Friday, March 29

Qualcomm is clear about where the future of chips lies: not for smartphones, but for cars


When it comes to charting its future, Qualcomm is clear that one of the most promising business niches is on the roads. Step by step, dollar by dollar, projection by projection, [la firma estadounidense](known for Snapdragons) seems to be paying more and more attention to vehicle chips and connected devices. At the beginning of the year it already had an impact on the value of diversification, in the spring it took a key step by acquiring the Swedish company Veoneer and over the last few months it has shown its commitment to autonomous cars and reached agreements with large manufacturers in the sector.

The Wall Street Journal (TWSJ) has just broken down some data that completes the portrait.

A small part still, but with good projections. That is roughly the summary of what the income from the automotive branch represents. The data disclosed by TWSJ is clear. Although they accounted for just 3.2% of general revenue for the quarter ending in June, light years away from the 56.2% that telephony brings together, the trend and expectations are positive.

It comes with seeing the newspaper library. At the end of last year, the US company estimated that automotive-related revenues would total 3,500 million dollars in 2026 and 8,000 million in 2031. Just a few days ago those projections were significantly more optimistic and pointed, respectively, to approximately 4,000 and 9,000 million of dollars.

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Decisions and steps that mark a clear commitment. Not everything is figures. Over the last few months the company has taken steps that point to its interest in the sector. Taking advantage of the CES 2022 framework, in January it announced the Snapdragon Ride Vision System, a software solution for autonomous vehicles, and in the last year it has reached agreements with Cariad, from the Volkswagen Group, Renault or Mercedes-Benz. Its clients include manufacturers such as General Motors or Stellantis NV.

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“The challenge for us in the automotive business is how to get the right mix of where to invest and how much to invest,” the firm’s CFO Akash Palkhiwala told TWSJ. Perhaps the biggest move in recent months has been the $4.5 billion purchase of Sweden’s Veoneer Inc, a provider of automotive technology. The operation included its Arriver autonomous driving software business, in which it would consider spending 200 million annually.

“A Tremendous Opportunity”. That is the idea that Palkhiwala transmits to the New York newspaper. “We have to invest well in advance of revenue and that’s what we’ve been doing. The opportunity for us on the revenue side is tremendous and we are excited about the predictability this brings to our business.”

The car chip division, he acknowledges, represents “an important business” for the company, which is working to monetize technology such as advanced driver assistance or the digital dashboard system through software and hardware offerings.

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The context, essential. As is often the case, enlarging the portrait, paying attention to the frame, helps to better understand trends. Qualcomm’s decision comes in a well-defined context that is characterized by two keys: a shortage of chips that in 2021 favored its manufacturers and the automotive industry to strengthen ties, which has also led companies such as Intel or Nvidia to delve into the sector ; and the slowdown in the smartphone market.

Some manufacturers have recognized a significant decline in device shipments and according to data from International Data Corp during the quarter between April and June, the movement of units fell by almost 9% compared to the previous year. Samsung has also warned of a drop in demand for chips for smartphones. The slowdown is not homogeneous — sales of phones over $900 rose 20% in the first half of the year, according to Counterpoint Research — and is likely due to inflation or lockdowns in China.

Cover image | Qualcomm



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