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    Qualcomm Inc (QCOM)

    Business Description

    Qualcomm Incorporated is a leading technology company that operates primarily through its semiconductor and licensing businesses. The company develops and supplies integrated circuits and system software based on 3G/4G/5G technologies for mobile devices, automotive systems, and IoT products, significantly contributing to its revenue . Qualcomm also grants licenses for its intellectual property, including essential patent rights for wireless products . Additionally, the company engages in strategic investments and acquisitions to expand its market reach beyond mobile handsets, including automotive and IoT sectors .

    1. QCT (Qualcomm CDMA Technologies) - Develops and supplies integrated circuits and system software for mobile devices, automotive systems, and IoT products, leveraging 3G/4G/5G technologies.
    2. QTL (Qualcomm Technology Licensing) - Grants licenses for Qualcomm's intellectual property, including essential patent rights for wireless products.
    3. QSI (Qualcomm Strategic Initiatives) - Focuses on strategic investments to support the company's expansion into new markets and technologies.

    Q4 2024 Summary

    Initial Price$199.47June 29, 2024
    Final Price$170.13September 29, 2024
    Price Change$-29.34
    % Change-14.71%

    What went well

    • Qualcomm's handset revenue is showing strong growth, with greater than 40% sequential growth from Chinese OEMs forecasted for Q1 fiscal '25 guidance . In fiscal '24, Android revenues grew 20% year-over-year, even including the loss of Huawei revenues . Compared to its closest competitor, Qualcomm has over 5x the premium-tier revenue in Android devices, indicating strength in the premium segment .
    • Automotive sector is a significant growth driver for Qualcomm, with diverse design wins globally across OEMs, not reliant on any specific geography . The new Snapdragon Ride Elite and Cockpit Elite platforms offer 12x increase in AI capabilities, receiving high design traction from OEMs . Expected ramp-up in ADAS deployments over the next couple of years is anticipated to be an inflection point in revenue growth .
    • IoT business is growing, driven by new product launches in XR and NPC . On the industrial side, the market is turning, and Qualcomm sees early stages of demand for solutions that have processing, connectivity, and AI readiness .

    What went wrong

    • Potential loss of a major customer after 2026, as Qualcomm's planning assumes their share will ramp down to 20% for the 2026 launch, with the agreement ending thereafter, potentially impacting QCT margins.
    • Concerns about overreliance on growth in China, while other companies report weakness and migration to lower-tier devices in the region. Qualcomm's handset revenue with Chinese OEMs is expected to be up over 40% quarter-over-quarter, which may not be sustainable.
    • Dependence on future product adoption in automotive and industrial IoT, with significant growth projections relying on products that will ramp over the next few years, introducing risks if adoption does not meet expectations.

    Q&A Summary

    1. Handset Revenue Growth in China
      Q: How is Qualcomm's handset revenue performing in China?
      A: Qualcomm projects handset revenue from Chinese OEMs to grow by over 40% quarter-over-quarter in Q1 fiscal '25, driven by accelerated launches of new premium-tier devices using Qualcomm's latest chipsets. This growth reflects increased content per device and an improved mix across tiers, with devices priced over $400 rising from 21% to 30% of the market over the past 3-4 years ,.

    2. IoT Business Growth
      Q: What is driving the growth in Qualcomm's IoT business?
      A: Qualcomm's IoT revenues are benefiting across consumer, industrial, and networking segments due to new product launches in PC, XR, and industrial applications. The company introduced AI-ready solutions addressing both chipsets and software in industrial IoT, anticipating significant demand. Early stages of demand are already contributing to performance, with more details to be shared at the upcoming Investor Day ,.

    3. Automotive Segment Performance
      Q: How is Qualcomm's automotive segment performing and what is the outlook?
      A: Qualcomm's auto revenues are growing as new models launch with their technology, reflecting a shift in market share. The company holds design wins with virtually every OEM globally and is seeing significant traction with its Snapdragon Ride Elite and Cockpit Elite platforms, offering a 12x increase in AI performance. This growth is tied to technology adoption in new vehicle models rather than market fluctuations ,.

    4. Potential Impact of Customer Internalization
      Q: How could a large customer going internal affect Qualcomm's QCT margins?
      A: Qualcomm acknowledges the risk of a large customer potentially moving to internal solutions but notes no change from previous statements. They have a 3-year agreement covering '24, '25, and '26 phone launches, with the planning assumption that share will ramp down to 20% for the '26 launch. The agreement ends after that, and any better outcome would be considered upside.

