Qualcomm EV Smartphone China

Qualcomm CEO Cristiano Amon on 5G, China, and things beyond the smartphone: an interview with PingWest

Wang Boyuan

posted on January 20, 2022 9:10 pm

With 25 years of experience at Qualcomm, Cristiano Amon began to steer the wheel of the American semiconductor giant as the chief executive officer on June 30, 2021. In an era where Qualcomm is fundamental to mobile computing and, of course, smartphones, Cristiano Amon has been relentless in collaborating with Chinese tech companies. Furthermore, he is also among the US CEOs keen to strengthen ties with China and support China's digital transformation. 

In a previous interview with Xinhua, Amon said, "Qualcomm definitely sees China not just as a market, but as an opportunity to build strong partnerships."

At the end of 2021, at the Snapdragon Tech Summit, PingWest had this conversation with Cristiano Amon via video. The back and forth between PingWest and Cristiano were about many topics such as the relationship between Snapdragon and Qualcomm, Qualcomm's business growth beyond smartphones (like cars, which has been one of the company's vital businesses), and 5G. 

What’s more, Cristiano expressed his view on China's EV boom, and he also thought highly of China's 5G development and deployment throughout the years. 

Without further ado, here's the full interview:

PingWest: Congratulation on this year's Snapdragon Tech Summit. Snapdragon is Qualcomm's consumer-end brand. It used to come as Qualcomm Snapdragon, but now the brand is more independent. Why dropped the Qualcomm? What's the difference?

Cristiano: Thank you for that. That's an excellent and insightful question. It's the same Snapdragon. The reality is Qualcomm will always be an enterprise brand for the company. The meaning of Qualcomm is Quality Communications. We will always be a trusted, reliable preferred partner, a company that invests in technology, a very active company on standards, and a company to build the ecosystem within the carriers with our partners and customers to drive a horizontal technology model. We're much more diversified because of the demand for mobile technology everywhere as we'll build. 

It became evident that consumers know more of Snapdragon than they know of Qualcomm. That's because we also have a mature smartphone community. The smartphone is now our inseparable device. All of us depend on the phone, while more and more people are interesting in understanding the potential technology and capability of our phones and what is behind the glass. As a result, we always have seen incredible Snapdragon brand awareness. It's the number one consumer preference for flagship Android smartphones. The Snapdragon brand value would place it within Interbrand’s top 100 brands.  

It was about time to accept that and build Snapdragon for what it is, the most advanced mobile processor in the street, and the synonym with Android flagship worldwide. So that's why we simplify the brand. It's about Snapdragon. That's the product. And we simplify how we think about the part of numbering. From the very first Snapdragon, we started with the 800 tier. And in the process of application, it is always Snapdragon 8 in the eyes of consumers. So we are just embracing it. This year we unveil the first generation of Snapdragon 8, and there is going to be a new generation every year.

PingWest: Currently, RF front-end, IoT, and automotive chips have contributed nearly 40% of the company's QCT revenue. For Qualcomm, what did this performance indicate?

Cristiano: I'll start by saying there is absolutely no question that the semiconductor business is the growth engine of the company, now and going forward. That's where an immense opportunity exists for Qualcomm and an opportunity to expand its addressable market significantly. The demand for Qualcomm technologies beyond the handsets is happening across virtually every industry because we are the company that plays a role in the edge. If you believe in the growth of the data center, you believe in the growth of Qualcomm at the edge because you need those billions of devices to be connected, sending data to the cloud. It is not about just get connected. They are needed to have contextual awareness, artificial intelligence, advanced processing. And that's what we are doing. 

And that explains why in a short period, Qualcomm became one of the largest automotive suppliers. We have now significantly expanded our designing pipeline by about $13 billion[EL1] . And when you look at the broader IoT category, we have a total (including auto) non-handset revenue in excess of $10 billion in this fiscal year that ended in September, which is now representing approximately 40 % of QCT revenue, with much higher growth rates than mobile.

