Qualcomm Q1 2026 Qualcomm Inc Earnings Call | AllMind AI Earnings | AllMind AI
Q1 2026 Qualcomm Inc Earnings Call
Speaker #1: Ladies and gentlemen, thank you for standing by. Welcome to the QUALCOMM first quarter fiscal 2026 earnings conference call. At this time, all participants are in listen-only mode.
Speaker #1: Later, we'll conduct a question-and-answer session. If you'd like to ask a question during this time, press star, then the number one on your telephone keypad.
Speaker #1: To throw your question, press star, then the number two. If you're 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: As a reminder, this conference is being recorded, February 4th, 2026. The playback number for today's call is 877-660-6853. International callers, please dial 201-612-7415. The playback reservation number is 137-581-27.
Speaker #1: I would now like to turn the call over to Mauricio Lopez-Odoian. Vice President of Investor Relations. Mr. Lopez-Odoian, please go
Operator: I would now like to turn the call over to Mauricio Lopez-Hodoyan, Vice President of Investor Relations. Mauricio Lopez-Hodoyan, please go ahead.
Operator: I would now like to turn the call over to Mauricio Lopez-Hodoyan, Vice President of Investor Relations. Mauricio Lopez-Hodoyan, please go ahead.
Speaker #1: ahead. Thank you.
Mauricio Lopez-Hodoyan: Thank you, and good afternoon, everyone. Today's call will include prepared remarks by Cristiano Amon and Akash Palkhiwala. In addition, Alex Rogers will join the question and answer session. You can access our earnings release and its live presentation that accompany this call on our investor relations website. In addition, this call is being webcast on qualcomm.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.
Mauricio Lopez-Hodoyan: Thank you, and good afternoon, everyone. Today's call will include prepared remarks by Cristiano Amon and Akash Palkhiwala. In addition, Alex Rogers will join the question and answer session. You can access our earnings release and its live presentation that accompany this call on our investor relations website. In addition, this call is being webcast on qualcomm.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.
Speaker #2: And good afternoon, everyone. Today's call will include prepared remarks by Cristiano Amon and Akash Palkhiwala. In addition, Alex Rogers will join the question-and-answer session.
Speaker #2: 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.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 defining regulation G. And you can find the related reconciliations to GAAP on our website.
Speaker #2: 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.
Speaker #2: 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.
Mauricio Lopez-Hodoyan: 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, Cristiano Amon.
Mauricio Lopez-Hodoyan: 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, Cristiano Amon.
Speaker #2: And now to comments from QUALCOMM's President and Chief Executive Officer, Cristiano Amon.
Cristiano Amon: Thank you, Mauricio, and good afternoon, everyone. Thanks for joining us today. In fiscal Q1, we delivered record revenues of $12.3 billion and non-GAAP earnings per share of $3.50. Within QCT, record revenues of $10.6 billion were driven by strength in flagship handsets. We also saw another quarter of record revenues in automotive and positive momentum in IoT across industrial, edge networking applications, and smart glasses. Licensing business revenues were $1.6 billion. While global consumer demand for handsets, especially premium and high tier, exceeded our expectations, with healthy sell-through observed through fiscal Q1 in the first few weeks of 2026, in the coming quarters, the handset industry will be constrained by the availability and pricing of memory, particularly the RAM....
Cristiano Amon: Thank you, Mauricio, and good afternoon, everyone. Thanks for joining us today. In fiscal Q1, we delivered record revenues of $12.3 billion and non-GAAP earnings per share of $3.50. Within QCT, record revenues of $10.6 billion were driven by strength in flagship handsets. We also saw another quarter of record revenues in automotive and positive momentum in IoT across industrial, edge networking applications, and smart glasses. Licensing business revenues were $1.6 billion. While global consumer demand for handsets, especially premium and high tier, exceeded our expectations, with healthy sell-through observed through fiscal Q1 in the first few weeks of 2026, in the coming quarters, the handset industry will be constrained by the availability and pricing of memory, particularly the RAM....
Speaker #3: Mauricio. And good afternoon, everyone. Thanks for joining us today. In fiscal Q1, we delivered record revenues of $12.3 billion in non-GAAP earnings per share of $3.50.
Speaker #3: QCT, record revenues Within of $10.6 billion were driven by strength in flagship handsets. We also saw another quarter of record revenues in automotive and positive momentum in IoT across industrial, edge networking applications, and smart glasses.
Speaker #3: Licensing business revenues were $1.6 billion. While global consumer demand for handsets, especially premium and high-tier, exceeded our expectations, with healthy sell-through observed through fiscal Q1 in the first few weeks of 2026, in the coming quarters the handset industry will be constrained by the availability and pricing of memory, particularly DRAM.
Speaker #3: As memory suppliers redirect manufacturing capacity to HBM to meet AI data center demand, the resulting industry-wide memory shortage and price increases are likely to define the overall scale of the handset industry through the current environment. Several handset OEMs, especially in China, are taking a cautious approach in reducing their chipset inventory.
Cristiano Amon: As memory suppliers redirect manufacturing capacity to HBM to meet AI data center demand, the resulting industry-wide memory shortage and price increases are likely to define the overall scale of the handset industry through the fiscal year. Given the current environment, several handset OEMs, especially in China, are taking a cautious approach in reducing their chipset inventory. This is reflected in our guidance for the upcoming quarter. We will continue to work closely with our customers and suppliers as the situation evolves. Akash will share more details on the memory impact in his prepared remarks. And now some key highlights from the business. We are pleased with the continued expansion of the premium and high-tier smartphone segments and traction of Snapdragon platforms, including broad OEM adoption for dual flagship product strategy. For Samsung's upcoming family of premium-tier devices, we expect approximately 75% share, consistent with prior expectations.
Cristiano Amon: As memory suppliers redirect manufacturing capacity to HBM to meet AI data center demand, the resulting industry-wide memory shortage and price increases are likely to define the overall scale of the handset industry through the fiscal year. Given the current environment, several handset OEMs, especially in China, are taking a cautious approach in reducing their chipset inventory. This is reflected in our guidance for the upcoming quarter. We will continue to work closely with our customers and suppliers as the situation evolves. Akash will share more details on the memory impact in his prepared remarks. And now some key highlights from the business. We are pleased with the continued expansion of the premium and high-tier smartphone segments and traction of Snapdragon platforms, including broad OEM adoption for dual flagship product strategy. For Samsung's upcoming family of premium-tier devices, we expect approximately 75% share, consistent with prior expectations.
Speaker #3: This is reflected in our guidance for the upcoming quarter. We will continue to work closely with our customers and suppliers as the situation evolves.
Speaker #3: Akash will share more details on the memory impact in his prepared remarks. And now, some key highlights from the business. We are pleased with the continued expansion of the premium and high-tier smartphone segments, and traction of Snapdragon platforms, including broad OEM adoption for dual flagship product strategy.
Speaker #3: For Samsung's upcoming family of premium-tier devices, we expect approximately 75% share consistent with prior expectations. It's important to note that during the quarter, ByteDance launched the first agentic AI smartphone powered by the Snapdragon 8 Elite, this is a significant milestone in the transition toward AI-native smartphones and the precursor to the agentic experiences shaping the future of mobile.
Cristiano Amon: It's important to note that during the quarter, ByteDance launched the first agentic AI smartphone powered by the Snapdragon 8 Elite. This is a significant milestone in the transition toward AI-native smartphones and the precursor to the agentic experiences shaping the future of mobile. With the development of agents and AI becoming the new UI, intelligent wearables are evolving into personal AI companions and quickly emerging as the next mobile computing category. Our early investments in this area, including powerful and power-efficient chipsets, advanced connectivity, including Micro Power Wi-Fi, as well as Ambient Sensing and perception technologies, position Snapdragon XR, Wear, and Sound as the platforms of choice for the industry. We're pleased to be working with seven of the nine largest cloud companies globally, and more than 40 personal AI devices are in production or development.
Cristiano Amon: It's important to note that during the quarter, ByteDance launched the first agentic AI smartphone powered by the Snapdragon 8 Elite. This is a significant milestone in the transition toward AI-native smartphones and the precursor to the agentic experiences shaping the future of mobile. With the development of agents and AI becoming the new UI, intelligent wearables are evolving into personal AI companions and quickly emerging as the next mobile computing category. Our early investments in this area, including powerful and power-efficient chipsets, advanced connectivity, including Micro Power Wi-Fi, as well as Ambient Sensing and perception technologies, position Snapdragon XR, Wear, and Sound as the platforms of choice for the industry. We're pleased to be working with seven of the nine largest cloud companies globally, and more than 40 personal AI devices are in production or development.
Speaker #3: With the development of agents and AI becoming the new UI, intelligent wearables are evolving into personal AI companions and quickly emerging as the next mobile computing category.
