Q1 2022 Qualcomm Inc Earnings Call

Speaker 1: Ladies and gentlemen, thank you for standing by. Welcome to the Qualcomm first quarter fiscal 2022 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 the number.

Ladies and gentlemen, thank you for standing by and welcome to the Qualcomm first quarter fiscal 2022 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.

Draw. Your question Press Star then the number two if you are using a speakerphone. Please pick up your handset before pressing the numbers. Please limit your questions to one question and one follow up.

Speaker 1: Please limit your questions to one question and one follow-up. As a reminder, this conference is being recorded February 2nd, 2022.

As a reminder, this conference is being recorded February 2nd 2022, the playback number for today's call is 8776606853 International callers. Please dial 20161 to 7415, the playback reservation number is 1372602.

Speaker 1: The playback number for today's call is 877-660-6853. International callers, please dial 201-612-7415. The playback reservation number is 137-260-2853.

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

Speaker 1: I would now like to turn the call over to Mauricio Lopez-Hadoian, Vice President of Investor Relations. Mr. Lopez-Hadoian, please go ahead.

Speaker 2: Thank you and good afternoon everyone. Today's call will include prepared remarks by Christiane Amon and Akash Pakawala. In addition, Alex Rogers will join the question and answer session.

Thank you and good afternoon, everyone. Today's call will include prepared remarks by Christiane them on and of course Pago wallet. 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.

Speaker 2: You can access our earnings release in a slide presentation that accompanies this call on an investor relations website. In addition, this call is being webcast on Qualcomm.com and a replay will be available on our website later today.

Speaker 2: 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.

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 include projections and estimates of future events business or industry trends or business or financial results.

Speaker 2: actual events or results could differ materially from those projected in our forward-looking statement.

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

Speaker 2: Please refer to our SEC filings including our most recent 10K, which contain important factors that could cause actual results to differ maturely from the forward-looking steam.

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.

Speaker 2: And now to comments from Qualcomm's President and Chief Executive Officer, Christiano Mora.

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

Speaker 3: Thank you Mauricio and good afternoon everyone. Thanks for joining us today.

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

Speaker 3: Based on our performance over the past several quarters and the strong fiscal second quarter guidance, it is clear that our strategy is working.

As on our performance over the past several quarters and the strong fiscal second quarter guidance. It is clear that our strategy is working.

Speaker 3: The man for products and solutions continues to accelerate, as our one technology roadmap is driving the growth of premium Android smartphones, as well as enabling the connected intelligent edge, which is driving digital transformation for the cloud-connected economy.

Demand for our products and solutions continues to accelerate.

Our one technology roadmap is driving the growth of premium enjoyed smartphones as well as enabling the connected intelligent edge, which is driving digital transformation for the cloud connected economy.

Speaker 3: As you can see from our results today, strong performance in our chipset and licensing business led to record fiscal first quarter revenues of $10.7 billion and record non-GAAP earnings per share of $3.23.

As you can see from our results today.

Strong performance in our chipset and licensing business led to record fiscal first quarter revenues of $10 $7 billion and record non-GAAP earnings per share of $3.23.

Speaker 3: Our chipset business had its second consecutive quarter of record performance with revenues of $8.8 billion, EBT of $3.1 billion, and EBT margin of 35%.

Our chipset business had its second consecutive quarter of record performance with revenues of $8 $8 billion.

E B T of $3 $1 billion and EBT margin of 35%.

Speaker 3: Notably, QCT revenues exceeded those of any fabulous semiconductor company. These results demonstrate the continued success of our diversification strategy.

Notably Q C T revenues exceeded dose of Amy Fabless semiconductor company. This results demonstrate the continued success of our diversification strategy.

Speaker 3: In IoT, we continue to see strong momentum, with revenue growth of 41% year over year in the first quarter across consumer, edge networking and industrial. In consumer IoT, our early investments, collaboration with Microsoft in the recent acquisition of NUvia uniquely positions us to drive the PC industry transition to ARM-based computing for next generation connected laptop.

In Iot, we continue to see strong momentum with revenue growth of 41% year over year in the first quarter across consumer edge networking and industrial and consumer Iot our early investments collaboration with Microsoft and the recent acquisition of Nubia uniquely.

<unk> us to drive the PC industry transition to arm based computing for next generation connected laptops.

Speaker 3: We recently introduced two new platforms, the HCX Gen3 and 7C Plus Gen3. In Etsy ES, we highlighted broad support from ecosystem partners, including ASER, ASUS, HP, Lenovo, and Microsoft, as well as 200 enterprise customers currently testing or deploying Windows on Snapdragon laptops in two and one devices.

We recently introduced two new platforms. The H C X Gen three and seven seat plus Gen three and at CES, we highlighted broad support from ecosystem partners, including Asia.

Seuss, HP, Lenovo and Microsoft as well as 200 enterprise customers currently testing or deploying windows on snapdragon laptops in two in one devices.

Speaker 3: We're also seeing strong growth in premium and high-tier Android tablets.

We also seeing strong growth in premium and high tier enjoyed tablets further highlighting the convergence of mobile and PC.

Speaker 3: further highlighting the conversions of mobile and PC.

Speaker 3: Notably, we have already double the total number of pre-mintier and or tablet design wings, lounge or in the pipeline versus all of FISCO 21.

Notably we have already double the total number of premium tier Android tablet design wins lounge or in the pipeline versus all of fiscal 'twenty one.

Speaker 3: Additionally, as the Metaverse opportunity materializes, we continue to build on our industry leadership position in VR and AR devices with key ecosystem players, including Meta and Microsoft.

Additionally, as the meta versus opportunity materializes, we continue to build on our industry leadership position in V. R. N E R devices with key ecosystem players, including meta and Microsoft.

Speaker 3: At CES, we announce a collaboration with Microsoft to expand and accelerate the adoption of augmented reality in both the consumer and enterprise factors.

At CES, we announced a collaboration with Microsoft to expand and accelerate the adoption of augmented reality in both the consumer and enterprise sectors.

Speaker 3: This partnership includes custom AR chips to enable a new wave of power efficient lightweight AR glasses that deliver rich and immersive experiences as well as plans to integrate our Snapdragon spaces XR developer platform into Microsoft Mesh.

This partnership includes custom aorta chips to enable a new wave of power efficient lightweight E. Our glasses.

Deliver rich and immersive experiences as well as plans to integrate our snapdragon spaces X our developer platform into Microsoft mesh.

Speaker 3: We're also very pleased that Time magazine named our Snapdragon XR2 platform as one of the best inventions of 2021. And we're seeing strong support for VR and AR platforms from virtually all ecosystem providers, OEMs and content creators.

We're also very pleased the time magazine named our Snapdragon ex our two platform as one of the best inventions of 2021, and we're seeing strong support for a V. R. N E. R platforms from virtually all ecosystem providers Oems and content creators.

Speaker 3: In edge networking, we continue to lead in current and next generation high performance Wifi 6 and Wifi 6E solutions, which now make up more than 80% of our Wi-Fi access point revenues. Recently, we launched the award first quad band Wifi 6E mesh system with Netgear, which was rated the best in class mesh platform by PC Magazine.

In edge networking, we continue to lead in current and next generation High performance Wi Fi six and Wi Fi six solutions, which now make up more than 80% of our Wifi access point revenues recent.

Recently, we launched the wards first quad band Wifi, six mesh system with Netgear, which was rated the best in class mashed platform by PC magazine.

Speaker 3: Additionally, our Wi-Fi 6 immersive home platforms continue to gain momentum across regions with significant growth now expanding into China. One of the fastest growing markets for Wi-Fi 6 for both retail and carrier deployment.

Additionally, our Wifi six immersive home platforms continue to gain momentum across regions with significant growth now expanding into China, one of the fastest growing markets for Wi Fi six for both retail and carrier deployments.

Speaker 3: 5G as wireless fiber continues to gain scale and expand globally. In addition to our extended range millimeter wave platforms, we recently expanded our portfolio to include the 5G fixed wireless access solutions with extended range sub-six in worsening strong traction.

Five G S wireless fiber continues to gain scale and expand globally. In addition to our extended range millimeter wave platforms. We recently expanded our portfolio to include the five G fixed wireless access solutions with extended range sub six and we're seeing strong traction.

Speaker 3: In industrial, we're still in the early phases of digital transformation across many industries in demand for our solutions continues to accelerate.

In industrial we're still in the early phases of digital transformation across many industries and demand for our solutions continues to accelerate as.

Speaker 3: as an example, combine smart utility meter tracking robotics in retail revenues more than double over the last year.

As an example combine smart utility meter tracking robotics and retail revenues more than doubled over the last year.

