Q4 2021 Qualcomm Inc Earnings Call

Ladies and gentlemen, thank you for standing by welcome to the Qualcomm fourth quarter and fiscal 2021 earnings conference call. At this time, all participants are in a listen only mode.

Later, we will conduct a question and answer session. If you would like to ask a question. During this time press Star then the number one on your telephone keypad to withdraw your question Press Star then the number two if you are using a speakerphone. Please pick up your handset before pressing my numbers.

He's limit your questions to one question and one follow up as a reminder, this conference is being recorded November 3rd 2021.

The playback number for today's call is 8776606853 international callers. Please dial 20161 to 7415. The playback reservation number is 137 to three seven to one.

I would now like to turn the call over to Mauricio Lopez <unk>, Vice President of Investor Relations. Mr. Lopez. The Doyon. Please go ahead.

Thank you and good afternoon, everyone. Today's call will include prepared remarks by Christiane them on and of course Parker Wala. In addition, Alex Rogers will join the question and answer session.

You can access our earnings release and a slide presentation that accompany this call on our Investor Relations website. In addition, this call is being webcast on Qualcomm Dot com and a replay will be available on our website later today.

During the call today, we will use non-GAAP financial measures as defined in regulation G. And you can find the related reconciliations to GAAP on our website. We will also make forward looking statements, including projections and estimates of future events business or industry trends or business or financial results.

Actual events or results could differ materially from those projected in our forward looking statements.

Please refer to our SEC filings, including our most recent 10-K, which contain important factors that could cause actual results to differ materially from the forward looking statements.

And now to comments from Qualcomm's, President and Chief Executive Officer, Chris Gentleman.

Thank you Mauricio and good afternoon, everyone. Thanks for joining us today.

The pace of digital transformation of industries accelerates and as devices become connected and more intelligent our broad portfolio of technologies and solutions is creating a significant long term growth opportunity for us.

As you can see from our results the performance in our chipset business led to record fiscal fourth quarter non-GAAP revenue was up $9.3 billion and record non-GAAP earnings per share of $2 55.

Notably this is our fifth consecutive quarter of greater than 100% year over ear EBIT growth in our chipset business.

We also demonstrated revenue diversification with combined RF front end automotive and Iot fiscal 'twenty, one revenues exceeding $10 billion, an increase of 16, 9% year over year.

Going forward, our chipset business represents the largest growth engine for us as virtually all devices at the edge adopt mobile technologies, we have the relevant technologies required to continue to lead in mobile and the connected intelligent edge and S D edge gains scale and <unk>.

Activity and adopt one device artificial intelligence, we're well positioned to become a leader in AI processing.

Let me now briefly highlight the strong momentum we continue to see an iot across consumer edge networking and industrial.

In consumer we're pleased that our XR platforms are powering over 50 commercial devices and gaining scale with the leading V. R. N E R ecosystems.

Our early investments have established snapdragon XR as a device platform of choice for connecting physical and digital spaces and recent market developments position us as one of the key enablers of the meta versus opportunity.

Additionally, the ongoing convergence of mobile and compute continues to drive demand for Snapdragon powered premium tablets, two in ones and laptops.

We are pleased with the strong market validation of arm based personal computing in the industry transition to our new <unk> architecture, we're more confident than ever in the connected computing opportunity our upcoming solutions powered by our new V S Cpus and our collaborations.

<unk> with Microsoft.

We're also seeing increased traction in consumer electronics, our advanced technologies are powering category, leading devices, such as the peloton bike plus and tread as well as the Astro Amazon's recently announced household robot.

In etch networking, we are a leader in corn and next generation high performance Wi Fi six and Wi Fi six access point solutions.

And we continue to see high demand for our products driven by home and enterprise upgrade cycles. We expect this trend to continue as productivity increasingly requires video collaboration as well as cloud processing and storage.

Five G. S. Wireless fiber is now a reality and gaining scale in the United States, Verizon recently announced five G home Internet service availability in 57 markets.

<unk> more than 2 million households covered on millimeter wave. In addition, T. Mobile is leveraging their five G network to target seven to 8 million home broadband customers over the next five years.

We're seeing demand increase globally, making five G. S wireless fiber one of the fastest growing last mile broadband technologies.

