Qualcomm showcases the latest 5G technology new products at the 2019 MWC Conference (Source: Qualcomm official website)
Although the COVID-19 pandemic and cooling demand in Europe have led to a slowdown in sales in the global smartphone market, mobile phone chip suppliers have not been affected by this.
In the early morning of April 28, Beijing time, qualcomm, the US 5G chip giant, released the second fiscal quarter of 2022.
Qualcomm had sales of $11.164 billion in the Q2 fiscal quarter ended March 27 this year, compared with analysts' expectations of $10.6 billion, up 41% year-over-year, net profit of $2.934 billion, up 67% year-over-year, and adjusted EPS (non-GAAP) of $3.21, according to the earnings report.
Among them, Qualcomm Snapdragon mobile phone chip revenue increased by 56% to $6.33 billion; Internet of Things chips increased by 61%, and automotive chip revenue increased by 41%.
Thanks to the strong sales of mobile phones and Internet of Things chips, Qualcomm's revenue and profit in the quarter both exceeded the expectations of the Wall Street market, and it was also Qualcomm's sixth consecutive quarter of revenue exceeding expectations.
At the same time, a few hours before the release of Qualcomm's earnings report, the latest financial report released by its competitor and mobile chip design company MediaTek showed that in Q1 of fiscal 2022, MediaTek's net revenue was about $5.12 billion, an increase of 32.1% year-on-year, and the gross profit margin was as high as 50.3%.
With Huawei being sanctioned by the United States for three consecutive rounds, losing the update of kirin mobile phone chips, even if Qualcomm Snapdragon 8 market feedback is not good, lu Weibing, president of Xiaomi Group China, called "broken chips", but lack of strong competitors, Qualcomm, MediaTek performance has risen sharply, monopolizing the Android mobile phone chip market.
Huawei fell, Qualcomm "won the numb"
In fact, Qualcomm and Huawei have always been competitors in the mobile phone chip industry, as well as partners.
In 2009, Huawei released the K3 mobile phone chip processor. Three years later, Huawei again launched an improved K3V2 quad-core processor, which was subsequently used in the Ascend series of flagship phones, when Huawei did not yet name the phone chip "Kirin".
At the same time, in early 2013, Qualcomm changed its naming rules and released the first generation of Snapdragon processors 800 series, 600 series, 400 series and 200 series. Among them, the Snapdragon 800 series is positioned as a flagship processor, and is fully applied to many brands of mobile phones such as Xiaomi and Lenovo, making people understand the strong performance of Qualcomm chips for the first time, and the industry is famous.
In 2014, Huawei HiSilicon named the self-developed mobile phone processor brand "Kirin" and officially aimed at Qualcomm Snapdragon. Then in the second half of the year, Kirin and Snapdragon experienced a counterattack battle, directly sending Kirin to the throne of duel.
At that time, Qualcomm's Snapdragon 810 was seriously hot, dragging down many mobile phone manufacturers. However, the Huawei Mate 7 equipped with the Kirin 925 has sold against the trend, successfully establishing a high-end image of Huawei mobile phones and becoming a turning point in the rise of Huawei mobile phones.
In 2016, with the Kirin 960, Huawei was already on an equal footing with Qualcomm in the high-end mobile phone chip market.
Until the 5G era, Qualcomm CDMA's technical licensing advantages disappeared, Huawei occupied the opportunity, in terms of performance, process technology, etc., Kirin 990 and other 5G chips, and Qualcomm Snapdragon 865 are still inseparable, and finally formed Apple, Qualcomm Snapdragon, MediaTek, Huawei Kirin, Samsung Orion five major mobile phone chips stand on their feet.
Before being suppressed by U.S. sanctions, Huawei's flagship smartphones have never been equipped with Qualcomm Snapdragon processors in the past decade.
But at the same time, Huawei and Qualcomm are also developing close cooperation in many fields. One is Huawei's low-end mobile phone series and some overseas market products, Huawei chose Qualcomm Snapdragon as its mobile phone chip supplier; the other is that in the mobile phone RF module, Kirin has been using Qualcomm's QDM2305 and other RF modules, as well as paying Qualcomm a certain licensing fee.
At the 2018 Huawei Core Supplier Conference, Qualcomm was among the 92 core suppliers of Huawei, second only to Intel and NXP, and Qualcomm's importance to Huawei is self-evident.