Speaker 3: In robotics specifically, we expect total fiscal 22 product launches using our platforms to increase by over 50% year over year, spending applications from warehouse automation to public safety, delivery services, and in-home assistance.

In robotics, and specifically, we expect total fiscal 'twenty two product launches using our platforms to increase by over 50% year over ear spanning applications from warehouse automation to public safety delivery services and in home assistance, the diversity of vertical segments and applications.

Speaker 3: The diversity of vertical segments and applications reflects our ability to provide a common platform that integrates a advanced computer vision on device AI, high performance in low-barre computing, and industry leading connectivity technology.

Patients reflects our ability to provide a common platform that integrates advanced computer vision, one device AI high performance and low power computing and industry, leading connectivity technologies.

Speaker 3: In RF front end, we successfully launch our latest 5G modules, which now include our ultra-bottles technology.

In RF front end, we successfully launched our latest five G modules, which now include our ultra Bot technology.

Speaker 3: our modern to antenna strategy is working, enhancing power and performance with every generation of Snapdragon. Notably, virtually all our Snapdragon 8 Gen 1 design wins now include Qualcomm UltraBall filter technology.

Our modem to antenna strategy, it's working enhancing power and performance with every generation of snapdragon, notably virtually all our snapdragon eight Gen. One design wins now include Qualcomm Ultra ball filter technology.

Speaker 3: Building on our success enhancements, we're seeing traction with our modern to antenna solution across automotive and IoT. As examples, we're well positioned to address up to $30 of 5G RF content per vehicle, and we're also intersecting our RF run end roadmap with Wi-Fi 7.

Building on our success in handsets, we're seeing traction with our modem to antenna solution across automotive and Iot as examples we're well positioned to address up to $30. A five G. RF content per vehicle and we're also intersecting or RF front end road map with Wi Fi seven.

In automotive Walker is becoming the technology partner of choice for the industry and we're enabling the transition of the automobile to additional cloud connected platform.

Speaker 3: In automotive, QualCAT is becoming the technology partner of choice for the industry and we're enabling the transition of the automobile to a digital cloud connected platform.

Speaker 3: Our innovative Snapdragon digital chassis is an open and scalable cloud-enabled platform for telematics, connectivity, digital cockpit, and ADAS, and uniquely position us as the leading system solution provider for silicon, software, systems, and services across multiple domains.

Our innovative Snapdragon digital chassis is an open in a scalable cloud enabled platform for telematics connectivity digital cockpit, and a dash and uniquely position us as the leading system solution provider for Silicon software systems and services.

It's across multiple domains.

Speaker 3: As a reminder, General Motors, BMW, and now Renault Group are cornerstone customers for our platform, including ADAS.

As a reminder, general motors, BMW and know Renaud group or cornerstone customers for our platform, including a dish.

Speaker 3: At CES, we announce an addition to our A-DAS and autonomy platform. The Snapdragon Ride Vision 50.

At CES, we announced an addition to our Adas and autonomy platform the Snapdragon ride vision system.

Speaker 3: a new modular computer vision solution that combines a Snapdragon Ride SoC with the next generation vision perception software from Arriva.

New modular computer vision solution that combines a snapdragon ride soc's with the next generation visual perception softer from a river.

Speaker 3: It supports the various compute functions needed for enhanced perception around the vehicle in the scales across applications from entry-tier in-cab front camera to comprehensive front and surround view camera for enhanced autonomy.

It supports the various compute functions need therefore enhanced perception around the vehicle in the scales across applications from entry tier in cap front camera to comprehensive front as surround view camera for enhanced autonomy.

Speaker 3: We expect the Snapdragon Ride Vision System to be available in production in 2024.

We expect the Snapdragon ride vision system to be available in production in 2024.

Speaker 3: Inhancements, we recently announced our most advanced 5G mobile platform for flagship smartphones, the Snapdragon 8 Gen 1, at our annual Snapdragon Tech Summit. The announcement was viewed by more than 50 million people worldwide. The new Snapdragon 8 Gen 1 leads the way to a new era of premium mobile technology with category-defining enhancements across mode on RF, camera, AI, gaming, security, and more.

In handsets, we recently announced our most advanced five mobile platform for flagship smartphones. The Snapdragon eight Gen. One at our annual Snapdragon Tech summit the.

Smith was viewed by more than 50 million people worldwide. The new Snapdragon H N. One leads the way to a new era of premium mobile technology with category defining enhancements across modern RF camera AI gaming security and more.

Speaker 3: Snapdragon 8 Gen 1 is the world's first 5G modem RF solution to reach 10 gigabit download speed.

<unk> Dragon eight Gen. One is towards first five G modem RF solution to reach 10 gigabit download speeds.

Speaker 3: is the first to include commercial 18-bed mobile image sensor in the word force platform compliant with the Android Ready Secure Element Alliance.

He was the first to include commercial 18 bit mobile image sensor in the wards force platform compliant with the Android ready secure element alliance.

Speaker 3: We also announce new mobile platforms in every Snapdragon series to address global customer demand across every smartphone tier.

We also announced new mobile platforms in every snapdragon series to address global customer demand across every smartphone tier.

In our licensing business first quarter results reflect a favorable mix in the strength of smartphone shipments.

Speaker 3: In our licensing business, first quarter results reflect a favorable mix in this strength of smart phone shipment.

Speaker 3: With over 150 5G license agreements, QTL is well positioned for the future and we continue to expect 5G to have a longer life cycle than prior generations due to its broad application across multiple industries.

With over 155 G license agreements Q T O is well positioned for the future and we continue to expect five G to have a longer life cycle than prior generations due to its broad application across multiple industries.

Speaker 3: Lastly, demand remains strong across all of our technologies and continues to exceed supply. Despite ongoing challenges across the global supply chain, our multi-sourcing and capacity expansion initiatives will provide incremental improvements to our supply throughout the year. I would now like to turn the

Lastly, demand remained strong across all of our technologies and continues to exceed supply.

Despite ongoing challenges across the global supply chain, our multi sourcing and capacity expansion initiatives will provide incremental improvements to our supply throughout the year.

I would now like to turn the call over to what gosh.

Speaker 4: Thank you, Christiano and good afternoon everyone. We're extremely pleased to report strong results to start our fiscal year.

Thank you Krishna and good afternoon, everyone. We're extremely pleased to report strong results to start our fiscal year we.

Speaker 4: We delivered our second consecutive quarter of record non-gap earnings with revenues of $10.7 billion and non-gap EPS of $3.23.

We delivered our second consecutive quarter of record non-GAAP earnings with revenues of $10 $7 billion, and non-GAAP EPS of $2 and 23 seconds.

Speaker 4: These results reflect year-over-year increases of 30% and 49% respectively, driven by strength across both QCT and QTL.

These results reflect year over year increases of 30% and 49%, respectively, driven by strength across both the QC D and QTL.

Speaker 4: For Q.C.T. this was another record quarter with revenues of eight point eight billion and E.B.T. of three point one billion dollars up 35 percent and 62 percent respectively versus the year ago quarter.

For Q C. D. This was another record quarter with revenues of $8 8 billion, an EBT of $3 $1 billion up 35% and 62% respectively.

As the year ago quarter.

Speaker 4: QCT EBT margins of 35% surpassed the high end of our guidance range and increased six points versus the year-ago quarter, driven by revenue scale and operating leverage.

Q C D E B D margins of 35% surpassed the high end of our guidance range and increased six points worse as the year ago quarter, driven by revenue scale and operating leverage.

Speaker 4: Handset revenues of $6 billion increased 42% year-over-year due to greater than 60% growth in revenues from Snapdragon chipsets for Android devices.

Handset revenues of $6 billion increased 42% year over year due to greater than 60% growth in revenues from Snapdragon chipsets for Android devices.

Speaker 4: RF front-end revenues of $1.1 billion grew 7% versus the year-ago quarter, reflecting the previously mentioned pull-in of demand into the fourth fiscal quarter.

RF front end revenues of $1 $1 billion grew 7%, whereas as the year ago quarter, reflecting the previously mentioned pull in of demand into the fourth fiscal quarter.

Speaker 4: Our RF front-end revenues for Android devices grew by greater than 25 percent versus the year-ago quarter as we continue to see strong traction across all major OEMs.

Our RF front end revenues for Android devices grew by greater than 25% versus the year ago quarter. As we continued to see strong traction across all major Oems.

Speaker 4: IoT revenues were up 41% year-over-year to $1.5 billion on continued demand for our cloud-connected intelligent edge devices.

Iot revenues were up 41% year over year to $1 $5 billion on continued demand for our cloud connected intelligent edge devices.