Speaker #3: Our early investments in this area include powerful and power-efficient chipsets advanced connectivity, including micropower Wi-Fi, as well as ambient sensing and perception XR where and sound as the platforms of choice for the industry.
Speaker #3: We're pleased to be working with seven of the nine largest cloud companies globally and more than 40 personal AI devices are in production or development.
Speaker #3: In PCs, we introduced the Snapdragon X2 Plus, an expansion of our second generation platforms purpose-built for the enterprise and commercial segment. The X2 Plus is powered by the third generation QUALCOMM Orion CPU, which delivers up to 35% faster single-core performance and up to 3.5 times faster multi-core performance compared to the competition in previous generations.
Cristiano Amon: In PCs, we introduced the Snapdragon X2 Plus, an expansion of our second-generation platforms, purpose-built for the enterprise and commercial segment. The X2 Plus is powered by the third-generation Qualcomm Oryon CPU, which delivers up to 35% faster single-core performance and up to 3.5 times faster multi-core performance compared to the competition in previous generations. Our Hexagon NPU provides up to 5.7 times and 3.4 times faster inferencing versus competitors' NPU and GPU, respectively. 18 Snapdragon-powered PCs debuted at CES from Asus, HP, Lenovo, and Microsoft. The Asus ZenBook A16 was one of the standouts, featuring the Snapdragon X2 Elite Extreme and is the fastest Snapdragon-powered laptop to date.
Cristiano Amon: In PCs, we introduced the Snapdragon X2 Plus, an expansion of our second-generation platforms, purpose-built for the enterprise and commercial segment. The X2 Plus is powered by the third-generation Qualcomm Oryon CPU, which delivers up to 35% faster single-core performance and up to 3.5 times faster multi-core performance compared to the competition in previous generations. Our Hexagon NPU provides up to 5.7 times and 3.4 times faster inferencing versus competitors' NPU and GPU, respectively. 18 Snapdragon-powered PCs debuted at CES from Asus, HP, Lenovo, and Microsoft. The Asus ZenBook A16 was one of the standouts, featuring the Snapdragon X2 Elite Extreme and is the fastest Snapdragon-powered laptop to date.
Speaker #3: Our Exagon NPU provides up to 5.7 times and 3.4 times faster inferencing versus GPU, respectively. 18 Snapdragon-powered PCs debuted at CES from ASUS, HP, Lenovo, and Microsoft.
Speaker #3: The ASUS ZenBook A16 was one of the standouts, featuring the Snapdragon X2 Elite Extreme and is the fastest Snapdragon-powered laptop to date. It features our 18-core third generation Orion CPU, an 80 TOPS Exagon NPU for AI workloads and an Adreno GPU delivering up to a 2.3 times improvement in performance per watt versus the prior generation.
Cristiano Amon: It features our 18-core, third-generation Oryon CPU and 80 TOPS Hexagon NPU for AI workloads and an Adreno GPU, delivering up to a 2.3 times improvement in performance per watt versus the prior generation. X2 Elite Extreme enables desktop-class performance, advanced graphics, and more than 21 hours of battery life in an ultra-light 16-inch form factor. We remain on track to commercialize 150 Snapdragon X-powered PCs this year. Demand for our Snapdragon Digital Chassis solutions remains incredibly strong, and we announced several collaborations with top automakers, OEMs, and service providers during the quarter. We signed a letter of intent for a long-term supply agreement with Volkswagen Group, which spans many brands, including Audi and Porsche. Under this intended agreement, we would provide advanced infotainment and connectivity capabilities powered by our digital chassis across multiple vehicle segments, price tiers, and markets.
Cristiano Amon: It features our 18-core, third-generation Oryon CPU and 80 TOPS Hexagon NPU for AI workloads and an Adreno GPU, delivering up to a 2.3 times improvement in performance per watt versus the prior generation. X2 Elite Extreme enables desktop-class performance, advanced graphics, and more than 21 hours of battery life in an ultra-light 16-inch form factor. We remain on track to commercialize 150 Snapdragon X-powered PCs this year. Demand for our Snapdragon Digital Chassis solutions remains incredibly strong, and we announced several collaborations with top automakers, OEMs, and service providers during the quarter. We signed a letter of intent for a long-term supply agreement with Volkswagen Group, which spans many brands, including Audi and Porsche. Under this intended agreement, we would provide advanced infotainment and connectivity capabilities powered by our digital chassis across multiple vehicle segments, price tiers, and markets.
Speaker #3: X2 Elite Extreme enables desktop-class performance advanced graphics and more than 21 hours of battery life in an ultra-light 16-inch form factor. We remain on track to commercialize 150 Snapdragon X-power PCs this year.
Speaker #3: Demand for our Snapdragon Digital Chassis solutions remains incredibly strong, and we announced several collaborations with top automakers, OEMs, and service providers during the quarter.
Speaker #3: We signed a letter of intent for a long-term supply agreement with Volkswagen Group, which spans many brands including Audi and Porsche. Under this intended agreement, we would provide advanced infotainment and connectivity capabilities powered by our digital chassis across multiple vehicle segments price tiers and markets.
Speaker #3: We would also serve at a group's primary technology provider for its software-defined vehicle architecture, develop through its joint venture with Rivian Automotive. In addition, we're collaborating with the group's automated driving alliance formed by Cariad and Bosch to accelerate development of highly automated driving systems.
Cristiano Amon: We would also serve as a group's primary technology provider for its software-defined vehicle architecture, developed through its joint venture with Rivian Automotive. In addition, we're collaborating with the group's automated driving alliance, formed by CARIAD and Bosch, to accelerate development of highly automated driving systems. We're very proud that the newly launched RAV4, Toyota's top-selling vehicle globally and one of the best-selling cars worldwide, is powered by our Snapdragon Cockpit platform, delivering premium AI-enabled in-vehicle experiences. We also announced new and expanded collaborations with Hyundai Mobis, Leapmotor, Li Auto, Zeekr, Great Wall Motors, Nio, and Chery, bringing our total design win for Snapdragon Elite platforms to 10 programs. In industrial IoT, we continue to expand our portfolio of advanced computing, connectivity, and AI solutions for an increasing number of verticals.
Cristiano Amon: We would also serve as a group's primary technology provider for its software-defined vehicle architecture, developed through its joint venture with Rivian Automotive. In addition, we're collaborating with the group's automated driving alliance, formed by CARIAD and Bosch, to accelerate development of highly automated driving systems. We're very proud that the newly launched RAV4, Toyota's top-selling vehicle globally and one of the best-selling cars worldwide, is powered by our Snapdragon Cockpit platform, delivering premium AI-enabled in-vehicle experiences. We also announced new and expanded collaborations with Hyundai Mobis, Leapmotor, Li Auto, Zeekr, Great Wall Motors, Nio, and Chery, bringing our total design win for Snapdragon Elite platforms to 10 programs. In industrial IoT, we continue to expand our portfolio of advanced computing, connectivity, and AI solutions for an increasing number of verticals.
Speaker #3: We're very proud that the newly launched RAV4 Toyota's top-selling vehicle globally and one of the best-selling cars worldwide is powered by our Snapdragon cockpit platform delivering premium AI-enabled in-vehicle experiences.
Speaker #3: We also announced new and expanded collaborations with Hyundai Mobies, Leap Motor, Li Auto, Zeekr, Great Wall Motors, NIO, and Chery, bringing our total design wins for Snapdragon Elite platforms to 10 programs.
Speaker #3: In industrial IoT, we continue to expand our portfolio of advanced computing, connectivity, and AI solutions for an increasing number of verticals. With the recent acquisition of Algentics, we augmented our Jaguar Wing vision portfolio and Qualcomm Insight platform with its AI-based, low-power image signal processing solution.
Cristiano Amon: With the recent acquisition of Augentics, we augmented our Dragonwing vision portfolio and Qualcomm Inside platform with its AI-based, low-power image signal processing solution. At CES, we also introduced two new Dragonwing processors, delivering on-device intelligence for security-focused drones, smart cameras, and industrial vision, AI TVs, media hubs, and video collaboration system. Additionally, the launch of our new Dragonwing IQX series marked our entry into the industrial PC space, with best-in-class compute performance and efficient edge AI, engineered for PLCs, advanced HMIs, edge controls, and panel and box PCs. This quarter, we formally announced our expansion into advanced robotics and introduced a full suite of robotics technologies and solutions, including the Dragonwing IQ10 series. Our general-purpose robotics architecture supports advanced perception and motion planning using models such as VLAs and VLMs, allowing robots to perceive, reason, adapt, and act in real-world environments.
