Specialist
Former VP at Qualcomm Inc
Agenda
- Qualcomm’s (NASDAQ: QCOM) operating environment, including shift to automotive and IoT from mobile plus handset demand outlook
- Competitive dynamics – Qualcomm’s RFFE (radio frequency front end) positioning vs those of Broadcom (NASDAQ: AVGO), Qorvo (NASDAQ: QRVO) and Skyworks (NASDAQ: SWKS),
- Samsung (KRX: 005930) partnership and 5G modem positioning ability of MediaTek (TWSE: 2454) to make inroads and market share dynamics
- AR/VR metaverse share dynamics, automotive pipeline health and demand forecasting
- Stimulus benefits from CHIPS (Creating Helpful Incentives to Produce Semiconductors) Act and relationships with China-based smartphone OEMs and dynamics with Apple (NASDAQ: AAPL)
- Outlook for 2023 and beyond
Questions
1.
What’s your overview of Qualcomm’s operating environment? Despite recent challenges and major volatile developments within the semiconductor industry, how has the company continued to stand out as a dominant industry leader?
2.
How have the catalysts behind the global chip shortage changed or evolved over the past year? Is there anything new we should be looking to or worried about?
3.
Would you say there is more of an industry sentiment towards transitioning over from a one-stop-shop model within auto?
4.
How could Qualcomm be exposed to newer supply chain risk as this environment develops?
5.
Can you map out Qualcomm within the competitive landscape? What are the biggest threats within the segments among QCT [Qualcomm CDMA Technologies] and how may this have evolved in the last fiscal year?
6.
Could you highlight competitive dynamics within China and MediaTek? What’s your sentiment on the longevity within the China markets?
7.
On ASPs and pricing conversations with smartphone OEMs, there is a very strong belief that 5G’s market consolidation will lead to much healthier pricing than late 4G days when SoC [system on a chip] pricing collapsed. How is pricing typically negotiated from this standpoint?
8.
What is Qualcomm’s willingness to cut price to stimulate demand, not just in China but within global markets? How long does an inventory correction typically need to last before management gives in or starts cutting prices to maintain volumes?
9.
Could you highlight trends and major dominant drivers for handsets in the broader market? How has the overall handset market begun to evolve with the chips?
10.
How much demand would you say comes from the replacement rate? Would most people foresee that if replacement rate starts to double, triple or quadruple over time, not only will we see issues with demand but also with bottlenecks in supply?
11.
You mentioned the partnerships Qualcomm has experienced, the first being the severance with Apple and the second being the multi-year partnership agreement recently announced with Samsung and its Galaxy S lines of smartphones. How do you feel about such an integrated partnership with one of Qualcomm’s biggest competitors? Can you break down the dynamics of this relationship and how it might be different than others?
12.
You mentioned the chip only makes up 10% of the handset’s total cost, and as you’re saying, how many lenses on the camera can a phone really have? Is the name of the game for future handset specialisation within the chip?
13.
With Samsung, what does implementation look like with this new end market and its users? In recent history, while the Snapdragon 8 Gen 1 has been powering Galaxy S phones in the US, Samsung has continued to put its in-house Exynos chips within these smartphones across European and certain Asian markets. Snapdragon powers about 75-80% of Galaxy phones, minus a select few markets, and Samsung has chosen to continue Exynos, however the disparity in public opinion is astounding in favouring the Snapdragon line. What does that last 25% of implementation look like for Qualcomm’s capacity, and also fitting in with potentially untapped global markets within the handset industry?
14.
When you view Apple and Samsung as solely customers, which needs do Qualcomm’s chips cater to better?
15.
Can you describe opportunities in newer or less-tapped markets such as the non-premium and lower-end handsets? Ultimately, is there a possibility or even a need for Qualcomm to offset premium handset revenue loss?
16.
There are many developments within the RF [radio frequency] space. Can you map out Qualcomm within that competitive landscape? How is the company staying ahead of players such as Qorvo and Skyworks?