However, since August 2018, Huawei has been suppressed by the United States three times in a row, HiSilicon can not produce a new Kirin 5G chip, and finally Huawei can only split the Glory mobile phone, P series flagship phone choose Qualcomm Snapdragon 888 4G processor. At the same time, Huawei has shifted to The To B (enterprise side) business, and cloud computing, autonomous driving and other services have become the direction of force.
Titanium media App paid attention to the fact that even if the heat consumption is criticized, Huawei almost refuses to publicize the performance and supply of Qualcomm products on a large scale.
Qualcomm CEO Cristiano Amon said in an interview at the time that throughout history, Qualcomm and Huawei have been in a competitive relationship in the Chinese market and even the global market. The two may be partnerships in some verticals and competitors in others.
Titanium media App combed Qualcomm's financial reports in the past five years and found that since Huawei's mobile phone shipments encountered obstacles, from 2018 to 2022 Q2, Qualcomm's overall revenue and profits both increased sharply, and by Q1 2022, Qualcomm's revenue exceeded $10 billion for the first time - this is almost Baidu's intelligent cloud revenue in 2020, and it is also the market value of Lenovo Group at this moment (about $11.296 billion).
Qualcomm's quarterly results in the last five fiscal years (Source: compiled and charted by Titanium Media App editors)
In mid-April, market research firm Gartner released its 2021 Global Chip Enterprise Revenue Report.
According to the data, in 2021, Qualcomm's overall revenue reached about $27.1 billion, ranking fifth in the industry, while MediaTek's revenue in 2021 was about $17.6 billion, an increase of 60.2% year-on-year. The report also shows that Huawei HiSilicon fell out of the top 25, with revenue of $1.5 billion in 2021, down 81% year-on-year.
Liu Ji, chief analyst of the TMT industry at the Leopard Research Institute, told Titanium Media App that in 2021, the Android flagship mobile phone SoC will be dominated by qualcomm Snapdragon 888 and 8 Gen 1 platforms, and the low-end processor will be obtained by MediaTek Tianji 9000. In the past few years, huawei's lost high-end mobile phone market share has been occupied by Apple, while the low-end market where Huawei Glory is located has been rapidly occupied by three Chinese manufacturers, Xiaomi, OPPO and vivo.
Ammon said on today's earnings call that Qualcomm has a three-quarter share of Samsung's Galaxy S22 series of phones, compared to only 40 percent of the previous generation. Typically, Samsung uses self-developed chips in nearly half of the Galaxy S series of phones. In addition, Qualcomm also provides integrated chips for Chinese smartphone manufacturers such as Xiaomi, OPPO and Honor.
Looking forward to fiscal 2022, Qualcomm expects its mobile phone chip business to grow by more than 50% thanks to the Samsung Galaxy series flagship mobile phones and some Chinese smartphone suppliers.
However, it is foreseeable that as Xiaomi, OPPO, and Vivo begin to increase the strength of self-developed chips, some scenarios may supplement the shortcomings of Qualcomm and MediaTek chips. In the long run, after the Huawei incident, the realization of independent and controllable chip research and development will become a new development path for domestic mobile phone manufacturers.
Masatsune Yamaji, research director at Gartner, said in a previous interview with titanium media app that at present, the capital of chip production, equipment and materials produced by semiconductors are dominated by companies in the United States, Europe and Japan, and it will take a long time for Chinese companies to catch up with them.
Launch a diversification strategy, Qualcomm will and Huawei cars to face off again
At qualcomm AI Day in 2018, the first qualcomm official event I attended, the 5G+AI development strategy was disclosed for the first time.
At that time, in order to reduce its dependence on specific markets, Qualcomm implemented a diversification strategy and actively stepped into the fields of automobiles, Internet of Things, XR/VR, etc., providing chip and toolchain solutions. Recently, Qualcomm has also increased its investment in the personal computer market. Market analysts also called it a "transformation of Qualcomm" — Qualcomm is explaining that they don't want to lose.
When the growth of consumer electronics markets such as mobile phones slows down today, MediaTek's sniping and Apple's self-developed chips have accelerated, making Qualcomm's diversification strategy an important part of supporting the company's business development.
According to Canalys' latest mobile phone shipment data, in Q1 2022, global smartphone shipments fell by 11% year-on-year due to the poor economic situation and seasonal sluggish demand.