In industrial we have expanded our Qualcomm Iot services suites to more than 30 verticals. As an example in retail our solutions are powering digital signage payment and self checkout devices from companies like square and Clover as well with solutions from Honeywell, Panasonic Zebra and others.

To enable new customer experiences help empower store associates and improve operational efficiencies.

We also continue to lead the way on product innovation with new launches like the Qualcomm flight or be five the word first five G AI drone platform.

In RF front end, we expanded our product portfolio with a recently announced ultra ball RF filter technology that supports frequencies from $2 seven gigahertz to 7.2 gigahertz. This is the new industry benchmark for performance in this range with <unk> technology also supports Wi Fi bands, including <unk>.

Five gigahertz, the newly adopted six gigahertz band for Wifi, six and future Wifi standards. This creates a new growth vector for RF front end as we attach our RF solutions to Wifi.

Our RF front end portfolio, combining ultra saw an ultra bought technologies is now best in class for them 600 megahertz to seven gigahertz and with the addition of millimeter wave. We are the only RF front end provider with a comprehensive solution for all bands.

Cellular expands beyond handsets, we're focused on extending our modem to antenna platform to automotive and Iot.

In our automotive, we're creating a leading horizontal an open platform with our snapdragon digital chassis, which includes our telematics digital cockpit car to cloud service Adas and autonomy solutions.

Taking the same approach we used to make the smartphone the world's largest computing and developer platform. We're currently working with automakers and tier ones to create a joint roadmap to build multi tier multi generation scalable and upgradable platforms for long term sustainable business.

The strength of our digital chassis strategy is reflected in both our results as well with strong design pipeline and it's creating a platform for innovation for Alto.

We're also very excited about our river well upon closing Snapdragon ride Adas solutions will be complemented with a rivers' computer vision drive policy and driver assistance assets enhancing our ability to deliver in an open and competitive Adas platform for automakers and tier ones at scale.

<unk>.

In handsets, we're successfully executing on our strategy.

Our premium tier Snapdragon solutions continue to gain traction with Oems in fiscal Q4 devices announced orders shipped with our snapdragon premium tier products increased by 21% year over year, notably all leading five G Android smartphones Oems by volume.

Tina to power their flagship devices Snapdragon.

Snapdragon continues to be the preferred choice for premium and high tier Android smartphones in all regions. As a result, we're benefiting from the changing OEM landscape and Android Sam expansion.

Lastly, our licensing business achieve fiscal 'twenty, one revenues in excess of $6 $3 billion Q.

QTL remains the most successful licensing business and the industry, reflecting the strength of our innovation and seller technology the value of our extensive patent portfolio and our execution in securing long term agreements with key Oems as well as over 155 agreements to date.

As we have noted throughout the year, we continue to see incredibly strong demand across all our technologies as the current environment is accelerating the scale of connectivity and processing at the edge, we still expect material improvement store supply by the end of the calendar year and our second sourcing initiatives remain on.

Track.

Before I turn the call over to a cash I would like to highlight that we recently announced a goal to achieve net zero global emissions for scopes, one two and three by 2040. We also look forward to enabling a more sustainable future with five G through its impact on <unk>.

House gas emissions reduction energy and water use optimization green jobs creation and more.

Now like to turn the call over to what Kash. Thank.

Thank you Cristiano and good afternoon, everyone.

We are pleased to announce record fourth fiscal quarter results with non-GAAP revenues of $9 $3 billion, and non-GAAP EPS of $2.55, reflecting year over year growth of 43% and 76% respectively.

For Q C. D. This was another record quarter with revenues of $7 7 billion and EBT margin of 32% both above the high end of our guidance.

Qcd EBT of $2 $5 billion grew by 143% versus the year ago quarter on revenue growth of 56% and 12 points of EBIT margin expansion.

We also delivered record revenues in each of Q3 revenue streams handsets RF front end Iot and automotive.

Handset revenues of $4 $7 billion increased 56% year over year on strong demand across all major Oems.

RF front end revenues of $1 $2 billion grew 45% year over year and included the benefit of pulling off demand in advance of certain holiday launches.

Iot revenues were up 66% year over year to $1 $5 billion as digital transformation continues to drive higher demand across our diversified customer base.

Automotive revenues of $270 million grew 44% year over year on the ramp of digital cockpit launches and continued strength in telematics.