Cristiano Amon: With the recent acquisition of Augentics, we augmented our Dragonwing vision portfolio and Qualcomm Inside platform with its AI-based, low-power image signal processing solution. At CES, we also introduced two new Dragonwing processors, delivering on-device intelligence for security-focused drones, smart cameras, and industrial vision, AI TVs, media hubs, and video collaboration system. Additionally, the launch of our new Dragonwing IQX series marked our entry into the industrial PC space, with best-in-class compute performance and efficient edge AI, engineered for PLCs, advanced HMIs, edge controls, and panel and box PCs. This quarter, we formally announced our expansion into advanced robotics and introduced a full suite of robotics technologies and solutions, including the Dragonwing IQ10 series. Our general-purpose robotics architecture supports advanced perception and motion planning using models such as VLAs and VLMs, allowing robots to perceive, reason, adapt, and act in real-world environments.
Speaker #3: At CES, we also introduced two new Dragon Wing processors, delivering on-device intelligence for security-focused drones, smart cameras and industrial vision, AI TVs, media hubs, and video collaboration systems.
Speaker #3: Additionally, the launch of our new Dragon Wing IQX series marked our entry into the industrial PC space, with best-in-class compute performance and efficient edge AI engineering for PLCs, advanced HMIs, edge controls, and panel and box PCs.
Speaker #3: This quarter, we formally announced our expansion into advanced robotics and introduced a full suite of robotics technologies and solutions including the Dragon Wing IQ10 series.
Speaker #3: Our robotics architecture supports advanced perception and motion. Our general purpose planning uses models such as VLAs and VLMs, allowing robots to perceive, reason, adapt, and act in real-world environments.
Speaker #3: As part of a complete hardware-to-software stack, IQ10 is designed to accelerate commercialization of household industrial and humanoid robots. It combines heterogeneous edge compute, safety-grade SOCs, and end-to-end AI.
Cristiano Amon: As part of a complete hardware-to-software stack, IQ10 is designed to accelerate commercialization of household, industrial, and humanoid robots. It combines heterogeneous edge compute, safety-grade SoCs, and end-to-end AI. In a short period of time, we have engaged with Advantech, APLUX, AutoCore, Booster, Figure, KUKA Robotics, Robotec.ai, and VinMotion to help define the compute architecture for their robotics and humanoid platforms. The physical AI in robotics space is experiencing rapid growth, driven by advances in edge AI and sensor fusion, and Qualcomm is one of the best-positioned companies to enable this next frontier of AI. We will do this by leveraging our strengths in high performance, power-efficient computing, connectivity, and edge intelligence, as well as our experience in ADAS and autonomy, industrial and safety-grade silicon, and perception and sensing technologies. Many of the drivers of our leadership in automotive are applicable to advanced robotics.
Cristiano Amon: As part of a complete hardware-to-software stack, IQ10 is designed to accelerate commercialization of household, industrial, and humanoid robots. It combines heterogeneous edge compute, safety-grade SoCs, and end-to-end AI. In a short period of time, we have engaged with Advantech, APLUX, AutoCore, Booster, Figure, KUKA Robotics, Robotec.ai, and VinMotion to help define the compute architecture for their robotics and humanoid platforms. The physical AI in robotics space is experiencing rapid growth, driven by advances in edge AI and sensor fusion, and Qualcomm is one of the best-positioned companies to enable this next frontier of AI. We will do this by leveraging our strengths in high performance, power-efficient computing, connectivity, and edge intelligence, as well as our experience in ADAS and autonomy, industrial and safety-grade silicon, and perception and sensing technologies. Many of the drivers of our leadership in automotive are applicable to advanced robotics.
Speaker #3: In a short period of time, we have engaged with Advantech, Applux, AutoCore, Booster, Figure, KUKA Robotics, Robotech AI, and Vinmotion to help define the compute architecture for their robotics and humanoid platforms.
Speaker #3: The physical AI and robotics space is experiencing rapid growth, driven by advances in edge AI and sensor fusion, and Qualcomm is one of the best-positioned companies to enable this next frontier of AI.
Speaker #3: We will do this by leveraging our strengths in high-performance power-efficient computing connectivity and edge intelligence, as well as our experience in ADAS and autonomy industrial and safety-grade silicon and perception and sensing technologies.
Speaker #3: Many of the drivers of our leadership in automotive are applicable to advanced robotics. Finally, we continue to develop our data center solutions and engage with leading hyperscalers, cloud service providers, sovereign AI projects, and other global partners.
Cristiano Amon: Finally, we continue to develop our data center solutions and engage with leading hyperscalers, cloud service providers, sovereign AI projects, and other global partners. We remain encouraged by the positive feedback on our CPU and innovative AI processing and memory architecture for next-generation inferencing data centers. Additionally, the recent developments in the industry validate Qualcomm's view of the importance of specialized and power-efficient AI platforms, as inferencing becomes the key driver of data center growth. In fiscal Q1, we completed the Alphawave Semi acquisition, adding high-speed wire connectivity technologies to further strengthen our platforms. We also acquired Ventana Microsystems, reinforcing our leadership and commitment to expanding the RISC-V standard and ecosystem, and development of our high-performance RISC-V CPU for data center workloads. We look forward to providing more information, including an update on our roadmap at our next investor event.
Cristiano Amon: Finally, we continue to develop our data center solutions and engage with leading hyperscalers, cloud service providers, sovereign AI projects, and other global partners. We remain encouraged by the positive feedback on our CPU and innovative AI processing and memory architecture for next-generation inferencing data centers. Additionally, the recent developments in the industry validate Qualcomm's view of the importance of specialized and power-efficient AI platforms, as inferencing becomes the key driver of data center growth. In fiscal Q1, we completed the Alphawave Semi acquisition, adding high-speed wire connectivity technologies to further strengthen our platforms. We also acquired Ventana Microsystems, reinforcing our leadership and commitment to expanding the RISC-V standard and ecosystem, and development of our high-performance RISC-V CPU for data center workloads. We look forward to providing more information, including an update on our roadmap at our next investor event.
Speaker #3: We remain encouraged by the positive feedback on our CPU and innovative AI processing and memory architecture for next-generation inferencing data centers. Additionally, the recent developments in the industry validate Qualcomm's view of the importance of specialized and power-efficient AI platforms as inferencing becomes the key driver of data center growth.
Speaker #3: In fiscal Q1, we completed the AlphaWave semi-acquisition, adding high-speed wire connectivity technologies to further strengthen our platforms. We also acquired Vintana Microsystems, reinforcing our leadership and commitment to expanding the RISC-V standard and ecosystem high-performance RISC-V CPU for data center workloads.
Speaker #3: We look forward to providing more information, including an update on our roadmap, at our next investor event. We'll also share our progress in robotics, automotive, and next-generation autonomy, industrial IoT, and 6G.
Cristiano Amon: We'll also share our progress in robotics, automotive, and next-generation autonomy, industrial IoT, and 6G. I will now turn the call to Akash.
Cristiano Amon: We'll also share our progress in robotics, automotive, and next-generation autonomy, industrial IoT, and 6G. I will now turn the call to Akash.
Speaker #3: I will now turn the call to
Speaker #3: Akash. Thank you,
Akash Palkhiwala: Thank you, Cristiano, and good afternoon, everyone. Let me begin with our strong first fiscal quarter results. Total revenues of $12.3 billion and non-GAAP EPS of $3.50 were both records, with non-GAAP EPS coming in at the high end of our guidance. QTL revenues of $1.6 billion and EBT margin of 77% were at the high end of our guidance, driven by higher units and favorable mix. We delivered record revenues in QCT of $10.6 billion, including strong year-over-year growth across automotive and IoT. QCT handset revenues reached a record $7.8 billion, reflecting the benefit of recently launched flagship smartphones. QCT IoT revenues of $1.7 billion grew 9% year-over-year, driven by demand across consumer and networking products.
Akash Palkhiwala: Thank you, Cristiano, and good afternoon, everyone. Let me begin with our strong first fiscal quarter results. Total revenues of $12.3 billion and non-GAAP EPS of $3.50 were both records, with non-GAAP EPS coming in at the high end of our guidance. QTL revenues of $1.6 billion and EBT margin of 77% were at the high end of our guidance, driven by higher units and favorable mix. We delivered record revenues in QCT of $10.6 billion, including strong year-over-year growth across automotive and IoT. QCT handset revenues reached a record $7.8 billion, reflecting the benefit of recently launched flagship smartphones. QCT IoT revenues of $1.7 billion grew 9% year-over-year, driven by demand across consumer and networking products.
Speaker #2: Everyone, let me begin with our strong first fiscal quarter results. Total revenues of $12.3 billion and non-GAAP EPS of $3.50 were both at the high end of our guidance.
Speaker #2: QTL revenues of $1.6 billion and EBITDA margin of 77% were at the high end of our guidance, records, with non-cap EPS coming in at the high driven by higher units and favorable mix.
Speaker #2: We delivered record revenues in QCT of $10.6 billion including strong year-over-year growth across automotive and IoT. QCT handset revenues reached a record $7.8 billion reflecting the benefit of recently launched flagship smartphones.