At the same time, MediaTek has cooperated with OPPO and Vivo manufacturers in a multi-faceted way at the high-end chip level, and installed Tianji 9000 on their flagship products. (For details, see the previous article of the Titanium Media App: "Left tear Intel right block MediaTek, qualcomm can still sit firmly in the "chip king"?) 》）
Moreover, Apple has also signed a contract with TSMC, which will produce customized 5G modems for the 2023 iPhone series, and with the deepening of cooperation between the two sides, Apple is expected to get greater support for TSMC's 3nm process. According to the Qualcomm shareholders' meeting, they judged that in 2025, Apple's iPhone will no longer be equipped with Qualcomm's technology.
Ammon said on today's earnings call that demand in all end markets is still strong, and chip demand continues to outpace supply. At the same time, Qualcomm's diversification strategy has successfully achieved growth, as well as the strong market demand for Qualcomm's wireless connectivity, high-performance low-power processor technology, Qualcomm's good technical advantages can achieve long-term development goals.
"We can no longer be defined as a communications company that serves only one industry," he said at the earnings report.
The financial report shows that Qualcomm's non-mobile phone chip revenue has increased this quarter. In Q2 2022, Qualcomm's RF front-end segment of wireless chips grew 28 percent to $1.16 billion; IoT smart device chip revenue rose 61 percent to $1.72 billion; automotive chip sales also rose 41 percent to $339 million, and Qualcomm believes partnerships with automakers and suppliers will drive growth further (excluding revenue from Veoneer, which completed its acquisition this quarter).
Looking ahead, Qualcomm said it expects earnings per share in the fiscal third quarter to be between $2.75 and $2.95 and revenue between $105 and $11.3 billion, both above Wall Street's expected revenue guidance of $9.98 billion.
This is actually very unusual in the chip industry, because most of Qualcomm's profits come from technology licensing. Whether or not they buy its chips, mobile phone makers pay to use Qualcomm's technology because the company holds numerous patents for mobile communications.
But other industries cannot let Qualcomm operate in this way, especially in the face of opponents such as Huawei.
As we all know, Huawei has now also entered the field of intelligent cars, and the main driving technology is promoted to the outside world, and at present, Alpha S HiCar, Xilis AITO Q&I M5, Smart SF5 and other models use Huawei's automatic driving technology, and Huawei is also cooperating with more partners. In particular, this business is helmed by Yu Chengdong.
Therefore, it is inevitable that Huawei will inevitably meet Qualcomm in the field of automatic driving, and then it will fall into competition.
In April, Qualcomm announced that it had completed a transaction from investment firm SSW Partners to acquire Veoneer's self-driving software business, Arriver, for a total consideration of about $4.5 billion, which will enhance Qualcomm's open, fully integrated advanced driver assistance system ADAS solution.
In addition, Qualcomm also announced that it has reached a cooperation with Stellantis Group and BMW Group, and 14 car brands under Stellantis will use the Snapdragon cockpit platform, and Qualcomm and BMW will jointly develop autonomous driving software stacks.
According to Qualcomm, Qualcomm's revenue in the automotive sector will be $970 million in 2021, and after 10 years, this part of the revenue will reach $8 billion (about 51.1 billion yuan).
Comparison of Qualcomm's revenue growth in ten years (Source: Edited and arranged by Titanium Media App)
Titanium media App through Bloomberg data, combed Qualcomm's revenue growth comparison in the decade from 2011 to 2021, we found that Qualcomm's expected revenue growth rate in 2022 is similar to 2012, which shows that Qualcomm relies on diversified business revenue such as automotive chips this year, or will achieve business development again, but the revenue growth rate may slow down.
Qualcomm Chief Financial Officer Akash Palkhiwala said at a corporate event late last year that Qualcomm's revenue could reach $46 billion by fiscal 2024, which is almost double the revenue in fiscal 2020.
Shen Jin, managing director of Qualcomm Ventures China, said in a recent interview with Titanium Media App that in the future, Qualcomm's investment focus will continue to be on 5G-enabled intelligent interconnection, specifically integrating 5G and artificial intelligence (AI), XR/VR, robotics/autonomous driving and Internet of Things. And in 2022, Qualcomm Ventures will also lay out the meta-universe field. (For details, see the titanium media App above: "Qualcomm Venture Capital Shen Jin: 17 unicorns listed or merged in 5 years, the future will be laid out meta-universe terminal XR innovation | exploration 2022")
Shen Jin stressed that Qualcomm has a long period of research and development and accumulation in the fields of edge-side AI, imaging, graphics processing, processing and connection technology, and will also lead the industry for a long time.
(This article was first published on titanium media App, author | Lin Zhijia)