<unk> revenues of $1 $6 billion and EBT margins of 72% were in line with guidance.

These results reflect slightly lower than expected units offset by favorable mix.

Lastly, we delivered GAAP EPS of $2 45.

47 cents above the high end of our guidance driven by record non-GAAP earnings and approximately $500 million of gains in our <unk> investment portfolio.

Now I would like to highlight some key achievements in fiscal 'twenty one.

We're exceeding all targets, we set at our 2019 analyst day, which is a year earlier than forecasted.

We delivered year over year revenue growth of 26% in Q T L and 64% in Q C D and more than doubled non-GAAP EPS to $8 54.

In Q C D, we had greater than 50% year over year growth in each of our revenue streams and EBT margins expanded from 17% in fiscal 'twenty to 'twenty, 9% in fiscal 'twenty one.

Within handsets are Android revenues for our Snapdragon chipsets, where approximately 40% higher than our primary competitor.

With our focus on diversification RF front end automotive and Iot accounted for 38% of total <unk> revenues.

Lastly, we returned 74% of our free cash flow to stockholders.

<unk> 3 billion in dividends and $3 4 billion in stock repurchases.

Turning to our guidance for handset units in the first fiscal quarter.

For calendar 2021 we are narrowing the range for five G handsets to 500 to 550 million units.

We are now forecasting mid to high single digit growth in global <unk> handsets relative to calendar 2020.

For the first fiscal quarter, we are forecasting revenues of 10 to $10 8 billion and non-GAAP EPS of $2 90 to $3.10.

In <unk>, we expect revenues of eight 4% to $8 9 billion and EBT margins of 32% to 34%.

At the midpoint this implies year over year revenue growth of 32% and EBIT dollar growth of 49%.

The sequential revenue growth is driven by handsets due to higher demand primarily for our snapdragon chipsets and Android devices.

We also expect it to contribute to the rest of fiscal 'twenty two.

Before I finish my prepared remarks, I would like to tank our employees for their leadership and contributions in making 2021 successful.

Finally, we look forward to seeing you at our Investor Day on November 16, where we will provide additional detail about our growth strategy.

Thank you and I'll now turn the call back to Mary Sue. Thank you.

Operator, we're now ready for questions.

Thank you Tequila question Press Star then the number one can withdraw your question press star two if youre using a speakerphone. Please pick up your handset before pressing my numbers.

Our first question comes from Chris Caso with Raymond James. Please proceed with your question.

Yes. Thank you good evening.

So my first question, perhaps you could help us out with what was was different from your expectations heading into this quarter I know that you were struggling with supply constraints like everyone else in the industry was at that supply came on better than you expected.

It wasn't a demand was it a combination of both.

Okay.

Yeah, Hi, Chris This is gosh. It was really a combination of both we were we had lots of strength in Q C. D really across all of our revenue streams are with handsets Iot in RF front end those are the three areas that did really well.

Relative to our expectations and we were able to work through those supply constraints to address the demand that came up so it was really a combination of both.

Great and maybe you could expand on your comments you spoke about and I think I have this right EPS growth expected to exceed 20%.

Ah as you go into next year.

Can you can you give us some details I'm sure that's something that you're planning on hitting as you go into the analyst day.

Yeah, absolutely I mean, it's just just to clarify what we what we guided is a non-GAAP EPS growth of greater than 20% and the key driver for that is really across all qcd revenue streams. So you're seeing the strength exiting the year and that's the that's kind of playing out both in our first quarter guidance.

And also the full year.

The one thing I'll highlight is within handsets.

Really in a strong position to benefit from the 10 billion. Sam expansion. We have previously discussed from the changing OEM landscape and a portion of this benefit is reflected in our first quarter guidance and that's that's also contemplated in the greater than 20% EPS growth we are suggesting.

Given that we expect our handsets to grow faster than non handsets in fiscal 'twenty, two but really across the board will have very strong growth rates in and really set up to do well in the year and beyond.

Thank you. Our next question is coming from the line of Matt Ramsey with Cowen. Please proceed with your question.

Yes. Thank you very much good afternoon, guys and congrats on the results.

Cristiana, what I wanted to dig a little bit with you into the guidance for the December quarter in Q C. T. I think you guys mentioned in the script that that that was primarily going to be driven by your Android business and increased supply. So I just wanted to make sure that I got that right. Obviously that's a.