17.
QCT’s CFO has recently highlighted the allocation to ever-growing automotive chip business, as well as a whopping USD 4bn in auto projection for 2026. Do you think this is even possible? If so, what would be the main things that propelled Qualcomm to get to that position in the first place?
18.
Will there ever be a time where Qualcomm makes a shift from handsets to a more auto-focused company, other than just design wins? In terms of capacity, are there other things the company can implement in this industry?
19.
Does Qualcomm’s major partnerships with some of the biggest players in the AR/VR space show its focus on the space? Why is it so important and why are there such opportunities for growth?
20.
You mentioned gaming and the analogy of the car assembly line, but where does the majority of Qualcomm’s penetration come from within AR/VR?
21.
On that note of handsets possibly going away, we’ve seen a huge push of mid- and lower-range SoC production from Qualcomm. Does that have anything to do with the current status of margins behind production?
22.
How is Qualcomm bracing for potential revenue losses in higher-end chips with recent events out of China? We’ve seen the administration recently declare export bans on all nodes 14nm and under, but even with response to that we’ve seen SMIC begin mass production of 14nm, and even reports of 7nm. Is Qualcomm in any major positioning threat with a potential loss of revenue from China? If not, has the company already taken measures to prepare for this?
23.
If you were the CEO of Qualcomm, how do you handle the next steps involving the CHIPS [Creating Helpful Incentives to Produce Semiconductors]-Plus implications on overall operations? Which incentives will directly benefit the company most?
24.
North America is a bit behind in terms of infrastructure within the semiconductor industry, but how do you think Qualcomm will differentiate from competitors once the incentives come around full effect?
25.
As the US tries to move towards domestic dependence for semiconductor manufacturing, you would need companies such as Qualcomm with expert design and IP. What would the first steps towards cost parity with countries such as Taiwan and China look like for the US?
26.
Could you discuss the multi-billion-dollar revenue agreement extended into 2028 between Qualcomm and GlobalFoundries? Although the companies were dominant in Europe before, how does this extend their presence by being in Malta?
27.
The partnership announcement was focused around the FinFETs [fin field-effect transistors], specifically for 5G, wifi, IoT connectivity and auto. Does that speak to Qualcomm’s positioning on where it would like to switch its focus to and potentially offset handset revenue?
28.
Was there a general industry consensus on whether the CHIPS Act gives an unfair advantage or edge to some companies? Is there uncertainty in the fairness of funding distribution?
29.
When looking at Qualcomm trying to receive significant funding, whether through R&D grants or education or tax credits, how could the company’s strategy shift or how will it adapt to the implications of the CHIPS Act?
30.
What’s your outlook on Qualcomm post CHIPS Act over the next 3-5 years, considering the company itself, domestic affairs and the global semiconductor industry?
31.
Would you say Qualcomm’s strongest positioning is within the AR/VR space and the opportunities there?
32.
Are there any industry assumptions that we should be challenging around Qualcomm? Are there any commonly held numbers or growth projections we should reconsider or look at differently?
33.
Is there anything around Qualcomm that you wanted to reiterate or something that we missed?
Gain access to Premium Content
Submit your details to access up to 5 Forum Transcripts or to request a complimentary one week trial.
The information, material and content contained in this transcript (“Content”) is for information purposes only and does not constitute advice of any type or a trade recommendation and should not form the basis of any investment decision.This transcript has been edited by Third Bridge for ease of reading. Third Bridge Group Limited and its affiliates (together “Third Bridge”) make no representation and accept no liability for the Contentor for any errors, omissions or inaccuracies in respect of it. The views of the specialist expressed in the Content are those of the specialist and they are not endorsed by, nor do they represent the opinion of, Third Bridge. Third Bridge reserves all copyright, intellectual and other property rights in the Content. Any modification, reformatting, copying, displaying, distributing, transmitting, publishing, licensing, creating derivative works from, transferring or selling any Content is strictly prohibited