Speaker 4: Each of the consumer, edge networking, and industrial categories grew by at least 30% compared to the year-ago quarter.

Each of the consumer edge networking and industrial categories grew by at least 30% compared to the year ago quarter.

Speaker 4: Automotive revenues of $256 million grew 21% year over year on the strength of our design wins across our Snapdragon Digital chassis.

Automotive revenues of $256 million grew 21% year over year on the strength of our design wins across our Snapdragon digital chassis.

Speaker 4: We recorded QTL revenues of $1.8 billion, an increase of 10% year over year, and EBT margins of 77%, which was above the midpoint of the guidance.

Prerecorded QTL revenues of $1 $8 billion, an increase of 10% year over year, and EBT margins of 77%, which was above the midpoint of the guidance.

Speaker 4: These results reflect a favorable mix and slightly higher handset chip.

These results reflect a favorable mix and slightly higher handset shipments.

Turning to global handsets and our guidance for the second fiscal quarter.

Speaker 4: turning to global handsets and our guidance for the second fiscal quarter.

Speaker 4: For calendar 2021, consistent with the previous guidance, we estimate global 3G, 4G, 5G handsets grew 7% year over year, including approximately 535 million 5G handsets.

For calendar 2021 consistent with the previous guidance, we estimate global <unk> five D. Handsets grew 7% year over year, including approximately 535 million five G handsets.

Speaker 4: For calendar 2022 there is no change to the forecast provided at our investor day with greater than 750 million 5G.

For calendar 2022 there's no change to the forecast provided at our Investor day with greater than 750 million five <unk> handsets for.

Speaker 4: For the second fiscal quarter, we are forecasting revenues of $10.2 to $11 billion and non-gap EPS of $2.80 to $3.

For the second fiscal quarter, we are forecasting revenues of $10.2 billion to $11 billion and non-GAAP EPS of $2 87 to $3 <unk>.

Speaker 4: In QCT, we expect revenues of $8.7 to $9.3 billion and EBT margins of 32 to 34 percent. At the midpoints, this implies year-over-year revenue growth of 43 percent and EBT dollar growth of $1.4 billion.

<unk>, we expect revenues of 8.7 to $9 $3 billion and EBT margins of 30% to 34%.

At the midpoint this implies year over year revenue growth of 43% and EBIT dollar growth of one $4 billion for handsets and our upfront then we expect revenues to be in line sequentially as seasonal decline in Apple revenues is offset by continued growth in revenues from Android devices within handsets.

Speaker 4: For handsets and RF front-end, we expect revenues to be in-line sequentially, as seasonal decline in Apple revenues is offset by continued growth in revenues from Android devices.

Speaker 4: With EnhanceS, the increase in Android revenue is driven by the launch of our new Snapdragon Premium chipset and additional shipments across high and mid tiers due to our second sourcing effort.

The increase in Android revenue is driven by the launch of our new Snapdragon premium chipset and additional shipments across high and mid tiers due to our second sourcing efforts.

Speaker 4: Additionally, we expect strong year-over-year and sequential growth in our IoT and automotive revenue streams.

Additionally, we expect strong year over year and sequential growth in our Iot and automotive revenue streams.

Speaker 4: We estimate QTL revenues of $1.45 to $1.65 billion and EBT margins of 70 to 74 percent. This reflects the normal pre-COVID trends following the strong holiday quarter. We anticipate non-GAAP operating expenses to be up 7 to 9 percent sequentially on normal seasonality, including calendar year resets for certain employee-related costs.

We estimate QTL revenues of $1.45 billion to $1.65 billion and EBT margins of 70% to 74%. This reflects the normal pre COVID-19 trends following a strong holiday quarter, we anticipate non-GAAP operating expenses to be up 7% to 9% sequentially on normal seasonality, including.

Calendar year resets for certain employee related costs. The remaining increase reflects select investments in long term growth initiatives that we outlined at our Investor day looking forward to the third fiscal quarter, we are forecasting year over year, non-GAAP EPS growth of greater than 30%.

Speaker 4: The remaining increase reflects select investments in long-term growth initiatives that we outlined at our Investor Day. Looking forward to the third fiscal quarter, we are forecasting year-over-year non-gap EPS growth of greater than 30 percent.

Speaker 4: For QCT, this reflects the seasonality following Chinese New Year purchases and the launch of our new Snapdragon premium chipset in the second quarter. We expect the next inflection point in QCT to be in the second half of the calendar year with launch of new 5G handsets across several major OEMs.

For POC D does reflect the seasonality following Chinese new year purchases and the launch of our new Snapdragon premium chipset in the second quarter. We expect the next inflection point in Q C. D to be in the second half of the calendar year with launch of new five G handsets across several major Oems.

Speaker 4: Lastly, we published our annual corporate responsibility and ESG report yesterday, which outlines progress against our company-wide targets, including environmental sustainability, diversity and inclusion, and power efficiency of our Snapdragon products. We are pleased to have been recognized by several organizations, including making the Dow Jones Sustainability Index and Newsweek's Most Responsible Company list for the third consecutive year. Thank you. Back to you, Mauricio. Thank you, Kaush. Operator.

Lastly, we published our annual corporate responsibility and he is Judah board yesterday, which outlines our progress against our companywide targets, including environmental sustainability diversity and inclusion and bar efficiency off our snapdragon products. We are pleased to have been recognized by several organizations, including making the Dow Joe.

And sustainability index and Newsweek's, most responsible company list for the third consecutive year. Thank you back to humor too.

Thank you <unk> operator, we're now ready for questions.

Speaker 1: Thank you. To queue a question, press star then the number 1. To withdraw your question, press star 2. If you are using a speakerphone, please pick up your handset before pressing the numbers. One moment please for the first question.

Thank you to keep a question press Star then the number one to withdraw your question Press Star two if he already.

Using a speakerphone please pick up your handset before pressing the numbers one moment. Please have the first question.

Okay.

Speaker 1: Our first question is from the line of Simic Chatterjee with JPMorgan. Please proceed.

Our first question is from the line of Sonic Chatterji with J P. Morgan. Please proceed.

Yeah. Thanks, Thanks for taking my questions and congrats on the results.

Speaker 4: Thanks for taking my questions and congrats on the results. I guess if I can start with, you talked about the strong launch with Android customers that you've had in both phones and tablets, and I think you mentioned doubling the pace of launches with Android. As we look...

I guess, if I can start with you talked about the strong launch.

With Android customers that you've had in both phones and tablets and I think you mentioned doubling the pace of launches with Android O as we look.

Speaker 4: beyond the first half, that is your fiscal first half, December and March, how should we think about how much of the Android share gains for you or launches for you is already in the run rate and how much of that is like.

Beyond the first half that is your physical close talk to somebody in March how should we think about how much of the Android share gains for you of launches for you is already in the run rate and how much of that is like.

Speaker 5: we did for the remainder of the year beyond sort of this first half of the year, if you can share some color on how to think about share gains continuing for those.

For the remainder of the yogurt beyond sort of this first half of the Europe . If you can share some color on how to think about share gains continuing for the.

The remainder of the yield with Android and then I have a follow up please.

I should make this push your auto book Android is a success story for US this quarter continues to validate what we said before you know OEM share in.

Speaker 3: I want to make this questional. Look, Android is a success story for us. This quarter continues to validate what we said before. You know, OEM.

Speaker 3: share in shifts in China is benefiting Qualcomm and we saw significant growth.

In shifts in China is benefiting Qualcomm and we saw significant growth.

Speaker 3: of Qualcomm share within the market as we have this new 10 opportunity. And we see that reflected in the growth, we've seen in premium and high tiers. So it continues to be story. It was the highlight of what happened in the handset within the quarter, you know, a cash outline 60% year-over-year growth on Android. And I'll shift over to a cash talk about the season now.

Of Qualcomm share within the market peak as we have this up this new 10 opportunity and we've seen that reflected in the growth machine and premium and high tiers. So it continues to be story. It was the highlight of what happened in the in the handset within the quarter you know what.

Our cash outline 60% year over year growth on Android and I'll shift over to a car should talk about the seasonality.

Speaker 4: Yes, I think this is something that will sustain for us going forward. We are in a very strong position, as you see in the numbers. Our product portfolio is very strong as well. So as we go forward, we continue to expect to see this benefit in our financial.

Yes, I mean I think this is something that will sustain for us going forward. We're in a we're in a very strong position as you've seen the numbers are our product portfolio is very strong as well so as we keep going forward. We continue to expect to see this benefit in our financials.

Yes.

Speaker 5: And just for my follow up, I know you talked about these second source helping in terms of obviously in terms of realizing better revenues, but if you can talk about what you're seeing in terms of the cadence of the improvement there, do you get to where you want to be with supply during the year or does it take longer?