Speaker #2: QCT IoT revenues of $1.7 billion grew 9% year-over-year, driven by demand across consumer and networking products. In QCT Automotive, we delivered another record quarter, with revenues growing to $1.1 billion, up 15% versus the year-ago period, on increased demand for our Snapdragon Digital Chassis platforms.
Akash Palkhiwala: In QCT Automotive, we delivered another record quarter, with revenues growing to $1.1 billion, up 15% versus the year-ago period, on increased demand for our Snapdragon Digital Chassis platforms. QCT EBT margin of 31% came in line with expectations, exceeding our long-term target of 30%. Lastly, we returned $3.6 billion to stockholders, including $2.6 billion in stock repurchases and $949 million in dividends. Before turning to guidance, I'd like to address the impact of the memory industry dynamics on our financial outlook. The fundamentals of our handset business remain favorable, with a stable global economic environment, total handset shipments exceeding expectations in the December quarter, especially in the premium and high tier, and a strong design win pipeline for our Snapdragon chipsets.
Akash Palkhiwala: In QCT Automotive, we delivered another record quarter, with revenues growing to $1.1 billion, up 15% versus the year-ago period, on increased demand for our Snapdragon Digital Chassis platforms. QCT EBT margin of 31% came in line with expectations, exceeding our long-term target of 30%. Lastly, we returned $3.6 billion to stockholders, including $2.6 billion in stock repurchases and $949 million in dividends. Before turning to guidance, I'd like to address the impact of the memory industry dynamics on our financial outlook. The fundamentals of our handset business remain favorable, with a stable global economic environment, total handset shipments exceeding expectations in the December quarter, especially in the premium and high tier, and a strong design win pipeline for our Snapdragon chipsets.
Speaker #2: QCT EBITDA margin of 31% came in line with expectations, exceeding our long-term target of 30%. Lastly, we returned $3.6 billion to stockholders including $2.6 billion in stock repurchases and $949 million in dividends.
Speaker #2: I'd like to address the impact of the memory Before turning to guidance, industry dynamics on our financial outlook. The fundamentals of our handset business remain favorable with a stable global economic environment, total handset shipments exceeding expectations in the December quarter, especially in the premium and high tier, and a strong design win pipeline for our Snapdragon chipsets.
Akash Palkhiwala: However, increasing demand for memory solutions in AI data centers is driving near-term uncertainty in memory supply and pricing for handset OEMs. As a result, the handset OEMs are taking a cautious approach in planning their business. We've seen several OEMs, especially in China, take actions to reduce their handset build plans and channel inventory. Our guidance for the upcoming quarter reflects the latest signals from these customers, which includes reduced chipset orders aligned with their scaled-back expectations for build plans. We expect to return to our prior run rate and growth trajectory for QCT handset revenues when these conditions normalize. Now turning to guidance. In the second fiscal quarter, we are forecasting revenues of $10.2 to 11 billion and non-GAAP EPS of $2.45 to $2.65.
Akash Palkhiwala: However, increasing demand for memory solutions in AI data centers is driving near-term uncertainty in memory supply and pricing for handset OEMs. As a result, the handset OEMs are taking a cautious approach in planning their business. We've seen several OEMs, especially in China, take actions to reduce their handset build plans and channel inventory. Our guidance for the upcoming quarter reflects the latest signals from these customers, which includes reduced chipset orders aligned with their scaled-back expectations for build plans. We expect to return to our prior run rate and growth trajectory for QCT handset revenues when these conditions normalize. Now turning to guidance. In the second fiscal quarter, we are forecasting revenues of $10.2 to 11 billion and non-GAAP EPS of $2.45 to $2.65.
Speaker #2: increasing demand for memory solutions in AI data centers is driving However, OEMs. As a result, the handset supply and pricing for handset their business.
Speaker #2: increasing demand for memory solutions in AI data centers is driving However, OEMs. As a result, the handset supply and pricing for handset OEMs are taking a cautious approach in planning We've seen several OEMs, especially in China, take actions to reduce their handset build Our guidance for the upcoming quarter reflects the latest signals from these customers which include reduced chipset orders, aligned with their scaled-back expectations for build plans.
Speaker #2: We expect to return to our prior run rate and growth trajectory for QCT handset revenues when these conditions normalize. Now turning to guidance, in forecasting revenues of $10.2 to the second fiscal quarter, we are $11 billion and non-cap EPS of $2.45 to $2.65.
Speaker #2: In QTL, we estimate revenues of $1.2 to $1.4 billion and EBITDA margins of $68 to $72% reflecting normal sequential trend. In QCT, we expect revenues of $8.8 to $9.4 billion and EBITDA margins of $26 to $28%.
Akash Palkhiwala: In QTL, we estimate revenues of $1.2 to 1.4 billion and EBT margins of 68% to 72%, reflecting normal sequential trend. In QCT, we expect revenues of $8.8 to 9.4 billion and EBT margins of 26% to 28%. We are forecasting QCT handset revenues to be approximately $6 billion as a result of the impact of memory constraints I just outlined. We anticipate QCT IoT revenues to grow by low teens % versus the year ago period, driven by growth across industrial and consumer products. In QCT Automotive, following another record quarter, we expect year-over-year revenue growth to accelerate to greater than 35% in the second fiscal quarter. Lastly, we expect non-GAAP operating expenses to be approximately $2.6 billion in the quarter.
Akash Palkhiwala: In QTL, we estimate revenues of $1.2 to 1.4 billion and EBT margins of 68% to 72%, reflecting normal sequential trend. In QCT, we expect revenues of $8.8 to 9.4 billion and EBT margins of 26% to 28%. We are forecasting QCT handset revenues to be approximately $6 billion as a result of the impact of memory constraints I just outlined. We anticipate QCT IoT revenues to grow by low teens % versus the year ago period, driven by growth across industrial and consumer products. In QCT Automotive, following another record quarter, we expect year-over-year revenue growth to accelerate to greater than 35% in the second fiscal quarter. Lastly, we expect non-GAAP operating expenses to be approximately $2.6 billion in the quarter.
Speaker #2: We are forecasting QCT handset revenues to be approximately $6 billion as a result of the impact of memory constraints I just outlined. We anticipate QCT IoT revenues to grow by low teens percentage versus the year-ago period, driven by growth across industrial and consumer products.
Speaker #2: In QCT Automotive, following another record quarter, we accelerate to greater than 35% in the second fiscal quarter. Lastly, we expect non-cap operating expenses to be approximately $2.6 billion in the quarter.
Speaker #2: The typical calendar year resets for certain employee-related costs and completion of our acquisition of AlphaWave platforms for next-generation AI data to further strengthen our are pleased with our strong first quarter performance delivering record results across the following metrics.
Akash Palkhiwala: The sequential increase is driven by typical calendar year resets for certain employee-related costs and completion of our acquisition of Alphawave to further strengthen our platforms for next generation AI data centers. In closing, we are pleased with our strong Q1 performance, delivering record results across the following metrics: total company revenue, non-GAAP EPS, QCT revenues, QCT handset revenues, and QCT automotive revenues. While near-term QCT handset guidance is being impacted by memory industry dynamics, the underlying fundamentals around consumer demand for handsets and Snapdragon product leadership remain strong. Our Q2 guidance reflects the continued revenue acceleration across automotive and IoT, with their combined growth outpacing the run rate required to achieve our long-term revenue targets. Our product announcements and strong customer engagement at CES 2026 further demonstrated our momentum across multiple growth vectors.
Akash Palkhiwala: The sequential increase is driven by typical calendar year resets for certain employee-related costs and completion of our acquisition of Alphawave to further strengthen our platforms for next generation AI data centers. In closing, we are pleased with our strong Q1 performance, delivering record results across the following metrics: total company revenue, non-GAAP EPS, QCT revenues, QCT handset revenues, and QCT automotive revenues. While near-term QCT handset guidance is being impacted by memory industry dynamics, the underlying fundamentals around consumer demand for handsets and Snapdragon product leadership remain strong. Our Q2 guidance reflects the continued revenue acceleration across automotive and IoT, with their combined growth outpacing the run rate required to achieve our long-term revenue targets. Our product announcements and strong customer engagement at CES 2026 further demonstrated our momentum across multiple growth vectors.
Speaker #2: Total company revenue, non-cap EPS, QCT revenues, QCT handset revenues, and QCT Automotive guidance is being impacted by memory industry dynamics, the underlying fundamentals around consumer demand for handsets and Snapdragon product leadership remain strong.
Speaker #2: Our second quarter guidance reflects the continued revenue acceleration across automotive and IoT, with their combined growth outpacing the run rate required to achieve our long-term revenue targets.
Speaker #2: Our product announcements and strong customer engagement at CES 2026 further demonstrated our momentum across multiple growth vectors. In automotive, we have reinforced our technology leadership with 10 design wins for Snapdragon Ride Elite and Cockpit Elite eight global programs for Snapdragon Ride Flex and continued success in building an automated driving stack ecosystem for our customers.