    5. Chipset Gross Margins Outlook
      Q: What are the expectations for Qualcomm's chipset gross margins?
      A: Qualcomm expects chipset gross margins to remain largely in line with Q4, around 48%, due to a favorable product mix. The company believes this is a reasonable way to model the business going forward and feels positive about their product mix across businesses and within handsets.

    6. ARM Licensing Dispute Status
      Q: What's the status of the ARM licensing dispute?
      A: Qualcomm is confident in their broad, well-established license rights to custom design CPUs and expects these rights to be affirmed. The trial with ARM is scheduled for December, and the company looks forward to addressing ARM's claims at that time.

    7. Sustainability of Revenue Growth
      Q: How sustainable is Qualcomm's current revenue growth into future quarters?
      A: While pleased with the trajectory of their business, including a guided 10% revenue growth in Q1, Qualcomm is not providing guidance beyond that. They plan to discuss their diversification strategy and growth plans, including a financial framework, at the upcoming Investor Day.

    8. Expansion in PC Market
      Q: How is Qualcomm expanding in the PC market?
      A: Qualcomm has established itself as a performance leader in Windows devices and recently launched the Snapdragon X Plus 8-core chip, accessing the $700 price tier in the PC market. The number of platforms designed in has increased from 20 to 58, nearly a 3x increase, indicating strong traction with OEMs. Initial reactions have been positive, with more details to be shared at the Investor Day.

    Key Metrics

    View all financials →
    Revenue by Segment - in Millions of USDQ1 2014Q2 2014Q3 2014Q4 2014FY 2014Q1 2015Q2 2015Q3 2015Q4 2015FY 2015Q1 2016Q2 2016Q3 2016Q4 2016FY 2016Q1 2017Q2 2017Q3 2017Q4 2017FY 2017Q1 2018Q2 2018Q3 2018Q4 2018FY 2018Q1 2019Q2 2019Q3 2019Q4 2019FY 2019Q1 2020Q2 2020Q3 2020Q4 2020FY 2020Q1 2021Q2 2021Q3 2021Q4 2021FY 2021Q1 2022Q2 2022Q3 2022Q4 2022FY 2022Q1 2023Q2 2023Q3 2023Q4 2023FY 2023Q1 2024Q2 2024Q3 2024Q4 2024FY 2024
    QCT7,1747,37430,3828,4238,0268,0698,67833,196
    - Handsets5,2555,45622,5706,6876,1805,8996,09724,863
    - RFFE--------
    - Automotive4345351,8725986038118982,910
    - IoT1,4851,3835,9401,1381,2431,3591,6835,423
    QTL1,2301,2625,3061,4601,3181,2731,5215,572
    QSI95281332-18
    Reconciling Items38-110439424946176
    Equipment and Services--30,0288,316-7,993--
    Licensing--5,7921,619-1,400--
    Total Revenue8,4518,63135,8209,9359,3899,39310,24538,962
    Revenue by Geography - in Millions of USDQ1 2014Q2 2014Q3 2014Q4 2014FY 2014Q1 2015Q2 2015Q3 2015Q4 2015FY 2015Q1 2016Q2 2016Q3 2016Q4 2016FY 2016Q1 2017Q2 2017Q3 2017Q4 2017FY 2017Q1 2018Q2 2018Q3 2018Q4 2018FY 2018Q1 2019Q2 2019Q3 2019Q4 2019FY 2019Q1 2020Q2 2020Q3 2020Q4 2020FY 2020Q1 2021Q2 2021Q3 2021Q4 2021FY 2021Q1 2022Q2 2022Q3 2022Q4 2022FY 2022Q1 2023Q2 2023Q3 2023Q4 2023FY 2023Q1 2024Q2 2024Q3 2024Q4 2024FY 2024
    China-------17,826
    United States--1,259----9,686
    China (including Hong Kong)--22,382----17,826
    Vietnam--4,551-----
    South Korea--3,272----7,995
    Other Foreign-------3,455
    Ireland--------
    Other foreign--4,356----3,455
    Total Revenue--35,8209,9359,3899,39310,24538,962