The second and final part, Qualcomm is not replacing mobile with those new opportunities. Instead, they are an addition to mobile. We will always be the company that will be working very hard to drive the pace of innovation in mobile, and we're going to be working very hard to drive the mobile consistently. But the reality is the mobile ecosystem is very large. It's the largest consumer electronics market, but it is also mature. It grows at a single-digit every year. There's nothing wrong with it. But the growth of Qualcomm will come from those other markets.

PingWest: Mobile is a huge legacy for Qualcomm itself. Legacy sometimes means a good thing, but sometimes it's the other.

Cristiano: It is still a good thing because it's about core technology. And I'll explain this because it's one of the key messages we have been delivering as we unveil our multi-year plan to our investors. In that case, it's a very good thing because the pace of innovation in mobile is very high, and relying on a single technology roadmap, we call the Qualcomm One Technology Roadmap, which serves mobile, auto, IoT consumer, IoT networking, IoT industrial and RF. 

At the end of the day, the ability to stay relevant in mobile and drive the innovation cycle of mobile will allow Qualcomm to leverage that R&D to build those new businesses basically and they are equally accretive to margins as they have high leverage on the mobile R&D. So, it's still a very good thing.

PingWest: Okay, let's talk more about one of the good things. How could Qualcomm bear the fruit from the automobile industry in the coming probably 5 to 10 years, and how many smart vehicles in the world can adopt Qualcomm technologies and solutions?

Cristiano: This is actually one of my favorite topics of the conversation. The automotive industry is undergoing a massive transformation. Suppose you look at the market cap and the valuation of companies like Tesla and compared it to the other car companies. In that case, it's showing that the future of the automotive industry is those car companies will have to become technology companies. The car is becoming a connected, intelligent computer on wheels. And that is where the Qualcomm model makes the difference. In a short time, the reason is that those companies realize they need a horizontal platform that enables them to have access to the digital technology they need. We build a business that we're now working with more than 25 companies globally, and that's what we can do.

Our strategy is that, instead of saying we're going to build a chip component to this car model, we took the approach of building a Digital Chassis. Like a car company that have the chassis of the car, the unibody, or the engine, we said you're going to need a digital chassis. It's not about one component, but a system that includes ADAS autonomy, the digital cockpit solution, the connectivity to the car, and the cloud in a service platform. When you connect the part of the cloud, the car becomes a service hub to distribute media, games, advertisements. It has data analytics to learn about you as a driver and customize your experience. You learn about how the car is driven. When you take it to service, they know exactly what to do on your car because your car is monitoring itself and communicating with the owner, the car can upgrade over there. The whole business model then changed. 

The reality is that car companies need a digital platform, which we can do for them. So I hope that the growth of their experience right now will continue as we see more and more electrification, more autonomy, and more connectivity with the cloud. In terms of projection, we expect within the next 4 to 5 years, every new model of car released worldwide will be 5G connected.

PingWest: Just over 30 years ago, when Qualcomm and mobile device came to this world, the two of you were like some symbiosis. Now, for the smart automobile industry, things are different. Tesla has its chipsets D1 to train its own robot. Nvidia also has ambition on autonomous driving. All these parts are also very important for the future of smart vehicles. I think Qualcomm is doing pretty well on this part like the digital cockpit. Still, we'd like to see more cutting-edge technologies from Qualcomm on autonomous driving, the neural network, and more connected travel and traffic control.

Cristiano: Actually, it's precisely one of the reasons that Qualcomm is becoming the choice for ADAS and autonomy. When you think about assisted driving and intelligent transportation, your car has a bunch of different sensors collecting information from radar, lidar, cameras for vision. Meanwhile, there is 5G C-V2X, like car-to-car, car-to-vehicle, car-to-pedestrian, car-to-bicycle communications. Your car has to make decisions in a split second with all this generated information because it does not have time to upload to the cloud. To do that, you need an incredible amount of computation on a very low power. You cannot run a server in a car. And I think your problem is the reason we're being successful.