And just for my follow up I know you've talked about the second source, helping them self.

Obviously in terms of revenues, but if you can talk about what you're seeing in terms of the cadence of the improvement did you get to where you wanted to be with supply.

During the yard or does it take longer.

Could you just give us an update on how you're thinking about something like <unk>.

Yeah sure. So overall the demand is as Chris mentioned in his prepared remarks extremely strong across the board and so we're continuing to see demand outpacing supply.

Speaker 4: Sure, so overall the demand as Kushano mentioned and has prepared remarks extremely strong across the board. And so we are continuing to see demand outpacing supply. As you rightly mentioned, we had put plants in place very early in the process anticipating some of these challenges.

As you rightly mentioned, we have put plans in place very early in the process are anticipating some of these challenges and youre seeing the benefit of that right. We have three odd second sourcing parts, especially in the mid high tiers that are shipping at scale now and that shows up in our financial performance.

Speaker 4: And you're seeing the benefit of that, right? We have three second sourcing parts, especially in the mid-high tiers that are shipping at scale now, and that shows up in our financial performance.

Speaker 4: and we have additional parts coming up as well. So that's definitely something that's helping us.

And we have additional parts coming up as well so that's definitely something that's helping us. The second is our we're seeing capacity builds from some of our suppliers and that's playing a role as well as you look forward, we expect supply to continue to improve gradually through the year. In addition to where we are at now and then.

Speaker 4: The second is we're seeing capacity builds from some of our suppliers and that's playing a role as well.

Speaker 4: As you look forward, we expect supply to continue to improve gradually through the year, in addition to where we are at now. And this entire picture, obviously, as you would expect, is factored into our guidance.

Dara picture, obviously as you would expect as are factored into our guidance.

Speaker 3: Look, just Christian, nothing more to add other than in simple terms. We see supply improvements, our Ford guide, you know, it contemplates the visibility we have in supply. And I will still have more demand than supply. We'll ship more if we can.

Look just a question on often nothing more to add other than in simple terms.

We see supply improvements our forward guide you know it contemplates the visibility we have in supply.

And we still have more demand than supply when you ship more if we could.

Thank you. Our next question is coming from Chris Caso with Raymond James. Please proceed with your question.

Speaker 1: Thank you. Our next question is coming from Chris Caslow with Raymond James. Please proceed with your question.

Speaker 6: Yes, thank you. Good evening. I wanted to ask about the commentary about the June quarter and the second half of the calendar year. Your commentary there. If you give a little more color on that.

Yes. Thank you good evening I wanted to ask about the commentary about the the June quarter and in the second half of the calendar year. Your commentary there can you give a little more color on that it's.

Speaker 6: not typical for you to provide color to quarters in advance. So I imagine it's purposeful of why you're doing that. And maybe talk a little bit about the second half of the calendar year. Is that really a function of more supply coming on, allowing you to perhaps balance supply and demand as you get to the second half of the calendar?

Not typical for you to provide color two quarters in advance so I imagine, it's purposeful of why Youre doing that and maybe talk a little bit about the second half of the calendar year is that really a function of more supply coming on allowing you to perhaps balance supply and demand as you get to the second half of the calendar year.

Speaker 4: Sure Chris, thanks for the question. So overall when you look at our fiscal year, we're tracking well ahead of plan. We're very, very happy with how the year is playing out for us. And that obviously puts us in a very strong position to meet and exceed our long-term investor-day target.

Sure Chris Thanks for the question. So overall when you look at our fiscal year. We are tracking well ahead of plan and we're very very happy with how are the euro is playing out for us and that obviously puts us in a very strong position to meet and exceed our long term investor day targets.

Speaker 4: If you look at the first half out performance, beyond that as we go into the third fiscal quarter, we're projecting EPS growth of at least 30% and opportunity beyond that. And then as you get into the September quarter, as you know, well, that's kind of the next inflection point for us with launches, additional phone launches in across several major OEMs. So we're going to, we're expecting very strong year-over-year growth in the September quarter as well.

If you look at the first off outperformance beyond that as we go into the third fiscal quarter, we are projecting EPS growth of at least 30% an opportunity beyond that and then as we get into the September quarter. As you know well that's kind of the next inflection point for us with launches additional phone launches in.

Across several major Oems.

So we're going to we're expecting very strong year over year growth in the September quarter as well.

Speaker 4: Also, when you look beyond handsets, and we look at second half of fiscal 22, RF frontend, IOT, and automotive, all are poised to continue to show very strong year-over-year growth as we go through the year.

Also when you look beyond handsets and we look at the second half of fiscal 'twenty do RF front end, Iot and automotive and all are poised to continue to show very strong year over year growth as we go through the year. So generally when you step back we had a very strong second half of fiscal 'twenty, one fiscal 'twenty two is shaping.

Speaker 4: So generally when you step back, we had a very strong second half, fiscal 21, fiscal 22 is shaping up just like that, very strong year-over-year growth.

Up just like that very strong year over year growth rates.

That's very helpful. Thanks.

Speaker 6: That's very helpful. Thanks. You know, in addition to the longer-term goals you present at the Analyst Day, you also talked about fiscal 22 guidance for at least 20% EPS growth. You know, based on what you're saying for June , again, it seems like you're well ahead of that as well. You know, any commentary update on, you know, on that fiscal 22 guidance?

Addition to the longer term goals you presented at the Analyst Day, you also talked about fiscal.

'twenty two guidance for at least 20% EPS growth are based.

Based on what you're saying for June again, it it seems like you're well ahead of that as well you know any commentary update on you know on that fiscal 'twenty two guidance.

Speaker 4: Yeah, Chris, that's the right conclusion. We're tracking well ahead of it. We're not updating that number yet, but I think based on the guidance that you have for second fiscal quarter and third fiscal quarter and the comments I gave on the fourth, what you're drawing is a very reasonable conclusion.

Yeah, Chris that's the right conclusion, where we're tracking well ahead of it we're not updating that number yet, but I think based on the guidance that you have for second fiscal quarter and toward fiscal quarter and the comments I gave on the fourth what youre drawing is a very reasonable conclusion.

Speaker 1: Thank you. Our next question is coming from Rod Hall with Goldman Sachs. Please proceed with your questions.

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

Speaker 7: Yeah, thanks guys, appreciate the question. I was just taking a look and we've been looking at this for a while, the quarter on quarter marginal contribution. So the QCT marginal contribution, if I look at the change in, EBT and the change in revenue, I'm calculating 58% there in this quarter.

Yeah. Thanks, guys I appreciate the question.

Just taking a look at it you know we've been looking at this for a while a quarter on quarter marginal contribution. So the qcd marginal contribution if I look at the change in EBT and the change in revenue.

I'm calculating 58% there in this quarter and I know some of that is scaling but I wonder if there's any way you could maybe at least given some color on how much of that is the new marginal sales in Q C T being higher margin and how much. It is just scaling effect on the revenue. Thanks, and then I have a follow up.

Speaker 7: And I know some of that is scaling, but I wonder if there's any way you could maybe at least give us some color on how much of that is the new marginal sales in QCT being higher margin, and how much of is just scaling effect on the revenue. Thanks, and then I have a follow up.

Speaker 4: Rod, just to confirm, and this is Akash, just to confirm, your question was about the actuals for the December quarter?

Rod just to confirm this is.

Just to confirm your question was about the actuals for the December quarter.

Speaker 4: Yeah, so Akash, what all I've done is taken the EBT of the December quarter less the EBT of the September quarter and put it over the revenue difference. Correct. Correct. Great. Yeah. So, so I think it's a great story. You're seeing a combination of all three drivers, right? You have revenue scale benefiting us.

Yeah. So it costs would've all I've done is taken the EBT the December quarter less the EBT of the September quarter I'd put it over the revenue difference correct correct great. Yeah. So so I think it's a great story youre seeing a combination of all three drivers right you have revenue scale benefiting us gross margin strength quarter over quarter.

Speaker 4: gross margin strength, quarter over quarter, also benefiting us, and then operating leverage of the business. So it's a combination of all three, and we're pretty excited that, you know, not just gross margin performance is great. When you look at operating margins as well, 35% is really a great benchmark for us. It's the highest margin in a long time for us, so pretty excited about where we are at and where we're going with it.

Also benefiting us and then operating leverage of the business. So it's a combination of all three and we're pretty excited that our you know.

Not just our gross margin performance is great, but when you look at our operating margins as well, 35% is is really a great benchmark for us.

It's the highest margin in a long time for us so pretty excited about where we're at and where we're going with it.