    Executive Team

    NamePositionStart DateShort Bio
    Cristiano R. AmonPresident and Chief Executive OfficerJune 2021Cristiano R. Amon, age 54, has served as the President and Chief Executive Officer of Qualcomm since June 2021. He joined Qualcomm in 1995 as an engineer and has held several technical and leadership positions .
    Akash PalkhiwalaChief Financial Officer and Chief Operating OfficerNovember 2019 (CFO), January 2024 (COO)Akash Palkhiwala, age 49, has served as Chief Financial Officer since November 2019 and as Chief Operating Officer since January 2024. He joined Qualcomm in March 2001 and has held various finance and leadership roles .
    James H. ThompsonChief Technology OfficerMarch 2017James H. Thompson, age 60, has served as Chief Technology Officer (CTO) of Qualcomm Technologies, Inc. (QTI) since March 2017. He joined Qualcomm in 1992 as a senior engineer and has held several technical and leadership positions .
    Alexander H. RogersPresident, Qualcomm Technology Licensing & Global AffairsJune 2021Alexander H. Rogers, age 67, has served as President, Qualcomm Technology Licensing (QTL) and Global Affairs since June 2021. He joined Qualcomm in January 2001 as an attorney and has held various leadership positions .
    Ann ChaplinGeneral Counsel and Corporate SecretaryNovember 2021Ann Chaplin has served as General Counsel and Corporate Secretary at Qualcomm since November 2021. Before joining Qualcomm, she held various legal leadership positions at General Motors Company .
    Heather AceChief Human Resources OfficerMarch 2020Heather Ace, age 54, has served as the Chief Human Resources Officer at Qualcomm since March 2020. Before joining Qualcomm, she was the Senior Vice President of Human Resources at DexCom, Inc. .
    Dr. Baaziz AchourDeputy Chief Technology Officer, CTO-electFebruary 3, 2025Dr. Baaziz Achour currently serves as Deputy CTO and will become the Chief Technology Officer (CTO) on February 3, 2025, following Dr. James H. Thompson's retirement from the position .

    Questions to Ask Management

    1. Given your guidance that China Android revenues are expected to grow by more than 40% sequentially, can you explain the factors driving this significant increase and how it impacts your other major OEM customers?
    2. Your QCT IoT revenues have shown strong year-over-year growth, but you're also forecasting a sequential decline consistent with previous years; can you clarify the drivers behind both the growth and the anticipated decline, and how sustainable is this performance?
    3. With the upcoming ARM dispute trial in December, can you discuss the potential risks to your custom CPU design rights and how a negative outcome might affect your product roadmap and business strategy?
    4. Chipset gross margins appear to be guided slightly lower for Q1; is this due to increased wafer costs or changes in product mix, and how should we think about your gross margin trajectory moving forward?
    5. Considering the acceleration of flagship Android handset launches and your strong performance in non-smartphone areas, how sustainable is the double-digit revenue growth into the March quarter, and what factors could impact this momentum?

    Share Repurchase Program

    Program DetailsProgram 1Program 2
    Approval DateOctober 12, 2021 November 6, 2024
    End Date/DurationNo expiration date No expiration date
    Total additional amount$10.0 billion $15.0 billion
    Remaining authorization$1.0 billion $15.0 billion
    DetailsNo expiration date New authorization

    Past Guidance

    Q4 2024 Earnings Call

    • Issued Period: Q4 2024
    • Guided Period: Q1 2025
    • Guidance:
      • Revenues: $10.5 billion to $11.3 billion .
      • Non-GAAP EPS: $2.85 to $3.05 .
      • QTL Revenues: $1.45 billion to $1.65 billion with EBITDA margins of 73% to 77% .
      • QCT Revenues: $9 billion to $9.6 billion with EBITDA margins of 29% to 31% .
      • QCT Handset Revenues: Mid-single-digit percentage growth year-over-year .
      • QCT IoT Revenues: More than 20% growth year-over-year .
      • QCT Automotive Revenues: 50% growth year-over-year, approximately flat sequentially .
      • Non-GAAP Operating Expenses: Approximately $2.2 billion .
      • Global 3G, 4G, 5G Handset Units: Increase by a low to mid-single-digit percentage year-over-year in calendar 2024 .

