00:00And I'm sure it's really frustrating to start on the stock market reaction, but what do you think investors have done ahead of this?
00:06Have they got overexcited? We're seeing this play out with a few of the chip sector.
00:10Look, it's really hard to predict the market right now, but we're incredibly happy about the company.
00:16I think we're executing very well. Our strategy is playing out perfectly.
00:20Everything we said we're going to do, we're actually doing better.
00:24And like I could not be more excited about so many things that are going well at Qualcomm right now and the new opportunities we have in the future.
00:33I think the company is very different. We had expanded beyond handsets into a number of different markets.
00:39The results are showing and there are very few companies like Qualcomm that can go from five watts chips for earbuds all the way to now 500 watts chips for a data center.
00:51And I think that's how we think about the opportunity.
00:54We can't wait to get into more on the detail of how you're jumping into the AI accelerator offering, but just going to the smartphone business, which is the bread and butter.
01:00What are you seeing at the moment and particularly what inroads are you making in Android?
01:04Yes. So, you know, I think this is a very interesting and it's, you know, every quarter we see this.
01:14I know there's a lot of conversation about it, but it's a trend that has happened to Qualcomm over the past several years.
01:20I want everybody to step back and look at what's happening with the handset market in general.
01:26The handset smartphone is the most important consumer electronic purchase in the world.
01:31It's our inseparable device and people want always to get a better device when they buy a new device.
01:37What we see right now is the expansion of the premium tier.
01:41So the market, Caroline, the units of handset market is still smaller on the annual basis than used to be before COVID.
01:50But what has happened and is driving a lot of growth from Qualcomm and Android over the past several years is the premium tier is expanding in size.
02:00So if you look at the United States market, most of the devices are premium tier.
02:04Most people will buy like an iPhone or a Galaxy.
02:06That's now happening everywhere in the world.
02:08It's happening in China. It's happening in India.
02:10So we see premium tier expanding.
02:13That makes, you know, a much richer market for us.
02:16And then we see phones becoming more capable, more compute, more AI that is driving silicon content.
02:23That's why Android continues to grow with Snapdragon 8.
02:27And I think the upside that we have seen above expectations is really Android expansion for Qualcomm.
02:36Cristiano, good morning. It's Ed.
02:38What you've tried to do is diversify away from mobile and away from Apple, right?
02:43But there are so many categories.
02:45Now data center, but auto, mixed reality.
02:48Which of those is the fastest moving for you right now?
02:52Look, right now what you probably see in terms of the speed, it's automotive.
03:00I think we have been growing significantly on an year-over-year basis.
03:07And most of our growth, again, like the conversation with handset, has nothing to do about the market size.
03:17And we build a digital platform for the car industry, which is the Snapdragon Digital Chassis.
03:22So when you talk about diversification away from handset and Apple, a couple of things that actually came out in those results that are incredible.
03:32And it shows what we've been saying we're doing.
03:35We just closed our fiscal year.
03:38The non-Apple-related growth in the company of about 18%.
03:42And when you look at segments like automotive, we're actually doing significantly higher than that.
03:48And that's also the other segment as well.
03:51The other part of the question is what's moving faster?
03:54And we are incredibly optimistic about those new category of mobile devices, which we call personal AI devices.
04:03As AI models and agent applications started to appear for consumers, that's materializing with devices that people wear.
04:13Like glasses, for example, are really becoming agentic glasses.
04:17And we said $2 billion of revenue by fiscal 29.
04:21We're way ahead of that.
04:23Just looking of how is it performing right now, especially with Meta.
04:28This is the first opportunity we've had to speak to you since the big data center news, AI200 to start.
04:35And the question that I've had most often for you from the audience is what is different about Qualcomm's approach, particularly to inference?
04:45You have this AI accelerator family or MPU.
04:48How is it different from an NVIDIA or AMD GPU, a Broadcom, Marvel, XPU, or this large body of startups that are basically chasing rack-scale solutions for AI?
05:00Yes.
05:01So I'll start answering the question by saying the following.
05:05There's a lot of people that will love Qualcomm.
05:08There are people that are not going to like Qualcomm.
05:10But one thing everybody's probably going to say, don't bet against Qualcomm being a technology-competent company.
05:17I think, look, just last year, we're the number one company in America in terms of patent applications.
05:23And every market that we actually enter, we actually develop something very unique from a technology leadership.
05:28So now, to answer your question, what are we doing?
05:31We're very focused on the next phase of data center.
05:36The next phase of data center, if you expect all of those projections to materialize and all of those companies investing in data center and AI to deliver the profitability the market expects, they're going to have to do inference.
05:50Inference is directly when you put AI into production at scale.
05:55And if you see just some of the conversations you see in the market right now about concerns of growth rates, power is one of the concerns.
06:04You need a lot of energy.
06:05So we're coming from our DNA of building devices that are very efficient in power.
06:11And we think about what are the architecture that is dedicated for inference, especially for the post-GPU, I think, architecture.
06:19And I think that's what we're doing.
06:20I think we're developing an architecture that is optimized to the highest possible compute density you can put on a data center for a very efficient power.
06:30And people are interested.
06:32And we're just busy executing.
06:33I think the other part of the answer, Ed, is why do you not think that Qualcomm will have an opportunity to participate?
06:41The market is so big.
06:42We don't have to get a lot.
06:44Everything we get is multiple billions of dollars.
06:46Cristiano, you brought up a really interesting if.
06:49If some of the big numbers that are being bounded about by the big players come to light.
06:56Three trillion dollars by 2028 is what Morgan Stanley thinks is going to be needed in data centers.
07:02What if it doesn't?
07:03Is there a risk that we actually innovate because we have to innovate because there isn't enough power?
07:08And suddenly that data center demand just isn't going to live up to that expectation?
07:12No, for Qualcomm, for us, it's all upside.
07:15So, but do you think?
07:16Can I just get a take on whether you think that three trillion dollar figure even is reasonable?
07:20Do you have any negative worries, any concerns?
07:24Look, I don't.
07:25I believe that the need for compute is very clear.
07:29That's not only also, not only on the data centers everywhere.
07:32I think we see that on phones.
07:34We see that on cars.
07:35We see that on PCs.
07:37AI needs a lot more computing power.
07:40And I think, I believe what that will actually do is create opportunity for innovation.
07:45And there will be competition.
07:46Right now, everybody's playing to win.
07:48Everybody's building data centers to win.
07:50And then there's going to be competition.
07:51And I think that's what our focus is.
07:53But I don't believe the trend and the need for a computer.
07:57You can have an argument about the timing, but the trend is very clear.
08:01Here's one way I'll describe it to you.
08:03And I'll be very careful with my words.
08:05The internet, when we thought about what the internet will be back in 1999, it's bigger today.
08:12The internet's much bigger today than people thought.
08:15So, I think on the long run, AI is probably underestimated.
08:20It's going to be bigger.
08:21The question is always going to be about timing.
08:24And we're preparing for when there's going to be competition.
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