Great. Thanks, and then on my follow up I wanted to ask few Cristiana. If you could maybe comment on the there's been a lot of noise in the high end, Andrew Android chip market about upcoming competition and so on and I I just wonder maybe if could you comment could you comment on the competitive environment, a little bit there what you're seeing what do you anticipate seeing.

Speaker 7: Great, thanks. And then on my follow up, I wanted to ask you, Cristiano, if you could maybe comment on the, there's been a lot of noise in the high end Andrew, Android chip market about upcoming competition and so on. And I, I just wonder maybe, could you comment on the competitive environment a little bit there, what you're seeing, what you anticipate seeing the next six or nine months, thanks.

The next six or nine months. Thanks.

Happy to do it before you answer that question I, just want to add one thing to the prior question that our cash answer well we've been talking about there are one technology roadmap that really scales and this exactly where youll see S. Our diversification strategy you know unfolds.

Speaker 3: Happy to do it. Before I answer that question, I just want to add one thing to the prior question that Akash answered.

Speaker 3: Look, we've been talking about there are one technology roadmap that really scales and this is actually what you see as our diversification strategy

Speaker 3: you know uh... unfolds in more and more the revenue coming towards qcp from no one has a business

Unfolds and more and more of the revenue coming towards QC piece from non handset business. It gives us scale to the business is all accretive to margins and I think that's reflected in the numbers and I think that will continue to be the story as we are able to leverage the roadmap now back to your question on competition, we're very happy where we are booked I provided them a metric that we have.

Speaker 3: He gives a scale to the business is all creative to Morrison's and I think that's reflected in the numbers and I think that will continue to be the story as we are able to leverage the world map. Now back to your question on competition. We're very happy where we are. Look, I provided a metric that we not usually do that in my prepared remarks.

You usually do that in my prepared remarks, when we launched a new snapdragon eight.

Speaker 3: When we launched a new Snapdragon 8 series, we had 50 million views.

H series, we had 50 million views in off of the launch event and we have done that simultaneously both in the United States as well in two different locations in China Snapdragon is becoming the preferred brand for premium tier Android not a single one of our customers.

Speaker 3: of the launch event. And we have done that simultaneously, both in the United States as well, in two different locations in China. Snapdragon is becoming the preferred brand for premature Android, not a single one of our customers. Think about flagship with our thank you Snapdragon 8 series. It's a very strong position to

Think about flagship without thinking snapdragon.

H series, it's a very strong position to be in as our customers move to the premium tier we seen that turn into gangs of share of the market for Qualcomm. That's why Android is the story of our handset business right now in reality is as we look at the OEM share shifts there.

Speaker 3: As our customers move to the pre-manteer, we see that turn into gains of share of the market for Qualcomm. That's why Android is the story of our hands-and-business.

Happen in China, there's plenty of opportunity for us to grow and our competitors to grow and you know I I expect that we will continue to have good results in more and more of our customers would be betting on snapdragon brand.

Yeah.

Thank you. Our next question is coming from the line of Mike Walkley with Canaccord Genuity. Please proceed with your question.

Speaker 1: To your next question is coming from the line of Mike Walkley with Canna Courtenewity. Please proceed with your question.

Great. Thanks Congrats.

Speaker 8: Great, thanks. Congratulations on the results. Also, guess question for me on the 10 billion SAM opportunity within Android that you previously highlighted. How do you think much of that benefiting this first half of your guidance and how much further you think you have to go and penetrating that SAM?

Congratulations on the results are also.

I guess question for me on the 10 billion Sam opportunity within the Android that you've previously highlighted yep.

How much of that benefiting this first half of the year guidance and how much further you think you have to go in penetrating that Sam.

Yeah.

Speaker 4: Yeah, Mike, this is Akash. What's really happening with the 10 billion SAM opportunity is with the OEM mix change in China, all of our customers, Xiaomi, Oppo, Vivo, Honor, they're all picking up share. And as they pick up share and also go up tier, going into the high and the premium tier, as Cristiano just outlined, it gives us a tremendous opportunity to tap into it.

Yeah, Mike This is Mike gosh.

What's what's really happening with the $10 billion Sam opportunity is a with the OEM mix change in China, all of our customers Xiaomi Oppo vivo on or they are all picking up share and as as they pick up share and also go up they are going into the high end the premium Dear Escuchando just outlined it gives.

As a tremendous opportunity to tap into it so we've done a lot of it through our obviously our products being great. But also working on a second sources that we mentioned in our prepared remarks.

Speaker 4: So we've done a lot of it through obviously our products being great, but also working on the second sources that we mentioned in our prepared remarks. We still think that there is an opportunity to continue to expand into that Sam going.

We still think that that is an opportunity to continue to expand into that Sam going forward.

Okay.

Speaker 8: And just my follow up question. I think you've previously highlighted, you know, start the first half of the year, you've kind of prioritized the strong Android premium to your handsets. And you talk about demand out stripping supply. Is it good to maybe a softer handset quarter in the June quarter? Should we see maybe automotive and IoT start to close that supply demand balance in those businesses that you accelerate in terms of a sequential growth trend?

And just as my follow up question I think you've previously highlighted.

To start the first half of the year, you kind of prioritize the strong Android premium tier handsets.

Can you talk about demand outstripping supply as it get to maybe a softer handset quarter in the June quarter should we see maybe automotive and Iot start to close that supply demand balance in both those businesses, maybe accelerate in terms of the sequential growth trend.

Yeah, Mike we were definitely that's a decision that we'd definitely be make where if if we are again I'm biased our supply in certain directions based on the.

Speaker 5: Yeah, Mike, we're definitely, that's a decision that we definitely make where if we can bias the supply in certain directions based on the market demands, we take advantage of that. And so it's something that we'll definitely do as we get to the June quarter.

Market a market demands we take advantage of that and so it's it's it's something that we'll we'll definitely do is we get to the June quarter.

Speaker 3: Look at this question, let me just add one thing. I wanna, hopefully this will explain. We're seeing demand for all of our product lines. We're seeing more demand than supply right now. I think demand continues to be up. I think we're very fortunate position to be in.

Looked at this question and let me just add one thing and one of them. Hopefully this will will explain we're seeing demand for all of our all of our product lines, we see more demand than supply right. Now I think demand continues to be up I think we're very fortunate position to be and.

When you think about the handset business and you did see that's very high growth rate on Android, 60% growth of our Android when it within the quarter.

Speaker 3: when you think about the handsome business and you did see that's very high uh... growth rate on android sixty percent uh... growth of uh... android when it went to quarter uh... we we prioritize supply as we said in the park orders for the chinese new year launches

We we prioritize supply as we said in prior quarters for the Chinese new year launches.

Speaker 3: we will still have more demand and supply in all the growth business. As we go to the next quarter, you're going to see the growth business, and a lot of the non-hence of business can grow. And then the next inflection point for Hence is the holiday season, which is a September quarter. And as we expect...

We still have more demand than supply in all of the growth business as we go through the next quarters Youre going to see the growth business and a lot of the known Hinson business could you know growing and then the next inflection point for hence this is the holiday season, which is our September quarter and as we expect so.

Speaker 3: Supply improvements throughout the year. I think we'll be able to continue to drive growth in all business We're very happy to how the year is unfolding. And as I said, our supply picture is Reflected in our Ford guide having said that Demand continue to go up

Apply improvements throughout the year I think we'll be able to continue to drive growth in all business. We're very happy to how the year is unfolding and as I said our supply picture is reflected in our forward guide having said that demand continue to go up and it's a good thing.

Speaker 1: Thank you. Our next question is coming from Stacey Raskin with Bernstein Research. Please visit with your questions.

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

Speaker 6: Hi guys, thanks for taking my questions. First, I wanted to ask about chips at Gross Margin's in the quarter. I know you don't report them, if I sort of stare at it, I think they probably wore up a couple of hundred basis points. And I find that interesting just given the relative strength of handsets versus the adjacencies, which I think do have higher margins. Was that just the Android strength?

Hi, guys. Thanks for taking my questions first.

First I wanted to ask about the chipset gross margins in the quarter I know you don't report them, but if I sort of stare at it I think they probably were up a couple of hundred basis points and I found that interesting just given the relative strength of handsets versus the Adjacencies, which I think do have higher margins was that just the Android strengths.

Speaker 6: You talked about that drove that margin in the quarter, and then how should we think about that into March as sort of the mix reverses, but you should have some of the higher margins of the adjacencies actually growing sequentially into March. I mean, is there room for more margin expansion as we go into the next quarter?

You're talking about that drove that margin in the quarter and then how should we think about that into March.

