In this Making Markets quick take, host Daniel Newman and Qualcomm CEO Cristiano Amon talk about the company’s massive secular trends in automotive tech and how the company positioned itself for diversification and exponential growth with a decade of fundamental R&D in the space.
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Daniel Newman: I went on Yahoo Finance after your earnings. And of course, everybody wants to talk about mobile. Everybody likes talking about things like the licensing business. I’m like, good, but the story that’s being missed, I think so often, and you’re starting to tell it right here is you had, I think, three businesses, three segments in QCT, going on four now that are a billion dollar plus. One that’s, I think, over five billion, one that’s over four billion. You went from, I think, an unknown in the RF front end for mobile business to now the undisputed number one. So RF front end, IOT, and then you have automotive by the way, coming on extremely fast. Is that not the story that I think a lot of people are missing? These are massive secular trends.
Cristiano Amon: Absolutely. Which company you can find that it has the opportunity to grow not in one new market? I’m not here to say, oh, we have this one new market, we have plenty. We have plenty, like within this broad category, we identify a number of opportunities that are big for Qualcomm. And I want to come back to where we are right now, but just looking at the future, we have these devices for mixed reality and augmented reality. Whatever version of the metaverse you like, you’re going to find a Qualcomm device, connecting physical and digital spaces. We are the company that is doing that today. We have 10 years of fundamental R&D. We talked about this when it wasn’t popular. We have the opportunity to be the company that provides technology for the car companies as the car is being transformed. We are the preferred partner for building a digital chassis. No, that’s not a surprise that we’re now working with 25 of the 26 global brands.
Daniel Newman: $10 billion pipeline, right? No 13, right?
Cristiano Amon: It’s bigger now. Yes. Yes. Then number three, we have the full conversions of mobile [NBC] that is happening. We have the industry 4.0, that’s driving a lot of the industrial IOT as devices get connected for the digital transformation. We have 5G becoming the fastest growing broadband technology for wireless fiber. And all of those businesses exceed a billion dollars. And now I’ll go back to the question. I remember having conversations and I would say, “Look, we’re diversifying.” We have all those end markets and people want to say, “Okay, let’s talk about companies. They’re doing their own modems.” And I said, “Great, we can talk about that. And have you looked at our diversification?” Then all of a sudden people realize, wow, this is a 10 billion revenue already, already. It’s 38% of our QCT. So I said, “If 10 billion doesn’t do it, I don’t know what does it.” But it is a reality. Those are fast growing businesses. We have incredible growth rates. And I think we’re just at the beginning, just at the beginning.
Daniel Newman: Well, if you can keep these growth rates, your metaphor about startups really starts to be true. It’s a startup within a mega cap or a large cap. I think my market watch piece, I said, you guys would be one of the next mega caps in tech. You were about 160 billion on the day I wrote it. And it was literally within the earnings. The Investor Day catapulted you and I took a big picture of it, circled it on my phone when you hit 203. It hit 203 and I’m like, sometimes you just get it right.