You mentioned Tesla. Qualcomm is the company that can enable every other car company to have a product and a technology that can compete with Tesla because we provide a lot of the digital assets to those companies. So it's very similar in a way how we enable in the android ecosystems, for example. In that case, that's the reason we're getting a lot of traction with the digital cockpit. 

A couple of weeks ago, we announced a partnership with BMW in autonomous driving technology. General Motors also worked with us on the new electrical Cadillac, where we empowered its Super Cruise hands-free driving system. And the reason we're winning the next generation autonomy is that you need an enormous amount of computation of power in the car. After all, the car has to make decisions in real-time. And the power performance per watt is so important because if you put a server chip in the car's trunk, you are taking away range, and that's where Qualcomm can make a difference.

PingWest: Let's talk more about China's smart cars. Also, a couple of weeks ago, Qualcomm announced a partnership with XPeng. So what can Qualcomm further do with more Chinese smart car makers? Because there are two paths underway, one is having a trusted partner in terms of the digital cockpit or 5G connectivity for the chip from companies like Qualcomm and Nvidia. And on the other hand, some of the top players in the industry try to design their own chips. It's a little bit conflicting. How can Qualcomm deal with that?

Cristiano: The partnerships with the automotive segment in China for Qualcomm continue to increase. We've been adding customers quarterly, and we're working with them across all those areas. So I think it will be a substantial growth area for Qualcomm. Those partnerships are going to be stronger. The reason is that the Qualcomm model is different and open. We provide an open platform where they can innovate. 

As a result, I think many of those companies will be able to get access to the digital technology they need for their projects. And with that, we expect our partnership with China's ecosystem continues to expand.

PingWest: Just from what you talked about, the ecosystem of the smart vehicle industry. Qualcomm tries to enable more technology to empower more partners. Is it possible that one day the global smart vehicle ecosystem will just come to two dimensions? One is Qualcomm with their partners, and the other dimension is Tesla itself.

Cristiano: It's possible. At the end of the day, it's difficult to predict, right? Qualcomm strives to build a horizontal model, but in the meantime, we do have business with Tesla. It is difficult to predict winners, but the reality is the horizontal model has advantages. It has been proven in the mobile industry as an example. It combines the R&D of Qualcomm with the R&D of our customers. 

So when you have only one company innovating versus that of every other company innovating together, you have more R&D dollars. They get across through many companies to drive the single innovation. The beauty of the horizontal model is that you can combine the R&D of the car company and of Qualcomm. On the one hand, you get the best of the car company's experience. On the other hand, they have access to our digital technology. Finally, the market will decide which model is best. But we're super excited about the progress that could be made across all the carmakers.

PingWest: Great. For 5G, what's your view on the 5G adoption in the world's two largest economies? Anything interesting you find to identify the differences between China and the US? 

Cristiano: The transition from 4G to 5G is moving fast, at least two years faster than prior technology transitions. 5G has proven to be very resilient that we're now going to finish 2021 with about 525 million 5G handset shipments. And in markets, for example like China, just in the last quarter, 79% of all newly sold phones were 5G. And there is momentum for 5G globally because there is an understanding of the importance of this technology, not only for the telecom sector or just the phone, but the impact on many other sectors of the industry.

We have been extremely impressed and pleased with the speed and the scale of 5G deployment in China. We also see the speed of the transition of the mobile market, as well as the speed of development on the use cases impressive. China looks at everything as infrastructure. So I think China looked at 5G in the same way they looked at highways, ports, and grids. From early on, they built the idea in mind that 5G is a critical infrastructure. And I hope every other country will do the same.

PingWest: What does China mean to Qualcomm in this very dividing world? 

Cristiano: We have built partnerships with our Chinese customers and partners over decades. I believe that the more robust relationship between the tech companies in the enterprises in the United States and China will be the biggest stabilizing force between the two countries. And that's what we continue to do.