As sort of the mix reverses, but you should have some of the higher margins up adjacencies actually growing sequentially in the March I mean is there room for more margin expansion as we go into the next quarter.

Speaker 4: Yes, Stacy, it's Akash. So it's a combination of obviously the adjacents outside non handsets businesses helping the gross margin within handsets. You're seeing the benefit come through, especially as premium and high tier devices at the high end of Android are being consumed, and we're selling into that market. And as you'll see in the guidance that we gave, we're still continuing to be optimistic with the gross margin picture.

Yes, Stacy it's akash, so I'd say its a combination of obviously the adjacency outside non handsets businesses, helping the gross margin within our handsets youre seeing the benefit come through especially as premium and high tier devices at the high end of Android are being consumed and we're selling into.

That market and as you'll see in the guidance that we gave are we we're still continuing to be optimistic with the gross margin picture.

Got it that's that's helpful.

Speaker 6: For my follow up, I wanted to ask about the buyback. You know, you bought that quite a bit of stock, I believe in the quarter.

For my follow up I wanted to ask about the buyback you bought back quite a bit of stock I believe in the quarter.

Speaker 6: And I think at the analyst that you talked about, buybacks is only really being anti-dilutive. We look like we are seeing share counts come down. I guess how should we be thinking about the buyback going forward given the cash generation? And I noticed this quote, you didn't guide the share count on a more structural level. It does look like it's down a little lower. Should be thinking about share count, continue to go down through the year, given the capital to her and that we see.

And I think at the Analyst day, you talked about buybacks is only really being anti dilutive, but it looks like we are seeing share counts come down I guess, how should we be thinking about the buyback going forward given the cash generation and I noticed this quarter you didn't guide the share count on a more structural level. It does look like it's down a little lower should we be thinking about share count.

Continue to go down through the year, given given the capital to fund that we see.

Speaker 4: Stacy, no change on the framework that we've given on buybacks before. We're continuing to focus on prioritize anti-delete of buybacks and opportunistically look for.

Stacey no no change on the framework that we've given on buybacks before we're continuing to focus on prioritize and didn't leave no buybacks and Opportunistically look for.

Speaker 5: on top of that if we can do additional buybacks. And so what you're seeing in the quarter is a portion of that showing up, but fundamentally our framework doesn't.

On top of that if we can do additional buybacks and so what youre seeing in the quarter as a portion of that showing up.

But fundamentally our framework doesn't change.

Thank you. Our next question is coming from the line of Tal Leone with Bank of America. Please proceed with your question Hi.

Speaker 9: Thank you. Our next question is coming from a line of Tallahione with Bank of America. Please proceed with your question. Hi. I have two questions.

I.

I have two questions.

Speaker 10: The first one is other suppliers of Apple noted that orders for March and were strong, but then at least one of them said that the guidance for June is very weak.

The first one is other suppliers of Apple noted that orders for March in were strong, but then at least one of them said that the guidance for June these is very weak.

Speaker 10: Because there's going to be a reversion to the mean and the question I have is is there any concentration of QCP Hence that this with that gives you some concerns over any big customer that might be reducing Order that there is any abnormal behavior disorder might be reducing orders later on That's my first question

Because theres going to be a reversion to the mean and the question I have is is there any concentration of QC T.

Handsets. This with it gives you some concerns over any big customer that might be reducing orders. If there is any abnormal behavior this quarter might be reducing orders later on.

That's my first question.

Speaker 5: Sure. Mine, so. Okay, I will take it one by one, sorry. Sure, yeah, tell nothing to look there. I mean, there is a story. We're going, Apple is going to have their buying pattern across the quarters and so they'll flow through. But really our focus is on the Android market and there isn't a specific story that we're worried about there. Our position is good and design traction going forward looks great.

Sure Mike.

Okay, I will take it one by one sorry sure yeah. It does nothing to look there I mean, there there isn't a story, we we were going to Apple is going to have their buying.

Pattern across the quarters, and so that'll flow through but really our focus is on the Android market and there there isn't a specific story that are that we're worried about there our position is good and our design traction going forward looks great. Okay.

Speaker 10: Second question and I don't know how to look at it but

The second the second question and I don't know how to look at it but.

When I look at handset revenues are well above the consensus estimates, but Rs auto and Iot you reported below slightly below consensus estimates for the quarter.

Speaker 10: When I look at handset revenues, you are well above the consensus estimate.

Speaker 10: but RF, auto and IOT, you reported the below, slightly below consensus estimates for the quarter.

Speaker 10: And I'm just wondering, is there any, first of all, can you discuss the quarter for these non-henset markets, or maybe RF is part of Hensets, and then can you discuss his analogy? What, these are new markets relatively speaking, what should we think about his analogy?

And I'm. Just wondering is is there any first of all can you discuss the quarter for these non handset markets.

Or maybe RF as part of headsets and then can you discuss seasonality what what what these are new markets relatively speaking what should we think about seasonality here.

Yeah sure. So tullow as we had said at previous earnings call.

Speaker 5: Yeah, sure. So, Tal, as we had said at previous earnings call, December being a strong quarter for the handset business, we definitely prioritize the handset business over some of the other other new opportunities.

Being a strong quarter for the handset business, we definitely prioritize the handset business or some of the other our other new opportunities are still it's still great a great demand in those areas and as we go forward, you'll see that our growth rates ramp in each of those businesses.

Speaker 5: Still great demand in those areas, and as we go forward, you'll see that growth rates ramp in each of those businesses. It's reflected in our guidance, as I said in my prepared remarks. We expect auto and IoT to see strong sequential growth in the second quarter, and also strong growth in the third quarter.

It's reflected in our guidance as I said in my prepared remarks, we expect auto and Iot to see strong sequential growth.

In the second quarter and also a strong year over year growth.

Speaker 5: As you look at the second half of the year, you're going to see the same drens, strong, here, where growth across the board.

As you look at the second half of the year, you're going to see the same trend strong year over year growth across the board.

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

Speaker 1: Thank you. Our next question is coming from the line of Ross Seymour with Deutsche Bank. Please proceed with your question.

Speaker 7: Hi guys, thanks for letting me ask a question. Whether it's Christiano or a cashmine, I'm not sure who this is better online to, but I wanted to see what your strategy is on the pricing side of the equation. Poss are increasing, everybody's trying to get more supply. Are you passing along those costs? Is it margin accretive? And how are you using price on the revenue side of things as a tailwind? Should we be assuming that some of the goodness that we're seeing year over year is coming from the price side of the equation or not?

Hi, guys. Thanks for letting me ask a question.

Whether it's christiana or a cost I'm not sure who this is better aligned to but I wanted to see what your strategy is on the pricing side of the equation costs are increasing everybody's trying to get more supply are.

Are you passing along those cost is it margin accretive.

And how are you using price on the revenue side of things as a tailwind should we be assuming that some of the goodness that we're seeing year over year is coming from the price side of the equation or not.

Thanks, Ross so squishy on that thanks for the question.

Speaker 3: Here's how you should think about it. One thing to probably separate us, we've been very focused on in premium and high-tier devices, high-value devices, a lot of new technology. And therefore, we're kind of less impacted by semiconductor cost increases. It's more about the value of the platform we offer. The second part of the answer is what we said, I think, earlier.

Here's how you should think about it one thing that probably separate us we've been very focused in premium and high tier devices high value devices, a lot of new technology and therefore, it's we're kind of less impacted by semiconductor cost increases is more about the value of the <unk>.

For them, we offer the second part of off the answer is what we said I think earlier.

Speaker 3: Our one technology roadmap really scales. And as we use the technology in our R&D to serve more markets, we gain scale with our application processor in premium Android and Android becomes the key story of mobile, not the modem. It's really the application processor in the Snapdragon 800 is the key story.

Our one technology roadmap really scales and as we use the technology in our R&D to serve more markets. We gained scale with our application processor in premium the Android and Android becomes the key story of mobile not the modem is really the application processor and the snapdragon.

Hunter is the key story, plus we have the processing and connectivity into automotive and Iot It is accretive to margins.

Speaker 3: Plus we have the processing and connectivity into automotive and IoT. It is a creative to margins. The business gains scale and those are highly profitable of a product offerings. So those two things have a factor and it's reflected in the QCT 35% operating market.

Business gained scale and those are highly profitable I think our product offerings. So those two things have a factor and it's reflected in the Q2, 35% operating margin.

Speaker 11: Thanks for that color. I guess as my follow up 1 probably for a gosh on the side of things looks like the March quarter is doing what it typically does in your guidance up seasonally any sort of puts and takes for the rest of the year. That would be different than your traditional seasonality in that line.