Strong quarter four for Cupertino, but I just wanted to dig a little bit more into the dynamics that are driving the fourth quarter and Android. Thank you.

No. Thanks, Matt for the question look I think what you're starting to see exactly the.

Correlation is go into different directions.

Correct is a seasonally stronger quarter for our.

Modem only shipments, but the sequential revenue growth is primarily driven by Android handsets and demand for snapdragon mobile platforms, both across our premium and high tier and consistent to what we said, we see an incredible opportunity to grow way first into the market.

And Android this primarily growth driver in our handset business right now.

Very clear thank you.

Our cautious as my follow up.

33% Q C T op margins.

In the December quarter.

Obviously, there was a settlement with Apple and some things change there, but that number I think it was 13% two years ago. So I guess pretty remarkable progress I Wonder if you might talk a little bit more and maybe this is something for a couple of weeks from now at the analyst day, but the puts and takes and drivers of the Q C. T op margin going forward.

Where are we is this a seasonal peak or is this a new.

New trend thank you.

Matt. Thanks for the question Yeah, we are very pleased by the operating margin performance as well.

So maybe I'll point to a couple a couple of drivers, but really we are planning to address this in a lot more detail in a couple of weeks. So I'll ask you to hold the whole deal done.

If you see our gross margin performance in the September quarter that we just reported very strong gross margins and we are forecasting in similar range going into the December quarter.

And then year over year, if you look at the full year, so abstract back from the seasonality.

Went from 17% in fiscal 'twenty to 'twenty, 9% in fiscal 'twenty one.

And so we feel obviously very comfortable with that number and in a couple of weeks, we'll talk about how the combination of revenue growth and gross margin percentage and R&D leverage.

Bill will take us going forward.

Thank you. Our next question comes from the line of <unk> <unk> with Jpmorgan. Please proceed with your question.

Thank you hi, Thanks for taking my question I guess Hum Cross channel, Oh, gosh, you're sounding grid on Android adoption of your premium.

So it's going into the December quarter I, just wanted to see if I can get some more color about how you're thinking about adoption of millimeter wave with the Android customers I know there has been some investor conversations.

Disappointment around the primary customer not deploying are more widely rolling out millimeter wave. This year. So just wanted to get kind of what youre seeing in the pipeline relative to millimeter wave and however, Android customers wanting to go out there and I have a photo.

So many thanks for asking the question.

Our position of millimeter wave remains unchanged and we will remain unchanged.

There are two I think interesting question the first one.

Yes continue to track exactly as we'd expected we have millimeter wave in the United States is now commercially available in Japan across all carriers locomotive softbank to any of the or even the new carrier at 10 am.

And we continue to be optimistic about the opportunity of millimeter wave, becoming commercial overtime in China. The first first milestone is to millimeter wave for the Winter Olympics early 2022.

Japan is moving for millimeter wave.

And nothing has changed the carriers' plans to continue to build this technology and there are a number of commercial millimeter wave smartphone Ginger plan that includes the Galaxy note the GFS 'twenty, one and the galaxy fold and Sony.

And from our perspective, just knowing what we know of wireless and how the growth of data is going in the spectral efficiency.

Illumina wave it's inevitable, it's just a matter of time and it's just different markets will deploy at different speeds, but that's how we get more spectrum and our position of millimeter wave remains unchanged.

Thank you so much.

Follow up if I can ask you in a neighborhood of you've got some investors asking about how to think about the opportunity with the rifle and AR. How should we think about OEM customers that are looking for a full stack solution versus Oems.

OEM is that look for more of like a just the hardware piece of that stack and leveraging Qualcomm from that aspect and then if you can provide any updates I think you've updated us on the purchase right along with us as a partner, but oh.

Any more details around the closing as well as the price for Qualcomm Standalone for the right asset.

Yeah, we're very excited about the acquisition and an arrival technology as we said before with the natural owners of that asset.

We were you know.

Believe we are on track to get the ability to get all the approvals and close on this transaction and more important as we had a business cooperation in place with a year on year prior to the acquisition that remains unchanged and allow us to continue to progress towards our advanced platform.

We're getting incredibly positive feedback from the market from the ability to provide a truly open horizontal.

