execute in new areas.

So I think that’s the opportunity for Qualcomm. I think investors need to get probably past and maybe that day will come when Apple is zero and I’m going to be a more

Stacy Rasgon, Analyst, Bernstein: wish was zero tomorrow.

Cristiano Amon, President and CEO, Qualcomm: I do. But anyway, so that’s how I feel about it.

Stacy Rasgon, Analyst, Bernstein: Got it. And I think that’s as good of a place to end off as any. Thank you so much. Really appreciate it.

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