Thanks for that color I guess as my follow up one probably for a cost on the opex side of things it looks like the March quarter is doing what it typically does in your guidance up seasonally any sort of puts and takes for the rest of the year that would be different than your traditional seasonality in that line.

Speaker 5: Not really. It will be consistent with our historical seasonality. The one thing to keep in mind is as we close the Vioneer transaction, they'll become a factor in our OPEX trend going forward. But overall, you should expect the trend to be consistent with historical seasonality.

Not really it'll be consistent with our historical seasonality. The one thing to keep in mind is as we are closed the veolia transaction they'll become a factor in our opex trend going forward.

But overall, there's there's you you should expect the trend to be consistent with historical.

Yeah.

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

Speaker 9: Thank you. Our next question is coming from Matt Ramsey with Cowen. Please proceed with your question. Thank you very much.

Thank you very much good afternoon everybody.

Speaker 12: Cristiano, I wanted to, a lot of the conversation here has been focused on supply versus demand for your product.

Christiane I wanted to a lot of the conversation here has been focused on.

Supply versus demand.

For your products and and the wafers and et cetera that it takes to make your products, but a lot of the calls we we all do in Sami's, we're hearing about match that issues in kitting issues for your end customers, making devices and what I've heard more about in the last six months and I expect going forward is.

Speaker 12: wafers, et cetera, that it takes to make your products. But a lot of the calls we all do in semis, we're hearing about match set issues.

Speaker 12: I've heard more about in the last six months and I expect you going forward is maybe a push by Qualcomm.

There's maybe a push by Qualcomm to use your scale to help your OEM customers get the remainder of the kit to make phones pushing people more closely to be strictly aligned around the reference design, where you can control more of the components in those reference designs I wonder if you're finding your scale to be an advantage one and number two does that.

Speaker 12: your scale to help your OEM customers get the remainder of the kit to make phones, pushing people more close.

Speaker 12: strictly aligned around the reference design where you can control more the components in those reference designs. I wonder if you're finding your scale to be an advantage one.

Speaker 12: Does that have implications on attach rates of RF and other types of components that might generate revenue for Qualcomm?

Have implications on attach rates of RF and other types of components that might generate revenue from Qualcomm in those designs.

Speaker 3: No, thanks for the question. Here's, it's a complicated thing. I'll try to provide a simple answer. Look, when we talk for example, and I'm just gonna pick this product an example, we talk about Snapdragon 8 series generation one, and it's a leading node.

No. Thanks for the question here is it's a complicated thing here I'll try to I'll try to provide a simple answer look when we talk for example, and I was just going to pick this product. An example, we're talking about snapdragon.

H series generation, one and it's a leading nodes.

Speaker 3: you know, SOC, but he has a lot of attach. Yes, yes, you know, the transceiver has an entire front end attach, he has power, management I see. And at the end of the day, when we provide a chipset solution to our customers, we need capacity across a number of different

S O C. But he has a lot of attach yes, yes, you know the transceiver has entire front end attached as part of management actually and at the end of the day. When we provided chipset solution to our customers we need capacity across a number of different notes. So when when we think about multi sourcing our products and put capacity expansion plans in place.

Speaker 3: So when we think about multi-sourcing our products and put capacity expansion plans in place, so we have supply to support both our hands and the growth business, we have been building capacity across all those different technologies. And as an example, when you think of things like a power management IC or even transceiver, we work with four or five founders.

So we have supply to support both for Hansard into growth business, we have been building capacity across all of those different technology. So that it is.

An example, when you think of things like a power management IC or even transceiver, we worked with four or five foundries, so and in the the semiconductor supply chain shortage. It is across everything now having said that the second part of the answer is scale has been very helpful.

Speaker 3: So in the semi conductive-supplyting shorters, it is across everything. Now, having said that, the second part of the answer is scale has been very helpful.

Two things as being very helpful for Qualcomm.

Speaker 3: One is the high predictability we have on our demand. We can bet on ourselves, and therefore, we have the ability to make long-term capacity planning and get long-term capacity commitment.

One is the high predictability, we have on our demand we can bet on ourselves and therefore, we have the ability to make long term capacity planning.

And get long term capacity commitments from our vendors.

Speaker 3: from our vendors, and also the scale that we have to be able to utilize multi-sourcing, that has put us in a good position to navigate through this. Now having said that, I'll repeat what I said before, we still have more demand than supply even though we're very happy with the growth rates and how good was the quarter, the guide, how we've been managing I think the systemality between handsets and the growth business.

And also the scale that we have to be able to utilize multi sourcing that has put us in a good position to navigate through this now having said that so I'll repeat what I said before we're still we still have more demand than supply, even though we're very happy with the growth rates and how good was the quarter.

The guide how we've been managing I think the system ality between handsets in the growth business, but and as we said supply is going to get better as we get to the second half of 2022.

Speaker 3: But, and as we said, supply is going to get better as we get to this second half of 2020.

Very helpful. Thank you for that I'm, just as a follow up on the auto business you guys presented a very compelling story around eight athletes at the Investor day, but I was a bit surprised that the ultra cruise announcements. So quickly congrats on that maybe if you could give a little bit more details behind that relationship with GM and if you have.

Speaker 12: very helpful. Thank you for that. Just as a follow up on the auto business, you guys presented a very compelling story around ADAP.

Speaker 12: I was a bit surprised at the AlterCruise announcement so quickly, congrats on that. Maybe if you give a little bit more details behind that relationship with DM and if you have other...

Other irons in the fire of similar profile. Thanks.

Thanks for the question.

Speaker 3: Automotive is really an incredible opportunity for Qualcomm. We're super excited about everything that's happening at Automotive. It's happened in a very short period of time. And I think we have something that is very unique. It separates us from everybody else. It's not about having a component. It's about creating a digital chassis with Qualcomm.

Automotive is really an incredible opportunity for Qualcomm, we're super excited about everything's happening automotive has happened in a very short period of time and I think we have something that is very unique it's separate us from everybody else. So it's not about having a component it's about creating additional chassis with.

Speaker 3: Capabilities in all domains from connecting the quarter the cloud telematics the entire immersive digital cockpit experience and of course a das and autonomy plus a service platform

Capabilities in all domains from connecting the car to the cloud telematics the entire immersive digital cockpit experience and of course, a das and autonomy plus our service platform. A G. M is is as we said our cornerstone customer that is not only looking into the capability of a desk and where soup.

Speaker 3: is as we said a cornerstone customer that is not only looking

Speaker 3: into the capability of ADAS and we're super proud that the work will be done both on super cruise and ultra cruise.

We're proud of the work with them, both with Super cruise and ultra cruise, but also the ability to look of the entire chassis BMW was another one which we announced towards our analyst day at CES, We announced Reno is in addition to the digital chassis.

Speaker 3: but also the ability to look of the entire chassis.

Speaker 3: BMW was another one which we announced towards our analyst day. As CS, we announced we know as an addition to the digital chassis. We, we, you should expect that we have a lot of other irons in the fire. And overall automotive is a good story for Qualcomm. It's something that we can actually take a platform approach.

We weeks you should expect that we have a lot of other irons in the fire and our overall automotive is a good story for Qualcomm, it's something that we can actually take a platform approach and take some of the things. We have done in mobile was it's take the technology to scale up and down to every tier of automobile.

And are you you know like I think we're just at the beginning of having more a desk design wins and having the chassis b whats nice is a key platform going forward.

Okay.

Speaker 1: Your next question is coming from Joe Moore with Morgan Stanley . Please proceed with your question.

Thank you. Our next question is coming from Joe Moore with Morgan Stanley . Please proceed with your question.

Great. Thank you I Wonder if you could talk about our F for the year.

Speaker 8: Great, thank you. What if you could talk about RF for the year? You know, the RF business is ability to keep pace with handsets overall. And kind of what are the metrics we should look at as is millimeter wave roll out kind of more broadly an important factor or is it content growth in the sort of next 200 million 5G instance? How are you thinking about overall RF for the year?

You know the RF businesses ability to keep pace with handsets overall and kind of what are the metrics. We should look at it as millimeter wave rollout kind of more broadly an important factor or is it content growth and that sort of next 200 million five Jan says so how are you thinking about overall RF for the year.

Sure Joe it's gosh.

Speaker 5: Sure, Joe, it's a cush. If you go back to what we said at Analyst and the target that we set for the RF business, really no change there. We, we, we, 22 is playing out as we expected. It's on track to position us to achieve the target that we laid out.

If you'd go back to what we said at analyst day, and the target that we set for the RF business really no change. There. We are 22 is playing out as we expected it's on track to position us to achieve the target that we laid out.