Akash Palkhiwala: In automotive, we have reinforced our technology leadership with 10 design wins for Snapdragon Ride Elite and Cockpit Elite, 8 global programs for Snapdragon Ride Flex, and continued success in building an automated driving stack ecosystem for our customers. In robotics, we announced a full suite of technologies, including the industry-leading Dragonwing IQ10 chipset platform, and engagement with several players in the ecosystem to drive commercialization of our products. In industrial, we showcased our ability to serve a wide spectrum of customers, from global enterprises to local developers, with an expanded portfolio that offers advanced edge computing and AI solutions across industry verticals. This concludes our prepared remarks. Back to you, Mauricio.
Akash Palkhiwala: In automotive, we have reinforced our technology leadership with 10 design wins for Snapdragon Ride Elite and Cockpit Elite, 8 global programs for Snapdragon Ride Flex, and continued success in building an automated driving stack ecosystem for our customers. In robotics, we announced a full suite of technologies, including the industry-leading Dragonwing IQ10 chipset platform, and engagement with several players in the ecosystem to drive commercialization of our products. In industrial, we showcased our ability to serve a wide spectrum of customers, from global enterprises to local developers, with an expanded portfolio that offers advanced edge computing and AI solutions across industry verticals. This concludes our prepared remarks. Back to you, Mauricio.
Speaker #2: In robotics, we announced a full suite of technologies including the industry-leading Dragon Wing IQ10 chipset platform and engagement with several players in the ecosystem to drive commercialization of our products.
Speaker #2: In Industrial, we showcased our ability to serve customers from global enterprises to a wide spectrum of local developers, with an expanded portfolio that offers advanced edge computing and AI solutions across industry verticals.
Speaker #2: This concludes our prepared remarks. Back to you,
Speaker #2: Mauricio. Thank you, Kaush.
Cristiano Amon: Thank you, Akash. Operator, we are now ready for questions.
Mauricio Lopez-Hodoyan: Thank you, Akash. Operator, we are now ready for questions.
Speaker #1: Operator, we are now ready for questions.
Speaker #3: Thank you. To cue a question, press star, then the number one. To throw your question, press star two. If you're using a speakerphone, please pick up your handset before pressing the numbers.
Operator: Thank you. To queue a question, press star, then the number one. To withdraw your question, press star two. If you're using a speakerphone, please pick up your handset before pressing the numbers. One moment, please, for the first question. First question comes from the line of Joshua Buchalter with TD Cowen. Please proceed with your questions.
Operator: Thank you. To queue a question, press star, then the number one. To withdraw your question, press star two. If you're using a speakerphone, please pick up your handset before pressing the numbers. One moment, please, for the first question. First question comes from the line of Joshua Buchalter with TD Cowen. Please proceed with your questions.
Speaker #3: One moment, please, for the first question. First question comes from the line of Joshua Buckhalter with TD Cowan. Please receive
Speaker #3: their questions. Hey, guys.
[Analyst] (TD Cowen): Hey, guys. Thank you for taking my question. You know, I wanted to start with the handset outlook. Any other factors that are driving the weakness beyond the memory pricing? It was good to hear the reiterated Samsung share. But I think, you know, most importantly, you know, how should we think about the TAM for the year, and do you feel like this inventory correction is sort of the last shoe to drop in the March quarter that you're seeing? Thank you.
Joshua Buchalter: Hey, guys. Thank you for taking my question. You know, I wanted to start with the handset outlook. Any other factors that are driving the weakness beyond the memory pricing? It was good to hear the reiterated Samsung share. But I think, you know, most importantly, you know, how should we think about the TAM for the year, and do you feel like this inventory correction is sort of the last shoe to drop in the March quarter that you're seeing? Thank you.
Speaker #4: Thank you for taking my question. I wanted to start with the handset outlook. Any other factors that are driving the weakness beyond the memory pricing?
Speaker #4: It was good to hear the reiterated Samsung share that I think most importantly how should we think about the TAM for the year and do you feel like this inventory correction is sort of the last shoe to drop in the March quarter that you're seeing?
Speaker #4: Thank
Speaker #5: Thanks, Joshua, for the question. I will start and I'll ask Akash to add more color. It's 100% related to memory. Actually, I'll say the macroeconomic indicators have been strong.
Cristiano Amon: Thanks, Joshua, for the question. I will start, and I'll ask Akash to add more color. It's 100 percent related to memory. Actually, I'll say the macroeconomic indicators has been strong. We look at the handset demand has been strong. I think because of our licensing business, we have a good understanding of the overall demand. We look at sell-through data, also very strong. But unfortunately, I think what we saw in Q1, as we go to Q2, is 100 percent sized by the availability of memory. So as we all know, as all the indication shows that DRAM availability for consumer electronics, especially handsets, is actually down bias on a year-over-year because of the prioritization of HBM for data centers. I think the market is gonna be sized by that.
Cristiano Amon: Thanks, Joshua, for the question. I will start, and I'll ask Akash to add more color. It's 100 percent related to memory. Actually, I'll say the macroeconomic indicators has been strong. We look at the handset demand has been strong. I think because of our licensing business, we have a good understanding of the overall demand. We look at sell-through data, also very strong. But unfortunately, I think what we saw in Q1, as we go to Q2, is 100 percent sized by the availability of memory. So as we all know, as all the indication shows that DRAM availability for consumer electronics, especially handsets, is actually down bias on a year-over-year because of the prioritization of HBM for data centers. I think the market is gonna be sized by that.
Speaker #5: We look at the handset demand has been strong I think because of our licensing business. We have a good understanding of the overall demand.
Speaker #5: We look at sell-through data also very strong. But saw in Q1 as we got to Q2 is unfortunately, I think what we 100% size by the availability of memory.
Speaker #5: So as we all know, as all the indications show that DRAM availability for consumer electronics, especially handsets, is actually down bias on a year-over-year because of the prioritization of HBM for data centers.
Speaker #5: I think the market is going to be sized by that. And I think we saw that reaction right away from our customers are adjusting.
Cristiano Amon: And I think we saw the reaction right away from our customers are adjusting, I think, their build production to the memory they have available. And I don't know if, Akash, you'd like to add some more color to that?
Cristiano Amon: And I think we saw the reaction right away from our customers are adjusting, I think, their build production to the memory they have available. And I don't know if, Akash, you'd like to add some more color to that?
Speaker #5: Production to the memory they have—I think their build color to that.
Speaker #3: No, I think that covers it.
Speaker #3: No, I think that covers it.
Akash Palkhiwala: No, I think that covers it.
Akash Palkhiwala: No, I think that covers it.
[Analyst] (TD Cowen): Okay. Thank you, Cristiano. I guess, to follow up, I mean, just backing into the guidance you just gave on QCT, I mean, that auto number is implying a pretty sharp acceleration sequentially. You know, is this some of the ADAS wins that you've talked about previously layering in? And maybe you could speak to, you know, both the drivers and the durability of this, the higher water mark that you're guiding to. Thank you.
Joshua Buchalter: Okay. Thank you, Cristiano. I guess, to follow up, I mean, just backing into the guidance you just gave on QCT, I mean, that auto number is implying a pretty sharp acceleration sequentially. You know, is this some of the ADAS wins that you've talked about previously layering in? And maybe you could speak to, you know, both the drivers and the durability of this, the higher water mark that you're guiding to. Thank you.
Speaker #4: you, Christiano. I guess to follow up, I mean, just backing into the guidance you just gave on is implying a pretty sharp acceleration QCT, I mean, that auto number Okay.
Speaker #4: sequentially. Is this some of the ADAS wins that you've talked about previously layering Thank in and maybe you could speak to of this higher both the drivers and the durability watermark that you're guiding to?
Speaker #4: Thank
Speaker #4: you. No, thank you very
Cristiano Amon: No, thank you very much. Well, as we have said consistently, I think, you know, the pipeline we have built in automotive, it is continue to translate into revenue, especially as new cars ramp and new cars launches. And I think that's why we continue to see, you know, record revenues in automotive. We know we don't move with the industry. You move primarily with our share gains. I think we're very excited about, you know, the trajectory. I'll say, we feel good about all the projections we have made about the size of the revenue. When you look at our targets for fiscal 2029, it's all going the right direction, and we continue to have more design wins. I think our position in the industry becomes stronger.
Cristiano Amon: No, thank you very much. Well, as we have said consistently, I think, you know, the pipeline we have built in automotive, it is continue to translate into revenue, especially as new cars ramp and new cars launches. And I think that's why we continue to see, you know, record revenues in automotive. We know we don't move with the industry. You move primarily with our share gains. I think we're very excited about, you know, the trajectory. I'll say, we feel good about all the projections we have made about the size of the revenue. When you look at our targets for fiscal 2029, it's all going the right direction, and we continue to have more design wins. I think our position in the industry becomes stronger.