Platform for a dash and I highly encourage you to be at or in New York Analyst Day, we have a lot more details to provide about what we're doing in Adas and autonomy.

Thank you. Our next question is coming from the line of Stacy Raskin with Bernstein Research. Please proceed with your question.

Hi, guys. Thanks for taking my questions. My first one I was curious just given the current state of the handset market what kind of handset growth you have embedded in your more than 20% EPS forecast for 2022 are you looking for recovery or is it all around content cycle like how are we thinking about a unit.

Growth.

In the market to drive that.

Yes, Stacy for the guidance that we gave there are no heroic assumptions on market growth.

Assuming similar scale to this year and within that we feel comfortable that we have the opportunities in front of us to grow.

But it's also still like mid to high single digit.

That's right.

Got it thank you for.

For my follow up.

And I know you've had supply issues I know theyre resolving by the end of the calendar year are you still under shipping what you could ship if you had supply and as that supply eases up does that have any impact on how we might think about typical seasonality in the March quarter.

Yeah, Stacy it's akash.

So we do have constraints really across the board and you have to figure out how the demand would have played out if there was supply across the industry, but we feel pretty comfortable that the overall supply picture is playing out exactly as we had planned we saw this coming early and we've been talking about it for the last couple of quarters.

And we've put in place plans both for.

Dual sourcing for certain parts, we've now announced three parts that are dual sourced that are available.

And then also capacity expansions with our suppliers that were previously being planned anyways.

Come in towards the end up there. So that's definitely something that we're very excited about.

On your question on the second quarter, we're obviously not guiding the quarter at this point, but it's a it's a reasonable assumption to think that as we launch our new Android premium tier chip in the fourth first quarter of the calendar year that will offset some of the decline you would see in the handset.

Market naturally.

Within Qcd and then of course, we also expect non handset to grow from first quarter to second quarter.

Thank you. Our next question comes from the line of Polyone with Bank of America. Please proceed with your question Hi, guys I have two questions. So I'll just ask them together.

What is the what are the trends in China, meaning the handsets to market is weakening.

And we heard it throughout the quarter and on the other hand, there is a huawei share loss and your share gains. So I'm wondering if you can share with us kind of the trends within China and your outlook for the market.

And the second question is not related but its the second question I'm getting from investors, which is.

You always say that the when Apple starts using their motors the surface area at Apple is big and there are other opportunities can you elaborate what are the other opportunities what are the maybe give us scenarios. What are the scenarios that you can still manage the transition of apple using their own modem.

Yeah, Tal, it's a kind of a shall take the I'll take the first one on Cristiana will address the second one.

So what we saw in the September quarter, and the market was weakness in units in China and emerging markets.

But developed markets volume remained very resilient. So that's that's really the jumping off point for the December quarter, we are forecasting normal seasonality on top of what we saw in September.

I'll say that a portion of the weakness was driven by supply imbalances at certain Oems and so that did impact the demand to certain extent, but that's one of the key factors we saw happening.

Within the market, though five G continues to be very strong. So we're seeing two trends in China first is the transition to <unk>.

There is a variance month to month, but very very strong in the high 70% has already transitioned to <unk> and so we are raising the guidance the midpoint of the guidance for <unk> do now 525 million units.

And then within that we're also seeing.

Fear of devices, So Opel vivo Xiaomi honor all of our customers are moving up there and as they move up there that creates an incremental opportunity for us so some pretty positive market trends for us.

Alright, so the second question.

I apologize the second.

Okay. So just can answer the second question.

So.

The second question, we're very focused right now on our contract with Apple, which is focused on providing <unk> modem.

For for their products, we're very happy with the relationship but anything beyond our contract with them is an upside to our model and as I continue to say what I said before we have a lot of technologies. They have a large number of devices.

And if there are opportunities, we'll be very happy to engage with them in supply with just to want to speculate at this point and we've been very clear that.

Our assumptions in our model, it's just focus on our contract everything else is upside.

Our next question is coming from the line of Ross Seymore with Deutsche Bank. Please proceed with your question.

Hi, guys. Thanks for letting me ask a question congrats on the strong results and guide.

Cash or Cristiano I, just wanted to talk a little bit about the pairing of the handset in the RF side of things I know you said that there was a little bit of a pull in into your fiscal fourth quarter on the RF side of things, but with the Android market share gains that youre talking about heading into the December quarter.

