Qualcomm was able to pull off some magic with its latest earnings report delivered Wednesday. The company saw its Q4 fiscal revenues drop 24% from a year earlier, with net income down 48%, but a day later its stock rose 6% likely because of its strong forecast and a performance beat against earlier expectations. For all of 2023, its stock price is up 9%.
One bright spot for Qualcomm was stabilization in demand for handsets, with the decline in shipments at a rate less than the company earlier projected. Another was the increase in Qualcomm automotive chips, which rose 15% to $535 million in sales, even as the company’s processor division dropped overall by 26% to $7.4 billion from a year earlier.
By comparison, the company’s IoT business fell 31% to $1.38 billion. That category provides the chips used in Meta’s Quest headsets, for example, but many other devices as well.
On Oct. 24, Qualcomm announced two new chips to run AI software including LLMs: the X Elite for PCs and laptops and the Snapdragon Series 8 Gen 3 for Android phones.
Qualcomm has been making NPU chips since 2018 to improve photos and features for smartphones, but now the new Snapdragon chip will handle 10 billion parameters, far below the biggest AI models that handle 175 billion parameters, but in the cloud.
The differentiation between having edge AI on a laptop or smartphone instead of relying on the cloud was a big message from CEO Cristiano Amon in earnings call remarks on Wednesday. “On device Gen AI…is evolving in parallel to the cloud,” he said. “And it’s going to have a significant impact in how you change the user experience…Every single text that you write could be an input to a model and that could bring prediction of your behavior.”
Qualcomm’s new PC chip is the Snapdragon X Elite based on Arm, using technology from Nuvia, acquired in 2021 by Qualcomm. Laptops using X Elite with Oryon cores are expected to hit the market in mid-2024. The company claims greater performance than Apple’s M2 Max chip with less power.
Amon noted that X Elite has been built from ground up to take advantage of Microsoft’s AI Copilot in Windows.
Leonard Lee, an analyst at neXt Curve, said X Elite “appears to be a highly competitive if not game-chaning processor for the emerging AI PC opportunity.”
AMD and Intel have lately been promoting the AI PC concept, which means plenty of competition.
Qualcomm’s attempt to go after the PC space “has raised optimism in the market,” said Jack Gold, analyst at J. Gold Associates. “They are no longer just relying on the mobile handsets space, so diversification of their market is somewhat insulating for different market dynamics and should smooth out some of the highs and lows.”
Gold had earlier said X Elite “is a major step forward in Qualcomm’s attempt to be a major player in the PC space” but said it could take some time to catch on.
He noted that Qualcomm’s auto platform is “starting to kick in as well,” another widening of the markets
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