Speaker #5: much. As we have said consistently, I think the pipeline we have built in automotive is continued to translate into revenue, especially as new cars ramp and new cars launch.
Speaker #5: And I think that's why we continue to see record revenues in automotive. We know we don't move with the industry; you move primarily with our share gains.
Speaker #5: I think we feel good about all the projections we have made about the size of the revenue. We're very excited when you look at our targets for fiscal '29.
Speaker #5: It's all going the right direction. And we continue to have more design wins. I think the our position in the industry becomes stronger. I think with the trajectory.
Cristiano Amon: I think with the platform, we've seen traction with Flex, which both, you know, the ability to bring ADAS and a digital cockpit in the same chipset across other tiers. We're seeing now some of the major, I think, volume drivers achieving SOP. We did announce a very broad partnership with Volkswagen Group. And to your comment, it is correct. We're getting more traction with ADAS. Once OEMs were able to see the stack that we launched with BMW, that was an option for them. We're seeing interest, and those things are progressing very well.
Cristiano Amon: I think with the platform, we've seen traction with Flex, which both, you know, the ability to bring ADAS and a digital cockpit in the same chipset across other tiers. We're seeing now some of the major, I think, volume drivers achieving SOP. We did announce a very broad partnership with Volkswagen Group. And to your comment, it is correct. We're getting more traction with ADAS. Once OEMs were able to see the stack that we launched with BMW, that was an option for them. We're seeing interest, and those things are progressing very well.
Speaker #5: Platform, we've seen traction with Flex, which is both the ability to bring ADAS across other tiers. We've seen now some of the major, I think, volume drivers achieving SOP.
Speaker #5: We did announce a very broad partnership with Volkswagen Group. your comment, it is correct. We're And to getting more traction with I'll ADAS. Once OEMs were able to see the stack that we launched with BMW that was an option for them, we're seeing interest.
Speaker #5: And those things are progressing very
Operator: The next question is from the line of Sameek Chatterjee with JP Morgan. Please proceed with your questions.
Operator: The next question is from the line of Sameek Chatterjee with JP Morgan. Please proceed with your questions.
Speaker #3: The next question is from the line of
Speaker #3: Sameek Chatterjee with JP Morgan. Please receive your questions. well.
[Analyst] (JP Morgan): Hi, thanks for taking my questions. I have one on data center and one on the smartphone side. Maybe on the data center, Cristiano, if you can give us an update in terms of the progress with your customers on that front. And given sort of the volatility we are seeing in memory, is that sort of being more disruptive to making progress with your customers, or instead, is it sort of augmenting some of the pace of the discussions, given sort of big focus on that side of the sort of bill of materials as well? And I have a follow-up. Thank you.
Samik Chatterjee: Hi, thanks for taking my questions. I have one on data center and one on the smartphone side. Maybe on the data center, Cristiano, if you can give us an update in terms of the progress with your customers on that front. And given sort of the volatility we are seeing in memory, is that sort of being more disruptive to making progress with your customers, or instead, is it sort of augmenting some of the pace of the discussions, given sort of big focus on that side of the sort of bill of materials as well? And I have a follow-up. Thank you.
Speaker #6: on data center and one on the smartphone side. Maybe on the data center, Christiano if you can give us an update in terms of the Hi.
Speaker #6: progress with your customers on that Thanks for taking my questions. volatility we are seeing in front and given sort of the I have one disruptive to making progress with your customers or instead is it sort of augmenting some of the pace of the discussions given sort of big focus on that side of the sort of bill of materials as well?
Speaker #6: And I have a follow-up. Thank
Speaker #5: Thank you so much, Sameek. So let
Cristiano Amon: Thank you so much, Sameek. So let me start with the data center. Look, I think everything is going in the way we have planned. I think the only public, I think, customer announced today is Humane. That is progressing well. We have started shipping. We have been working with them and ISV on third-party workloads. I, we're encouraged about the progress our teams are doing on our roadmap. We continue to get very positive feedback, I think, from broad engagements. You would imagine that a company at our size will be engaged in conversations with some of the largest, you know, hyperscalers and, and, cloud service providers in the industry. We have something very unique. We always said we have a dedicated platform for the disaggregated data center.
Cristiano Amon: Thank you so much, Sameek. So let me start with the data center. Look, I think everything is going in the way we have planned. I think the only public, I think, customer announced today is Humane. That is progressing well. We have started shipping. We have been working with them and ISV on third-party workloads. I, we're encouraged about the progress our teams are doing on our roadmap. We continue to get very positive feedback, I think, from broad engagements. You would imagine that a company at our size will be engaged in conversations with some of the largest, you know, hyperscalers and, and, cloud service providers in the industry. We have something very unique. We always said we have a dedicated platform for the disaggregated data center.
Speaker #5: me start with the data you. center. I think everything is going in the
Speaker #5: The way we have planned, I think the only public customer announced today is Humane, that is progressing well. We have started shipping. We have been working with memory, ISVs, and third-party workloads. That sort of being more them and ISV on third-party workloads.
Speaker #5: We're teams are doing. On our roadmap, we continue to get very positive feedback. I think encouraged about the progress our from broad engagements, you would imagine that a company at our size will be engaged in conversations with some of the hyperscalers and cloud largest service providers in the industry.
Speaker #5: We have something very unique. We always said we have a disaggregated data center. We do, as Decode, with our different approach to compute and memory.
Cristiano Amon: We do very, very well in certain workloads, such as decode, with our different approach to compute and memory. If anything, I think the transaction of Groq kind of validates that, you, when you think about disaggregated data center, you have specialized hardware versus, you know, just a GPU that will do everything. And, and, we're getting good traction. Where we're really focused right now is on execution. I think we had identified some of the milestones. We're executing on two fronts: it's CPU. We added a RISC-V CPU now to our roadmap in, in addition to Oryon, which is Arm compatible, and we're executing on AI250 with our new memory architecture. And we will provide details of our roadmap in our investor event. But so far, everything is on track.
Cristiano Amon: We do very, very well in certain workloads, such as decode, with our different approach to compute and memory. If anything, I think the transaction of Groq kind of validates that, you, when you think about disaggregated data center, you have specialized hardware versus, you know, just a GPU that will do everything. And, and, we're getting good traction. Where we're really focused right now is on execution. I think we had identified some of the milestones. We're executing on two fronts: it's CPU. We added a RISC-V CPU now to our roadmap in, in addition to Oryon, which is Arm compatible, and we're executing on AI250 with our new memory architecture. And we will provide details of our roadmap in our investor event. But so far, everything is on track.
Speaker #5: If anything, I think the transaction of Grok kind of validates that you when you think about disaggregated data center, you have specialized hardware versus just a GPU that would do everything.
Speaker #5: And we're getting good traction. What we're really focused on right now is execution. I think we have identified some of the milestones. We're executing on two fronts.
Speaker #5: It's CPU. We added a RISC-V CPU now to our roadmap in addition to Orion, which is ARM-compatible. And we're executing on AI 250 with our new memory architecture.
Speaker #5: And we will provide details of our roadmap in our investor event. But so far, everything is on track. We're still to start showing in re-state that we expect 27 revenues.
Cristiano Amon: We still restate that we expect 27 to start showing in revenues, and we feel good. We're just gonna keep executing that. And if I don't know, Akash, you want to add anything before I go to metrics?
Cristiano Amon: We still restate that we expect 27 to start showing in revenues, and we feel good. We're just gonna keep executing that. And if I don't know, Akash, you want to add anything before I go to metrics?
Speaker #5: And we feel good. We're just going to keep executing that. And I don't know if Akash want to add anything before I go to
Speaker #5: memories. No, I think the only thing I'll add
Akash Palkhiwala: No, I think the only thing I'll add on data center is, we've mentioned previously that we expect this to be a multi-billion revenue opportunity in a couple of years, and so everything that Cristiano outlined kind of just reiterates that opportunity for us.
Akash Palkhiwala: No, I think the only thing I'll add on data center is, we've mentioned previously that we expect this to be a multi-billion revenue opportunity in a couple of years, and so everything that Cristiano outlined kind of just reiterates that opportunity for us.
Speaker #3: As mentioned previously, we expect this to be a data center opportunity, and we see a multi-billion-dollar revenue opportunity in a couple of years. And so everything that Cristiano outlined kind of just reiterates that opportunity for us.
Speaker #5: Okay, so the memory thing—and look, I think we're going to see how this thing played out. I'm going to give you maybe a little bit of the dynamics.