Why is the RF side, not coming along for that ride in and is that preparing something that it's just a transition period and as we look further out those are going to be more linked together.

There are all sorts of gosh.

It's the exactly the right question there that we expect that due to move together in concert.

As I mentioned in my prepared remarks, and that's why we highlighted it.

We did see some pull in from December quarter to September quarter within RF front end and it was really a where supply was available our customers chose to take it sooner than receiving the chipset and if you normalize for the two would have moved together. So we definitely see the growth in the Android opportunity is tremendous.

As a growth vector for us within RF front end as well.

Thanks for that color and I guess.

Just to just to be Crystal clear all of this growth opportunity that we've seen in Android, especially the premium is coming with RF I want to make that.

That statement clear.

Perfect. Thank you for that Christiana I guess as my follow up if I talk about Q C. T X handsets and ex RF front ends it sounds like it cost you said those would be relatively flat in December but then you thought it would actually grow again in March what's going on in those markets and then I guess a higher level question is given the supply constraints, there's a big debate going on in broad based.

I mean, it's between our investors worried about increased selectivity from customers' changing behaviors are you seeing some digestion period here why is it slowing and then why is it re accelerating.

Yeah, So as you.

As you saw we had tremendously strong results both in auto and Iot and our record results in both in the fourth fiscal quarter.

You are right going going into the first quarter, we are forecasting in line sequentially and and one of the key factors. There is still we are supply constrained and we are making certain decisions given the strong.

Handset market in that quarter.

To allocate supply a little differently.

Based on profitability.

But really when you think about the draw demand from the customer continues to be very strong and so we're confident that when you look at.

Second fiscal quarter or look at fiscal 'twenty, one going to fiscal 'twenty two.

Those businesses will grow in a very strong fashion.

Our next question is coming from the line of Joe Moore with Morgan Stanley. Please proceed with your question.

Great. Thank you I Wonder if you could just talk about the overall supply chain in smartphone and are you seeing bottlenecks at some of your customers, where they are unable to procure parts that aren't from Qualcomm that might lead to inventory buildup of Qualcomm parts in it.

Overall, the handsets sell through numbers are a little weaker because of those constraints, but it doesn't seem like the supply chain has changed at all can you just describe that dynamic.

Sure Joe So we're definitely seeing some mismatch of parts in the short term on some of our customers, but you should think of those as really timing issues. The other thing to keep in mind is kushan outlined earlier in the call that we're focusing really on the premium and high tier units and so when our customers have supply mismatch they actually end up.

Supplying the premium and high tier devices, so our chips and our devices are still being used and.

It's not something that's a big factor for us in the short term.

Okay, great. Thank you very much.

Thank you. Our next question comes from Rod Hall with Goldman Sachs. Please proceed with your question.

Yeah. Thanks for the question I wanted to come back to this idea of supply versus demand in the Q1 quarter I heard earlier someone mentioned that they were assuming that that supply would be.

Meaning demand it seems well I just wanted to check that with you is that a good assumption or do you think that we'd see supply continuing to rise to meet demand on into the fiscal Q2, and then I have a follow up.

Hi, Ross. This is Cristiano look if you remember we had said if I believe two earnings calls ago that we had to put it you know we act early we put a lot of things in place a multi sourcing kipp.

Capacity expansions and we said that we expect to see material improvement in our supply towards the end of the calendar year. That's reflected in the Q1 guide.

To have supply.

We continue to have pockets of areas that we would ship more if we had more but we see a lot of improvements we see at least three announced products of multi sourcing been shipped.

And we've been executing.

Executing on on that are you know increased supply and <unk>.

Different companies are going to have different outlooks. We we look at the first half of 2022, we still have some shortage, but as we get to the second part of the year I think in general supply and demand are gonna be aligned.

Yeah, just I guess, Mike My question was just aimed at the idea that this seems like it could continue to be a little bit of a tailwind for you.

You move into the beginning of next year and it's not just magically resolved here at the end of this year.

My my follow up is regarding the Android opportunity I Wonder if you guys could comment on content there versus.

The other big.

Big High end handset maker you supply.

We calculate a substantial increase in content, but I'm just curious do you agree with that.

If you sell a high end Android phone in January is that going to have materially more content for you than a and other type of phone might.

Absolutely look.

