Qualcomm Has $36B Year, Big Plans for AI

AI is going mobile.

San Diego chipmaker Qualcomm (NASDAQ: QCOM) continues to look forward to a world with artificial intelligence, spelling out the possibilities and capabilities that will come by combining AI with the company’s decades-long emphasis, mobile devices.

AI was front and center in the new products introduced as part of Qualcomm’s Snapdragon Summit in Hawaii at the end of October. In addition, AI figured in the company’s year-end earnings announcement on Nov. 1.

The business announced a new iteration of its Snapdragon chip for top-of-the-line mobile phones. Snapdragon 8 Gen 3 is “our first mobile platform meticulously designed with generative AI in mind,” the company said. Devices containing the new mobile platform will appear soon.

Qualcomm also announced its Snapdragon X Elite for personal computers, billed as “an AI super-charged platform to revolutionize the PC.” Computers running Windows 11 and powered by Snapdragon X Elite are expected to reach the market by mid-2024.

“Snapdragon is uniquely positioned to help shape and capitalize on the on-device AI opportunity and you will see generative AI going virtually everywhere that Snapdragon goes,” said Cristiano Amon, CEO of Qualcomm.

Featured partners for the summit included Dolby, Sony, T-Mobile and Verizon.

Net Income of $7.2 Billion

Qualcomm closed out fiscal 2023 in September, announcing results early this month. The corporation reported annual net income of $7.23 billion on revenue of $35.8 billion. Total revenue was down 19% from $44.2 billion in fiscal 2022. However, the 2023 revenue number was an improvement on its 2021 revenue of $33.6 billion.

For the fourth quarter, Qualcomm reported net income of $1.49 billion (down 48% from the fourth quarter of 2022) on revenue of $8.63 billion (down 24% from the fourth quarter of 2022).

Excluding items, Qualcomm reported earnings per share of $2.02. Analysts surveyed by Yahoo Finance expected $1.91.

Revenue from handsets came to $5.5 billion. In the automotive space, Qualcomm reported revenue of $535 million, marking its 12th consecutive quarter of double-digit, year-over-year revenue growth in auto. Revenue for internet of things came to $1.4 billion.

“As we enter fiscal 2024, we are pleased with our roadmap and product execution, which position us well across our businesses,” Amon said. “Our recent Snapdragon Summit announcements underscore our technology leadership, establishing Qualcomm as a leader in on-device generative AI and mobile computing performance.”

News highlights from fiscal 2023 included the September announcement that Qualcomm agreed to supply Snapdragon 5G modem-RF systems to Apple Inc. (NASDAQ: AAPL) for smartphone launches in 2024, 2025 and 2026. Financial terms of the deal were not disclosed.

Qualcomm reported having $8.45 billion in cash and cash equivalents at the end of its fiscal year Sept. 24, up from $2.77 billion a year ago.

Looking ahead to the current quarter, Qualcomm said it expects revenue in the range of $9.1 billion to $9.9 billion. Excluding items, the company said it expects diluted earnings per share of $2.25 to $2.45.

Iridium Project Shelved

In other news, satellite-communications specialist Iridium (NASDAQ: IRDM) said earlier this month (Nov. 9) that a joint project with Qualcomm was coming to an end.

The two companies announced in January that they had entered into an agreement to enable satellite messaging and emergency services in Snapdragon-powered mobile platforms using Iridium’s satellite network. They targeted a launch in the second half of 2023.

Apple offers such a feature on iPhone 14 and later models.

The Qualcomm technology worked, Iridium said in its news release. However, there were no takers among the Android smartphone manufacturers that Qualcomm serves. As a result, Qualcomm notified Iridium it would terminate the deal, effective Dec. 3.

Smartphone manufacturers may have been concerned about the economics of the partnership, wrote Louie DiPalma, analyst with William Blair & Co., in a Nov. 10 research note.

Qualcomm Inc.

FOUNDED: 1985
CEO: Cristiano Amon
HEADQUARTERS: Sorrento Mesa, San Diego
BUSINESS: Fabless semiconductor maker, specialist in developing and commercializing foundational technologies for the wireless industry
REVENUE: $35.8 billion in fiscal 2023
STOCK: QCOM (NASDAQ)
EMPLOYEES: 50,000 (as of September)
WEBSITE: qualcomm.com
CONTACT: 858-587-1121
NOTABLE: Qualcomm grew from the vision of several UC San Diego professors