Android devices, demand in China help keep Qualcomm from worrying too much about losing Apple

Oh, yeah, and Windows on Arm. Who could forget that?

No Apple as a modem customer for much longer? Not too much of a problem for Qualcomm, which is now relying more than ever on Android and China, and to some extent, Windows, to make up for the lost revenue.

"Android is a success story for us," Qualcomm CEO Cristiano Amon told analysts on a conference call on Wednesday. He was speaking following the release [PDF] of Qualy's financial figures for the first quarter of its fiscal 2022, the three months to December 26.

It's perhaps not surprising Android is a success story as that's the OS running on the majority of Qualcomm's system-on-chips. Amon said device makers in China that are adopting Qualcomm's components for use in Android handsets are a growth driver.

For Q1 FY22, the US chip house reported a 60 per cent year-over-year growth in revenue from Snapdragon system-on-chips for Android devices; revenues from handsets alone rose 42 per cent year-on-year to $6bn, we're told. Android-related sales grew thanks to the Chinese New Year, and the next inflection point will be the Christmas shopping season, Amon said.

Chief financial officer Akash Palkhiwala identified Android as a $10bn serviceable available market, and highlighted demand for Qualcomm's components in China now that Huawei is out of the smartphone chip business. "All of our customers – Xiaomi, Oppo, Vivo Honor, they're all picking up share and ... they're going into the high and the premium tier. It gives us a tremendous opportunity to tap into," Palkhiwala said on the call.

Late last year Qualcomm launched its flagship Snapdragon 8 Gen 1 system-on-chip, which has been adopted by major Chinese phone makers.

Qualcomm reported that revenue for the first fiscal quarter was a record $10.7bn, growing 30 per cent year-over-year. The corp banked a profit of $3.4bn, up 38 per cent. Qualcomm also saw strong growth in premium and high-end-tier Android tablets, which points to the convergence of mobile and PC devices, Amon said.

"Notably, we have already doubled the total number of premium-tier Android tablet design wins launch or in the pipeline versus all of fiscal 2021," Amon said.

Qualcomm is slowly getting Apple off its books; the iPhone was a major revenue driver for more than a decade. The Apple iPhone 13 uses Qualcomm's cellular modems, though Cupertino has indicated the next round of iPhones will have Apple's homegrown modems.

At an investor day in November, Qualcomm said it will probably supply only 20 per cent of the modem chips needed for iPhones in 2023, and likely low single digits exiting fiscal 2024 as a result of Apple's switch to its own modem silicon.

Qualcomm forecast revenue for the second quarter of fiscal 2022 to be in the range of $10.2bn to $11bn, higher than Wall Street's expectations of about $9.6bn. Of that, Qualcomm CDMA Technologies revenue is expected to be $8.7bn to $9.3bn. The seasonal decline in Apple revenues will be offset by continued growth in revenues from Android devices, Palkhiwala said.

Qualcomm will face competition from Mediatek, which launched the Dimensity 9000 chip, which like its Snapdragon 8 Gen 1, is an eight-core chip based on the Armv9 architecture. Mediatek's chips are also targeted at premium-tier Android handsets.

"There's plenty of opportunity for us to grow and our competitors to grow," Amon said.

Qualcomm in December also introduced new Arm-compatible chips for Windows on Arm PCs. Amon tempered his expectations on the Windows ecosystem, saying PCs will be more like smartphones, with long battery life and being always-on 5G connectivity.

"Our view is very clear. There's going to be a big portion of the market that is going to transition to an Arm architecture ... we are the best position company to do that for the Windows ecosystem," Amon said.

But there could be unforeseen problems. For one, T-Mobile US is still trying to figure out how to offer international roaming 5G connectivity for laptops.

Qualcomm is also designing PC processors based on blueprints from Nuvia, a startup Qualcomm acquired last year. These chips will start sampling this year, with the first products based on those components shipping in 2023. Nuvia's designs will ultimately go into smartphones and other devices. ®

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