    Q3 2024 Earnings Call

    • Issued Period: Q3 2024
    • Guided Period: Q4 2024
    • Guidance:
      • Total Revenue: $9.5 billion to $10.3 billion .
      • Non-GAAP EPS: $2.45 to $2.65 .
      • QTL Revenue: $1.35 billion to $1.55 billion .
      • QTL EBT Margin: 70% to 74% .
      • QCT Revenue: $8.1 billion to $8.7 billion .
      • QCT EBT Margin: 27% to 29% .
      • QCT Handset Revenue: Low single-digit percentage growth sequentially .
      • QCT IoT Revenue: Low double-digit percentage growth sequentially .
      • QCT Automotive Revenue: Flat .
      • Non-GAAP Operating Expenses: Approximately $2.2 billion .

    Q2 2024 Earnings Call

    • Issued Period: Q2 2024
    • Guided Period: Q3 2024
    • Guidance:
      • Revenues: $8.8 billion to $9.6 billion .
      • Non-GAAP EPS: $2.15 to $2.35 .
      • QTL Revenues: $1.2 billion to $1.4 billion with EBT margins of 69% to 73% .
      • QCT Revenues: $7.5 billion to $8.1 billion with EBT margins of 25% to 27% .
      • QCT Handset Revenues: Mid-single-digit percentage decline sequentially .
      • QCT IoT Revenues: Low to mid-single-digit percentage growth sequentially .
      • QCT Automotive Revenues: Low double-digit percentage growth quarter-over-quarter .
      • Non-GAAP Operating Expenses: Approximately $2.2 billion .

    Q1 2024 Earnings Call

    • Issued Period: Q1 2024
    • Guided Period: Q2 2024
    • Guidance:
      • Revenues: $8.9 billion to $9.7 billion .
      • Non-GAAP EPS: $2.20 to $2.40 .
      • QTL Revenues: $1.2 billion to $1.4 billion .
      • QTL EBT Margins: 69% to 73% .
      • QCT Revenues: $7.6 billion to $8.2 billion .
      • QCT EBT Margins: 27% to 29% .
      • QCT IoT Revenues: Mid- to high single-digit percentage growth sequentially .
      • QCT Automotive Revenues: Slightly down .
      • Non-GAAP Operating Expenses: Approximately $2.2 billion .

    Competitors

    Competitors mentioned in the company's latest 10K filing.

    • Broadcom - Competes in integrated circuits based on CDMA, OFDMA, Wi-Fi or their derivatives .
    • HiSilicon - Competes in integrated circuits based on CDMA, OFDMA, Wi-Fi or their derivatives .
    • MediaTek - Competes in integrated circuits based on CDMA, OFDMA, Wi-Fi or their derivatives .
    • Mobileye - Competes in integrated circuits based on CDMA, OFDMA, Wi-Fi or their derivatives .
    • Nvidia - Competes in integrated circuits based on CDMA, OFDMA, Wi-Fi or their derivatives .
    • NXP Semiconductors - Competes in integrated circuits based on CDMA, OFDMA, Wi-Fi or their derivatives .
    • Qorvo - Competes in integrated circuits based on CDMA, OFDMA, Wi-Fi or their derivatives .
    • Samsung - Competes in integrated circuits based on CDMA, OFDMA, Wi-Fi or their derivatives; also a customer developing its own integrated circuit products .
    • Skyworks - Competes in integrated circuits based on CDMA, OFDMA, Wi-Fi or their derivatives .
    • Texas Instruments - Competes in integrated circuits based on CDMA, OFDMA, Wi-Fi or their derivatives .
    • UNISOC - Competes in integrated circuits based on CDMA, OFDMA, Wi-Fi or their derivatives .
    • Apple - A customer developing its own integrated circuit products, effectively making it a competitor .

    Latest news

    Recent developments and announcements about QCOM.

    Corporate Leadership

      Leadership Change

      ·
      Dec 12, 2024, 9:28 PM

      Dr. James H. Thompson, the Chief Technology Officer (CTO) of Qualcomm Technologies, Inc., is leaving his position effective February 3, 2025. He announced his intention to retire on December 10, 2024. Dr. Thompson will continue with the company in an advisory role post-retirement. Dr. Baaziz Achour, currently the Deputy CTO, will step up as the CTO-elect immediately and will officially take over as CTO upon Dr. Thompson's retirement .