Cristiano Amon: Okay. So the memory thing, and look, I think we're gonna see how this thing played out. I'm gonna give you maybe a little bit of the dynamics. When we step back and we look at the business, we're very, very happy with everything in the business. We just wish there was more memory. And you know, the handsets get hit the most given its scale and its cycle time. So we expect that the impact is gonna be more muted in other business. For example, automotive is a little bit less sensitive to memory price increases. As you pointed out, the impact on handsets in the bottom.
Cristiano Amon: Okay. So the memory thing, and look, I think we're gonna see how this thing played out. I'm gonna give you maybe a little bit of the dynamics. When we step back and we look at the business, we're very, very happy with everything in the business. We just wish there was more memory. And you know, the handsets get hit the most given its scale and its cycle time. So we expect that the impact is gonna be more muted in other business. For example, automotive is a little bit less sensitive to memory price increases. As you pointed out, the impact on handsets in the bottom.
Speaker #5: When we step back and we look at the business, we're very, very happy with everything in the business. We just wish there was more memory.
Speaker #5: And hence, it's gotten hit the most, given its scale and its cycle time. So, we expect that the impact is going to be more muted in the other business.
Speaker #5: For example, automotive is a little bit less sensitive to memory price increases as you pointed out. The impact on handsets and the bond. Having said that, when we go back proxy is what happened during the pandemic.
Cristiano Amon: Having said that, when we go back to situations that we saw in the past, I think the best proxy is what happened during the pandemic. The premium and high tier has proven to be more resilient to price increases, and we think that that may be a factor that play out. But the most important thing is to... That issue is not just the price. The issue is just availability. So I think the memory availability will determine the overall size of the handset market. OEMs are very likely to prioritize premium and high tier, how they have done in the past. That could be less impacted, and we will see the reaction on consumers as their price increases for the finished product. I do, I do stand by what I said.
Cristiano Amon: Having said that, when we go back to situations that we saw in the past, I think the best proxy is what happened during the pandemic. The premium and high tier has proven to be more resilient to price increases, and we think that that may be a factor that play out. But the most important thing is to... That issue is not just the price. The issue is just availability. So I think the memory availability will determine the overall size of the handset market. OEMs are very likely to prioritize premium and high tier, how they have done in the past. That could be less impacted, and we will see the reaction on consumers as their price increases for the finished product. I do, I do stand by what I said.
Speaker #5: The to situations that we saw premium in high tier has proven to be more resilient to price increases. And we think that that may be a factor that they play out.
Speaker #5: But the most important thing is that the issue is not just the price. The issue is just availability. So, I think the memory availability will determine the overall size of the handset market.
Speaker #5: OEMs are very likely to prioritize premium and high tier, as they have done in the past. That could be less impacted, and we will see the reaction from consumers as their price increases for the finished product.
Speaker #5: I do stand by what I year mobile handset size will said. I think the whole fiscal be determined by memory availability. And on a quarter as phones get repriced tiers kind of shift towards high and premium.
Cristiano Amon: I think the whole fiscal year, mobile handset size will be determined by memory availability, and we're just gonna monitor this on a quarter as, you know, as our phones get repriced, tiers kind of shift towards high-end premium, and we'll see what happen in the marketplace.
Cristiano Amon: I think the whole fiscal year, mobile handset size will be determined by memory availability, and we're just gonna monitor this on a quarter as, you know, as our phones get repriced, tiers kind of shift towards high-end premium, and we'll see what happen in the marketplace.
Speaker #5: And we'll see what happened in the marketplace.
Speaker #6: Got it. If I just can quickly follow up on that, Christiano, on the OEMs prioritizing the higher tier, I mean, within that higher tier, do terms of the tiering of the chipsets or the SoCs that they go for just to be able to manage their overall cost in relation to what they need to pass on to consumers?
[Analyst] (JP Morgan): Got it. If I just can quickly follow up on that question. On the OEMs prioritizing the higher tier, I mean, within that higher tier, do you expect them to downshift in terms of the tiering of the chipsets or the associates that they go for, just to be able to manage their overall cost, in relation to what they need to pass on to consumers? And that's it from me. Thank you.
Samik Chatterjee: Got it. If I just can quickly follow up on that question. On the OEMs prioritizing the higher tier, I mean, within that higher tier, do you expect them to downshift in terms of the tiering of the chipsets or the associates that they go for, just to be able to manage their overall cost, in relation to what they need to pass on to consumers? And that's it from me. Thank you.
Speaker #6: And that's it from me. Thank you.
Speaker #5: So as a general trend, and I wanted to emphasize what we saw in the quarter, yes, there's a memory shortage, but when there was memory, we saw the results were very good.
Cristiano Amon: So, as a general trend, I, you know, I wanted to emphasize what we saw in the quarter. You know, yes, there's a memory shortage, but when there was memory, we saw the results was very good. The consumer demand was very good. And what we have seen, which is, is been going on like for years now, the premium tier continues to expand. In a market that is being relatively flat-
Cristiano Amon: So, as a general trend, I, you know, I wanted to emphasize what we saw in the quarter. You know, yes, there's a memory shortage, but when there was memory, we saw the results was very good. The consumer demand was very good. And what we have seen, which is, is been going on like for years now, the premium tier continues to expand. In a market that is being relatively flat-
Speaker #5: A consumer demand was very good. And what we have seen, which is been going on for years now, the premium tier continues to expand in the market that is being relatively flat, which is the handset market.
Akash Palkhiwala: ... which is the handset market. We have seen growth in the mix where the premium tier are expanding. So I think that's a factor that is likely going to drive OEMs to continue to be focused on the premium tier. I did mention one thing on my prepared remarks, which is a dual flagship strategy that we have adopted, and that has been also very well received, I think, by the market. You probably see that when you think of different OEMs, how they have, like, ultra or different categories, and they have multiple tiers of the premium tier. I expect that's gonna play. But overall, our hope is that the premium tier will be more resilient. Granted, the memory that is available is the memory that's available.
Akash Palkhiwala: ... which is the handset market. We have seen growth in the mix where the premium tier are expanding. So I think that's a factor that is likely going to drive OEMs to continue to be focused on the premium tier. I did mention one thing on my prepared remarks, which is a dual flagship strategy that we have adopted, and that has been also very well received, I think, by the market. You probably see that when you think of different OEMs, how they have, like, ultra or different categories, and they have multiple tiers of the premium tier. I expect that's gonna play. But overall, our hope is that the premium tier will be more resilient. Granted, the memory that is available is the memory that's available.
Speaker #5: We have seen growth in the mix, with the factor that is likely going to drive OEMs to continue to be focused on the premium tier.
Speaker #5: I did mention one thing on my prepared remarks. Which is a dual flagship strategy that we have adopted. And that has been also very well received I think by the market.
Speaker #5: You probably see that when you think of different have ultra or different categories and they have multiple tiers of the premium tier. I expect that's going to play OEMs, how they but overall, our hope is that the premium tier will be more the memory that's available.
Operator: The next question comes from the line of Ross Seymore with Deutsche Bank. Please proceed with your questions.
Operator: The next question comes from the line of Ross Seymore with Deutsche Bank. Please proceed with your questions.
Speaker #7: The question comes from the line of Ross Seymour with Deutsche Bank. Please proceed with your question.
Speaker #8: Hi, guys. Thanks for answering my question. You mentioned a couple of different things on the handset side for my first question. But I guess what it comes down to is, what percentage of your handset business do you think is in China, considering that you cited them as being especially hit?
[Analyst] (Deutsche Bank): Hi, guys. Thanks for letting me ask a question. You mentioned a couple different things on the handset side for my first question, but I guess what it comes down to is: What percentage of your handset business do you think is in China, considering that you cited them as being especially hit? And do you think normal seasonality is likely to occur after this step down in the March quarter, or is that too difficult to tell?
Ross Seymore: Hi, guys. Thanks for letting me ask a question. You mentioned a couple different things on the handset side for my first question, but I guess what it comes down to is: What percentage of your handset business do you think is in China, considering that you cited them as being especially hit? And do you think normal seasonality is likely to occur after this step down in the March quarter, or is that too difficult to tell?
Speaker #8: And do you think normal seasonality is likely to occur after this step down in the March quarter, or is that too difficult to—
Speaker #8: tell? Yeah.
Speaker #3: I think on your first question, Ross, we don't really kind of break down by regions. But if you think about the percent of volume that is driven by the Chinese OEMs, but then adjusted down for the tiers that they play in, so our exposure would be less than what you would just see based on the units.
Akash Palkhiwala: Yeah, I think on your first question, Ross, we don't really kind of break down by regions. But if you think about, the percent of volume that is driven by the Chinese OEMs, but then adjusted down for the tiers that they play in, so our exposure would be less than what you would just see based on the units.
Akash Palkhiwala: Yeah, I think on your first question, Ross, we don't really kind of break down by regions. But if you think about, the percent of volume that is driven by the Chinese OEMs, but then adjusted down for the tiers that they play in, so our exposure would be less than what you would just see based on the units.
