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