Qualcomm CFO: 'We're very happy' about smartphone and AI demand

let's dig a little bit more into qualcom specifically now though because those shares as I mentioned Are Climbing higher today after giving an upbeat outlook for sales and profit in the current quarter and also signaling a rebound in that smartphone segment particularly in China the chipmaker phone sales in that country surging 40% in the first half of the Year Akash pyala Qualcomm CFO and coo is joining me right now aash it's great to see you thanks for being here great to be here thanks for having me so I want to jump right into smartphones that is still your biggest line of business here that 40% increase in the first half of the Year from chips there um in China definitely catching some attention chips overall for smartphones for you guys though still not seeing a huge recovery when are we going to see that recovery and what is it going to look like What's the magnitude going to be yeah I think we're very happy with what's happening in the smartphone market for us if you look at the Android market we've seen this tremendous shift towards more premium devices uh which is a great trend for us we are very strong at the top end of the market where we make chips that uh lead on performance across the board on processing on connectivity uh and on AI and so we're seeing the benefit of that show up in our numbers and we're very happy about that as we also look forward uh we're seeing U the initial steps of having gen happening on devices uh we've talked a lot about gen in Cloud but our vision is that eventually just like processing happens on cloud and devices gen is also going to happen on cloud and devices and so uh we're seeing the first steps of that happen in phones we're going to start seeing that happen in PCS in Automotive in iot uh so it's a very broad trend for us and we're happy to see that uh take off in our in our favor um how eventually aash I think that's what a lot of people are trying to get their arms around and I don't know if you heard what I was talking about earlier with some of uh the other semiconductor makers we're seeing this kind of uneven end market demand and AI integration so when it comes to smartphones when are we really going to start to see a Tipping Point if you will where there is going to be more AI functionality on the device itself so I think in terms of integration within Hardware we've seen a lot of that come through already we're going to announce a new chip later this year Snapdragon 8 Gen 4 that will add a lot more capabilities versus what we have in the last generation and so we're excited about that uh but the use cases uh you saw phones launch earlier in the year with a certain number of use cases come through and uh I think uh Samsung talked about the success and the adoption of those features on their devices uh in their earnings a couple weeks ago um I think you're going to see that happen across the board uh later this year in premium de devices and then next year you'll see the same Trend happen in mid and low tier devices as well so we're at the front end of uh I'd say a multi-year trend and we're excited about what the devices can do with this capability and you know there is an upside opportunity for for us if this drives an upgrade cycle in smartphones Akash I want to dig a little bit more as well into different types of smartphones and where we are seeing demand and not seeing demand it it seems like reading through from your results that a lot of the demand the China demand for example is coming from Android powered devices what can we extrapolate there versus iOS best powered devices well I think generally the trend is that uh there are more there's more demand for devices at the premium tier and the the mix of devices across tiers is moving up and that's as I said earlier in our favor and that's a trend that holds across the market uh the second Trend as I said is Gen being adopted into the devices and and really it's not just about smartphones right when we talk about jni adoption and this AI Hub product that we've come out with which allows uh people who are making devices and applications quickly adopt uh on device AI on our on our chips that's something that extends to PCS and we have a new set of PC chips coming out shortly and new devices coming out shortly it will extend to our Automotive Products and then also to our iot products so it's it's a broad trend for us and and uh as crisano outlined on the call our priority is to focus on diversification and growth and uh the place we are at in terms of our technology portfolio allows us to do that um and where are you in terms of your that diversification Journey right I mean it's it's interesting that we're having this conversation now because I know you guys have been building up your auto business and it did well in the quarter iot intern of things did less well but it's really the the smartphone business that's surpriced on the upside and that's the business that you're trying to get less reliant on right well I think the general strategy of of the company has been to take the technology that we've created uh for smartphones and applied to all other Edge devices right and and if you look at our Automotive uh numbers what we announced this quarter is the designment pipeline is now up to 45 billion uh this was approximately 18 months ago it was 30 billion and that's a very very significant increase and within that a third of the designment pipeline is being driven by Adas which is obviously a very important Market going forward and uh and we've become one of the key technology suppliers uh on on Adas so we're excited about about that uh Julie if I also step back and give you kind of a report card on how we've done on diversification we started with ourf front end a few years ago and we've become one of the leaders there uh Automotive now we've become one of the leaders as we look forward uh we have this opportunity in AIP PCS as the transition in the PC happens to uh devices that are going that people are going to interact with differently and it's going to be AI first uh we think there's a tremendous opportunity for us and then we're also seeing the same Trend happen in industrial devices what used to be U microcontroller based devices is moving to microprocessors it's moving to Ai and that plays to our strength so we're excited about that as well Akash just a sort of very big picture zoomed out question here a year from now what percentage of the chips you're selling will have some sort of AI capability versus now uh i' would say pretty much every chip that we make going forward is going to have a significant amount of on device AI capability and if you think about on device AI it has tremendous advantages first of all it allows you to do things that you can't do in the cloud that are more specific to the user while maintaining security and privacy uh the latency of those applications is very fast because it is happening on the device you don't need to go to the cloud um from a cost perspective it's in some ways it's free because once you purchase the device uh you're using the capability that's dormant in the device to do AI versus going back to the cloud and we understand how how expensive it is to uh do some of these use cases in the cloud uh for uh for app developers so we're excited about what on device gen means uh across all these devices aash interesting stuff great to see you thank you so much great to be here thank you very much

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Length: 7min 21sec (441 seconds)

Published: Thu May 02 2024