Qualcomm recorded a very strong December quarter with revenues of $10.7 billion, an increase of 30% YoY. The company had a record QCT quarter despite component shortages and foundry capacity not being able to keep up with demand. Qualcomm was able to prioritize high-end Snapdragon sales, which come with higher profitability and less impact from shortages than mid- and low-end mobile handsets. The company was also able to increase supplies from its major foundry partners by dual-sourcing key products. Qualcomm’s QCT division’s non-handset revenues contributed 33% of its total revenues during the quarter. Its diversification strategy is working.
- Handsets saw revenues of $6 billion and a 60% YoY growth for Snapdragon chipsets within Android. Qualcomm is clearly showing it is not reliant on Apple. The shift to 5G in China, NAM and EU has helped. Additionally, Huawei volumes are now split between some of Qualcomm’s premium customers such as Honor, Xiaomi, OPPO and vivo. This quarter, flagships will begin hitting the market with Qualcomm’s Snapdragon 8 Gen 1 flagship mobile platform. The next Samsung Galaxy flagship will be announced in the coming week. Qualcomm has nailed the launch periods of its flagship Snapdragon chipsets to hit Chinese New Year and the year-end holiday season with refreshes.
- RF front-end revenues were $1.1 billion, up 25% YoY. New designs with ultraBAW tech will be launched in the market. At its most basic, it is a new technology for above 3GHz which has improved power amplifiers and better envelope tracking, helping efficiency. This work is difficult and costly. OEMs are able to take this solution and improve both performance and time-to-market. Virtually all OEMs using the Snapdragon 8 Gen 1 also design in Qualcomm’s RF front-end.
- Automotive revenues were $256 million, small relative to the handset business but grew 21% and are ripe with opportunity. Qualcomm has been leading the digital cockpit and infotainment space partnering with Alps Alpine. These solutions include safety, comfort and entertainment solutions like e-mirrors, next-gen input/output devices integrated into door trims, ceiling display(s) and sound zones that project sound individually to each car occupant. The newer and larger story is Qualcomm’s entrance into ADAS (advanced driver assistance systems). Qualcomm made a large (pending) acquisition of Arriver (which is wholly owned by Veoneer) and will partner to deploy deep-learning algorithms for vision perception with a full suite of full-vision functions, among other innovations, combining Arriver’s next-gen ‘Vision Perception’ software with Qualcomm’s Snapdragon Ride Vision System. During CES, Renault announced it had chosen Qualcomm for the entire suite. GM and BMW are also in the ADAS pipeline. Qualcomm dropped a stat of the potential of up to $30 of 5G RF content revenues per vehicle.
- IoT revenues were $1.5 billion and consumer, edge networking and industrial verticals all saw 30% or higher growth. The opportunities here include the convergence of mobile with new FWA (fixed wireless access) solutions. Verizon and T-Mobile alone have secured over 800,000 FWA subscribers. Qualcomm is aggressively spending to diversify into the IoT space. Robotics saw a 50% increase in launches and design wins include the Amazon Astro. Qualcomm is also investing in solutions for retail IoT (think digital customer loyalty cards, gesture displays, digitized shelves, biometric payments and smart parking). Qualcomm continues to chip away at the PC space. Windows on Snapdragon always-on-always-connected devices have seen slow adoption. But there are now many more OEMs coming into the space as people adapt to remote work and learning. Qualcomm’s acquisition of NUVIA, a CPU and design company, is a large investment in creating breakthrough PC experiences. VR, AR and the metaverse are still being defined. However, when this becomes meaningful and tangible, Qualcomm is supplying two of the major front-runners with the deepest pockets — Meta and Microsoft.
- Qualcomm is confident that shortages will improve through 2022. Qualcomm’s supply has not met demand, but the situation is improving. To help, Qualcomm has increased its chip supplies by dual-sourcing from its key high-end foundry partners Samsung Foundry and TSMC.
- Outlook is strong: The company is guiding to $10.2 billion – $11 billion in revenues. QCT guidance is $8.7 billion – $9.3 billion. There may be a slight tailwind of improving component supplies, lessening business risks due to the COVID-19 pandemic, and multiple handset OEMs launching products with 5G Snapdragons.
- Like many companies, Qualcomm is adding in a ‘Corporate Responsibility Report’ to detail what it is doing to integrate sustainability, respect for human rights, and products that are purposeful and enable life-changing experiences. Some 2025 goals:
- Reduce absolute Scope 1 and 2 GHG emissions by 50% by 2030. Reach net-zero global GHG emissions for Scopes 1, 2 and 3 by 2040.
- Reduce power consumption by 10% in Snapdragon Mobile Platform products (given equivalent features).
- Increase representation of women and underrepresented minorities in leadership roles by 15%.