We are very pleased with the strength of our Snapdragon 800 series, just never trying and 800 series became synonymous with premium Android.

Flagship smartphones, there's a lot more silicon content besides.

The RF front end is attached the modem you know theres GPU or CPU, there's all the multimedia and it's a lot more richer platform than just selling a modem and it's a multiple times in terms of revenue and earnings contribution and when we look of the Sam available to us.

When we look at the consolidation of our Snapdragon.

Snapdragon 800, being the chipset for every flip chip.

That's no surprise that we actually grow faster in the Android segment.

Thank you. Our next question is coming from the line of harsh Kumar with Piper Sandler. Please proceed with your question.

Yeah, Hey, guys first of all congratulations on tremendous execution and diversification.

I had a question Chris Xiaomi, you talked a lot about Android and how positive you are on that I know you were supposed to get additional supply in the December quarter.

Seem to be benefiting from units are you are you benefiting from units primarily or are you also going back and taking share that you were expecting to take from your competitors.

Well, there's plenty of opportunity with the changing landscape all for growth between us and our competitors I think what's important to highlight is that Qualcomm has been concentrated into premium and high there's very high demand for premium and high.

Knapp track and mobile platforms, both the 700 800 and I. It is a share gain of snapdragon in Android premium and we're very happy with the opportunity to capture the higher value share of the market.

And then maybe to add to that I'll just draw your attention to product announcements that we had a couple of weeks ago, where we announced a whole new set of five new products across tiers.

Great guys and then for my follow up I wanted to follow up on a question that was asked about the March quarter, you talked about some benefit coming from your premium chips that you'll be launching in the in the March timeframe, which is seasonally weak now Apple for one talked about leaving I think it was 6 billion plus worth of revenues behind on the table.

Do you think you might get a benefit from all the all the handset Oems that are leaving revenue behind on the table along with their premium or you think it's just again your your own chipsets that are getting better.

From launch of new chipsets.

Well the what I said about the March quarter was really you have a seasonal decline in the handset market, but given the launch of our new chipset and didn't really all the other chips Atlanta as we have done over the last month.

We feel like we will be in a very strong position to expand expand our unit within the Android market.

And then the second thing I said is non handset growth, we expect non handsets all three to grow.

Within the quarter as well.

Thank you. Our final question is coming from the line of Timothy Arcuri with UBS. Please proceed with your question.

Thanks, a lot I had two questions. The first of course, she was on the RF business. I think you said at the analyst day that you were targeting a more than 20% share of an $18 billion Tam next year, but you are now.

Annualized to almost $5 billion so either.

The market's a lot bigger or your shares a lot higher. So can you just comment on that and then secondly, I had a question on the contract with the big customer can you just level set us Chris.

Christiana you just.

<unk> alluded to it so can you level.

Level set us I think it goes through 2024, but can you just help us on the timing of that thank you.

Yeah.

So Tim on the on your first question on the map are three.

$3 6 billion is right on where we reported our results at four $4 1 billion I think so we've definitely exceeded the target we had set and and as Cristiano said earlier in the conversation we are very confident that we.

We have several more vectors of growth left in the RF business.

Not just within handsets, but also his hand.

<unk> expands into telematics and Iot and then also within Wi Fi. So yeah. There are some ways to go and we will definitely plan to address that at the analyst day in a couple of weeks.

Hi, Tim, especially on the only thing we can disclose as what we had disclosed before it is a long term agreement and it's a multiyear agreement, we unfortunately cannot say anything more than that.

Okay.

Thank you that concludes today's question and answer session. Mr. Them on do you have anything further to add before adjourning the call.

Thanks, everyone for joining us on the call today, we are at the intersection of key trends, they're accelerating edge connectivity efficient processing in one device artificial intelligence.

This is driving demand for our industry, leading roadmap of relevant technologies, creating a significant opportunity for growth and continue diversification.

In addition to driving the mobile industry to five G. We will power their connected intelligent edge.

I look forward to outlining our strategy and vision for the future at Investor Day on November 16, and sharing your next generation Snapdragon platforms at our annual Tech Summit in December.

I also want to take a moment to thank our employees for an incredible fiscal year. They are truly the best of Qualcomm and there is no better time to be part of this great company.

Ladies and gentlemen. This concludes today's conference call you may now disconnect.

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