Speaker 5: You should also think of RF as not just handsets. And today, most of the business is handsets, but we're going to have RF opportunities with 5G and automotive, with 5G and IoT, and then Wi-Fi RF as well. So tremendous growth opportunities outside of handsets. That's in front of us.

You should also think of RF as not just handsets and today most of the businesses and sets, but we're going to have RF opportunities with five G in automotive.

With five gene Iot and then Wifi RF as well so tremendous growth opportunities outside of handsets are that's in front of us.

Speaker 5: On millimeter wave, are the guidance that we gave at analyst day did not have any heroic assumptions of growth of millimeter wave globally. We think of that as an upside opportunity.

Oh on millimeter wave.

Our the guidance that we gave at analyst day did not have any heroic assumptions off a growth of millimeter wave globally, we think of that doesn't upside opportunity.

Great. Thank you.

Yeah.

Speaker 1: Thank you. Our final question is coming from the line of Brett Simpson with R.R.H. research. Please proceed with your question.

Thank you. Our final question is coming from the line of Brett Simpson with Arete Research. Please proceed with your question.

Speaker 12: Yeah, thanks very much. I have a question for Cristiano. You talked a lot about Android strength this year, but I guess on China's smartphones, we've seen some volatility in the sort of sell-in versus sell-through last quarter. Is this sort of typical kind of build-up ahead of Chinese New Year that we should expect? And I guess when you look at new product launches in China,

Yeah, Thanks very much.

For Cristiano you talked a lot about Android strength this year.

But I guess on China smartphones, we've seen some volatility in sort of sell in versus sell through last quarter.

Is this is this sort of typical kind of buildup ahead of Chinese new year that we should expect and I guess when you look at new product launches in China.

Speaker 12: Last year we didn't get any new premium Android launches in the June quarter. Nothing meaningful from Chinese customers. So I'm just keen to get your perspective on demand.

Last year, we didn't get any new premium Android launches in the June quarter, nothing nothing meaningful from Chinese customers. So I'm just keen to get your perspective on demand.

Speaker 12: from Chinese customers in the March and June quarters is things look a little bit more volatile than we'd expect.

Chinese customers in the March and June quarters, as things look a little bit more volatile than and then we'd expect.

No. It's a great question and I think because we've been trying to talk about on this call. When you think about the handset enjoyed you.

Speaker 3: no that's a great question and i think that we've been trying to uh... talk about on the school when you think about the hand-set and right you know revenue for us and the growth for having an android you see a lot of growth right now is on that sixty percent uh... here over your growth of android and we also have sick quince show growth that's because of the chinese new year and and we're more skewed towards premium and high tier um...

You know revenue for us and the growth, we're having and enjoy do you see a lot of growth right. Now you saw that 60% a year over year growth of Android and we also have seen Quinn show growth, that's because of the Chinese new year in and were more skewed towards premium and high tier.

And then we have the next inflection point will be the holiday season.

Speaker 3: And then we have the next inflection point will be the holiday season. And I think this is all contemplating our guide. And the market, we continue to see demand high. And because I think we're more concentrated in the premium and high tiers, we have been a little bit less impacted by some of the puts and takes that you see towards in the mid and the low tier of high.

And I think this is all contemplated in our guide and.

The market, we we continue to see demand of high end, because I think we're more concentrated in the premium and high tiers, we have been a little bit less impacted by some of the puts and takes that youll see towards into mid and the low tier of handsets.

Right. Thanks, Kristina and maybe just a follow up on the Windows and arm. I mean this is something you guys have laid over the last I don't know three or four years, but.

Speaker 12: Right, thanks, Cristiano. And maybe just to follow up on Windows and ARM, I mean, this is something you guys have laid over the last I don't know, three or four years. But...

Speaker 13: Can you talk a bit about your share ambitions? I mean, what do you think that an ARM platform and Windows ecosystem can command on a sort of two or three year view, especially with the Nuvia asset you've got now and the McKenna project and any sort of market share ambitions you can share with us just to give us some perspective on how you see this opportunity playing out. Thanks.

Can you talk a bit about your shared ambitions I mean, what do you think that an arm platform and windows ecosystem can command on a sort of two or three year view with especially with the new via asset you've got in Iowa, and the Makena project and any sort of market share ambitions, you can share with us just to give us some perspective on how you see this opportunity playing.

Yep.

Thanks.

Speaker 3: Great question. Look, let's talk about short term and then let's talk about mid-term. The way we look at this, and we have been very clear and very consistent with our vision. At the end of the day,

Great question look, let's let's talk about our short term and then let's talk about mid term the way the way we look at this and we have been very clear and very consistent with our vision at the end of the day.

Speaker 3: for Qualcomm, it's inevitable that you're gonna have a big portion off the PC market moving towards a connected on platform. I think you saw that happening already with.

For Qualcomm, it's inevitable that you're going to have a big portion of the PC market moving towards the connected platform I think you saw that happening already with them.

Speaker 3: with Apple when you think about the Apple devices. And then when you think about the use cases of PC, PCs are changing at least for the workhorse of laptop. It's about cameras, about connectivity, it's about multimedia, it's about streaming with 5G, including streaming of gaming, et cetera.

If apple when you think about the Apple devices and then when you think about the use cases of Pcs Pcs are changing at least for the workhorse of a laptop. It's about cameras about connectivity is about multimedia is about streaming with five G. Including you know streaming of gaming et cetera. So our view is very clear there's.

Speaker 3: So our view is very clear. There's gonna be a big portion of the market is going to transition to an ARM architecture. And when you think of everybody else in the industry, we are the best position company to do that for the Windows ecosystem. I think that's reflected, not only the developments in the partnership we have with Microsoft for the years, but also the acquisition of Nuvia. Short term.

Going to be a big portion of the market is going to transition to an arm architecture and when you think of everybody else in the industry. We are the best positioned company to do that for the Windows ecosystem I think that's reflected not only the developments and the partnership we have with Microsoft with the years, but also the acquisition of new again short term.

U S. As we prepare for Windows 11 of Windows 11 is really the time that you have the arm ecosystem able to support 32 bit 64 bit you'll have things like the Android apps come into Windows are new part that we just announced the HD X are you know gentry, we vis we'd talk.

Speaker 3: You know, as we prepare for Windows 11, Windows 11 is really the time that you have the ARM ecosystem able to support 32-bit, 64-bit. You have things like the Android apps coming to Windows are new part that we just announced, the HCX, you know, Gentry. We talk about a CS about having now the device being tested in 200 large enterprise.

She asked about having now the device being tested.

In 200 large enterprises.

Speaker 3: And it's just, it's a step function, you know, we'll continue to work with our partners on that transition. But I think every OEM that you're going to talk to, especially on the PC window side, they believe there's going to be a room for arm-based laptop. And that's what qualcomm is.

And it's just it's a step function you know, we'll continue to work with our partners on that transition, but I think every OEM that you're going to talk to especially on the P. C window side. They believe there's going to be a room for arm based laptop and that's what Qualcomm is doing.

Yeah.

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

Speaker 1: Thank you, that concludes today's question and answer session. Mr. Amand, do you have anything for the to add before joining the call?

Speaker 3: Yes, first of all, I'd like to thank everyone for joining in the call today.

Yes first of all I'd like to thank everyone for joining the call today.

Speaker 3: I'm really excited for what 2022 will bring. The man for technology is accelerating across virtually every sector and we remain at the beginning of one of the largest opportunities in our history.

I'm really excited for what 2022 will bring.

Demand for technology is accelerating across virtually every sector and we remain at the beginning of one of the largest opportunities in our history.

Speaker 3: Our one technology roadmap with incomparable capabilities in wireless communications, low power, advanced computing, and on-device AI, extends from mobile to automotive and IoT, expanding our addressable market by more than seven times to approximately 700 billion in the next decade.

Our one technology road map with in comparable capabilities in wireless communications low power advanced computing and on device AI extends from mobile to automotive and Iot expanding our addressable market by more than seven times to approximately 700 billion into next decade.

In closing we have division in the execution capabilities that will ensure we are at the forefront of innovation.

Speaker 3: In closing, we have division in the execution capabilities that we will ensure we are the forefront of innovation. As the world transforms, we will continue to move early and quickly to address this new opportunities and deliver technologies that enable industries and communities to advance. Most important, I would like to thank our 45,000 employees worldwide. I'm incredibly proud of the significant achievements we made. Thank you.

The word transforms who will continue to move early and quickly to address this new opportunities and deliver technologies that enable industries and communities to advance.

Most important I would like to thank our 45000 employees worldwide I'm incredibly proud of the significant achievements we made thank you.

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

Speaker 1: Ladies and gentlemen, this concludes today's conference call. From the United States Connect.

Yeah.

Speaker 14: The.

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