Qualcomm’s new CEO looks at dominance in the notebook computer market Reuters

Stephen Nellis

(Reuters)-The new CEO of Qualcomm (Nasdaq:) believes that by next year, his company will only provide chips for laptop manufacturers, and they want to know how they can compete with Apple (NASDAQ). 🙂 Competition, the latter introduced a CPU chip with a longer battery life using custom-designed notebook computers last year.

Long-term processor supplier Intel Corporation (NASDAQ:) and Advanced Micro Devices (NASDAQ:) do not have energy-efficient chips like Apple. Qualcomm CEO Cristiano Amon told Reuters on Thursday that he believes his company can have the best chips on the market. With the help of a team of chip architects, the team had previously worked on Apple chips. But now I work at Qualcomm.

In the first interview after accepting the top position of Qualcomm, headquartered in San Diego, California, Amon also said that despite political tensions, the company also counts on revenue growth from China to power its core smartphone chip business.

“We will be bigger in China,” he said, noting that US sanctions on Huawei Technologies Co., Ltd. gave Qualcomm an opportunity to generate more revenue.

Amon said that the cornerstone of his strategy comes from a lesson in the smartphone chip market: It is not enough to provide modem chips for wireless data connections in mobile phones. Qualcomm also needs to provide the brains that turn mobile phones into computers, and now it can provide this functionality for most high-end Android devices.

Now, as Qualcomm hopes to push 5G connectivity to laptops, it is pairing modems with powerful central processing units or CPUs, Amon said. Instead of using the computing core blueprint of long-time partner Arm Ltd as it does for smartphones, Qualcomm has concluded that if its customers are to compete with Apple’s new laptops, it needs custom-designed chips.

As the head of Qualcomm’s chip department, Amon bought the startup Nuvia for $1.4 billion this year. The former Apple founder of the latter helped design some Apple notebook chips before leaving to establish the startup. Qualcomm will begin selling Nuvia-based notebook computer chips next year.

“We need to provide leading performance for battery-powered equipment,” Amon said. “If Arm, which we have worked with for many years, finally develops a better CPU than our own CPU, then we can always choose to obtain a license from Arm.”

Nvidia (NASDAQ:) is acquiring Arm for 40 billion U.S. dollars, and Qualcomm has objected to the regulator.

Amon said that Qualcomm has no plans to build its own products to enter another big market for CPUs-cloud computing companies’ data centers. But it will license Nuvia’s design to cloud computing companies that want to build their own chips, which may make it compete with parts of Arm’s business.

“We are very willing to use Nuvia CPU assets to cooperate with companies interested in building data center solutions,” Amon said.

Brand challenge

Among its $16.5 billion chip revenue in its most recent fiscal year, mobile phone chips accounted for $12.8 billion. Some of Qualcomm’s best customers, such as mobile phone maker Xiaomi (OTC:) Corp, are in China.

Qualcomm is counting on revenue growth because its Android mobile phone customers have flooded into former Huawei mobile phone users, who were forced to withdraw from the mobile phone market due to Washington sanctions.

Kevin Krewell, principal analyst at TIRIAS Research, called it a “political minefield” because of the heightened tensions between the United States and China. But Amon said the company can do business there as usual.

“We authorize our technology-we don’t have to force a joint venture through technology transfer. Our customers in China are the latest agreements, so you see the respect for American intellectual property rights,” he said.

Another major challenge facing Amon is to treat Apple as a customer. After a fierce legal battle, Qualcomm’s modem chip is now used in all Apple iPhone 12 models. Apple sued Qualcomm in 2017, but eventually abandoned the claim and signed a chip supply and patent license agreement with Qualcomm in 2019.

Apple is now designing a chip to replace Qualcomm’s communication chip in the iPhone.

“The biggest suspense of Qualcomm’s long-term share price multiple is that it has reached the best level now because they are being applied to all iPhones, but one day, Apple will produce these chips in-house,” said Michael Walkley, Canaccord Genuity Group Senior analyst.

Amon said that Qualcomm has decades of experience in designing modem chips, which is difficult for any competitor to replicate. Huawei has left a blank in the Android market.

“Only in terms of the high-end market, Huawei’s target market is as big as Apple’s opportunity for us,” Amon said.

Amon is an energetic social executive on stage during the keynote speech. Another challenge he faces is that even in Qualcomm’s hometown, Qualcomm is not as well known to consumers as Intel or Nvidia.

“I flew to San Diego, found an Uber (NYSE:) driver at the airport, and told him I was going to Qualcomm. He said,’You mean the stadium?'” Crewell said, referring to the previous home football San Diego Chargers.

Amon has launched a new brand plan for the company’s Snapdragon smartphone chip in an attempt to change this situation.

“We have a mature smartphone industry today. People care about what’s behind the glass,” he said.

(This story corrects the missing apostrophe in paragraph 5 and fixes the typographical error in paragraph 11)