Speaker #8: And the seasonality side?
[Analyst] (Deutsche Bank): The seasonality side?
Ross Seymore: The seasonality side?
Akash Palkhiwala: The seasonality on the handset side, I think you should, you should think of the seasonality in the demand from the consumers is gonna be consistent with what we've seen in the past. I think consumers will wait for premium tier launches, and there is significant purchases that happen when that plays out. I think to Cristiano's earlier point, it's really a question of how supply aligns against the demand. We don't have a demand issue, as we said earlier. The demand continues to be strong. Our design win pipeline continues to be strong, and then it's just a question of supply alignment with it over the next few months.
Speaker #3: seasonality on the handset side, I think you should The think of the seasonality in the demand from the consumers is going to be consistent with what we've seen in the past.
Akash Palkhiwala: The seasonality on the handset side, I think you should, you should think of the seasonality in the demand from the consumers is gonna be consistent with what we've seen in the past. I think consumers will wait for premium tier launches, and there is significant purchases that happen when that plays out. I think to Cristiano's earlier point, it's really a question of how supply aligns against the demand. We don't have a demand issue, as we said earlier. The demand continues to be strong. Our design win pipeline continues to be strong, and then it's just a question of supply alignment with it over the next few months.
Speaker #3: I think consumers wait for premium tier launches and there is significant purchases that happen when that plays out. I think to Christiano's earlier point, it's really a question of how supply aligns against the demand.
Speaker #3: We don't have a demand issue, as we said earlier. The demand continues to be strong. Our design win pipeline continues to be strong. And then it's just a question of supply alignment with it over the next few months.
Speaker #8: And then I guess, just for my follow-up on the OPEX side of things, you gave a good explanation why it's popping up a bit in the March quarter.
[Analyst] (Deutsche Bank): And then I guess just for my follow-up on the OpEx side of things, you gave a good explanation why it's popping up a bit in the March quarter. After that, are there any adjustments, given what you're saying in the memory side, or are you guys kind of investing right through this?
Ross Seymore: And then I guess just for my follow-up on the OpEx side of things, you gave a good explanation why it's popping up a bit in the March quarter. After that, are there any adjustments, given what you're saying in the memory side, or are you guys kind of investing right through this?
Speaker #8: After that, are there any adjustments given what you're saying in the memory side or are you guys kind of investing right through this?
Speaker #3: I think the way we've guided the March quarter is a reasonable way of thinking about the rest of the year. I think our focus, as we've said before, is the following framework on OPEX.
Akash Palkhiwala: I think it's the way we've guided the March quarter is a reasonable way of thinking about the rest of the year. I think our focus, as we've said before, is the following framework on OpEx, really kind of reduce the investments in mature businesses and use it to fund the diversification priorities. And then we have these acquisitions, including Alphawave, kind of driving incremental expense and investment in data center. But it's really just focused on those things, as we've been extremely disciplined over the last several years and grown OpEx significantly slower than revenue and gross profit. That framework for our operating plan doesn't change going forward.
Akash Palkhiwala: I think it's the way we've guided the March quarter is a reasonable way of thinking about the rest of the year. I think our focus, as we've said before, is the following framework on OpEx, really kind of reduce the investments in mature businesses and use it to fund the diversification priorities. And then we have these acquisitions, including Alphawave, kind of driving incremental expense and investment in data center. But it's really just focused on those things, as we've been extremely disciplined over the last several years and grown OpEx significantly slower than revenue and gross profit. That framework for our operating plan doesn't change going forward.
Speaker #3: Really kind of reduce the investments in mature businesses and use it to fund the diversification priorities. And then we have these acquisitions including Alphawave kind of driving incremental expense and investment in data center.
Speaker #3: But it's really just focused on those things. As we've been extremely disciplined over the last several years and grown OPEX significantly slower than revenue and gross profit, that framework for our operating plan doesn't change going forward.
Speaker #8: Thank
Speaker #8: you. The next
[Analyst] (Deutsche Bank): Thank you.
Ross Seymore: Thank you.
Operator: The next question is in the line of Stacy Rasgon with Bernstein Research. Please proceed with your questions.
Operator: The next question is in the line of Stacy Rasgon with Bernstein Research. Please proceed with your questions.
Speaker #7: The question is from the line of Stacy Rascon with Bernstein Research. Please proceed with your question.
Speaker #7: questions. Hi guys.
[Analyst] (Bernstein Research): Hi, guys, thanks for taking my questions. For the first one, I wanna ask that seasonality question a different way, and I think it was really getting at June. Like, you usually, just seasonally, I know your revenues step down in June, and so you're guiding $6 billion in on handsets. You're guiding $6 billion in March quarter, which is down about 13% year-over-year. Are you expecting, just given what you're seeing in the memory market right now, a similar, and what can be supplied, a similar type of year-over-year growth, like, for handsets in June? Or do you think this, like, $6 billion number, given it is sort of supply constraint, is, like, a good number to have, given the current supply that is out there until things normalize?
Stacy Rasgon: Hi, guys, thanks for taking my questions. For the first one, I wanna ask that seasonality question a different way, and I think it was really getting at June. Like, you usually, just seasonally, I know your revenues step down in June, and so you're guiding $6 billion in on handsets. You're guiding $6 billion in March quarter, which is down about 13% year-over-year. Are you expecting, just given what you're seeing in the memory market right now, a similar, and what can be supplied, a similar type of year-over-year growth, like, for handsets in June? Or do you think this, like, $6 billion number, given it is sort of supply constraint, is, like, a good number to have, given the current supply that is out there until things normalize?
Speaker #4: Thanks for taking my questions. For the first one, I want to ask that seasonality question a different way. And I think it was really getting a June usually just seasonally, I know your revenues step down in June.
Speaker #4: And so, you're guiding 6 billion on handsets. You're guiding $6 billion in the March quarter, which is down about 13% year over year. Are you expecting, just given what you're seeing in the memory market right now and what can be supplied, a similar type of year-over-year growth for handsets in June?
Speaker #4: Or do you think this 6 billion number, given it is sort of supply constrained, is a good number to have given the current supply that is out there until things normalize?
[Analyst] (Bernstein Research): Like, just how do we think about June in the context of March, given the March decline in the context of the memory situation?
Stacy Rasgon: Like, just how do we think about June in the context of March, given the March decline in the context of the memory situation?
Speaker #4: Just how do we think about June in the context of March given the March decline in the context of the memory situation?
Speaker #3: Yeah. So Stacy, given the uncertainty in the market, we're obviously not guiding beyond the second quarter at this point. But as Christiano said earlier, when you think about the demand fundamentals, they're strong.
Akash Palkhiwala: Yeah. So Stacy, we're given the uncertainty in the market, we're obviously not guiding beyond the second quarter at this point. But as Cristiano said earlier, when you think about the demand, demand fundamentals, they're strong, and really, it's a question of how supply aligns against it. And we expect that supply will really define the financial forecast for the year, for the rest of the fiscal year. Specifically, kind of between quarters, you should think of March as a reasonable way to model June as well; it is really kind of similar seasonality profile that you would've seen in other years.
Akash Palkhiwala: Yeah. So Stacy, we're given the uncertainty in the market, we're obviously not guiding beyond the second quarter at this point. But as Cristiano said earlier, when you think about the demand, demand fundamentals, they're strong, and really, it's a question of how supply aligns against it. And we expect that supply will really define the financial forecast for the year, for the rest of the fiscal year. Specifically, kind of between quarters, you should think of March as a reasonable way to model June as well; it is really kind of similar seasonality profile that you would've seen in other years.
Speaker #3: And aligns against it. And we expect that supply will really define the financial forecast for the year for the rest of the fiscal year.
Speaker #3: Specifically, kind of between quarters, you should think of March as a reasonable way to model June as well. It's really kind of a similar seasonality profile that you would see in other years.
Speaker #4: Got it. Thank you. And for my follow-up, I want to ask just about QTL. So, again, it sounds like the demand is there, but we just don't know how many handsets are going to be able to be built.
[Analyst] (Bernstein Research): Got it. Thank you. And for my follow-up, I wanna ask just about QTL. So again, it sounds like the demand is there, but we just don't know how many handsets are gonna be able to be built. I guess in that context, how are you thinking about sort of like just the typical QTL run rates in the various quarters through the year? Do you think they're similar to what we've seen in the past? I think your guidance is maybe in line to maybe slightly below what we would typically see for March.
Stacy Rasgon: Got it. Thank you. And for my follow-up, I wanna ask just about QTL. So again, it sounds like the demand is there, but we just don't know how many handsets are gonna be able to be built. I guess in that context, how are you thinking about sort of like just the typical QTL run rates in the various quarters through the year? Do you think they're similar to what we've seen in the past? I think your guidance is maybe in line to maybe slightly below what we would typically see for March.
Speaker #4: I guess in that context, how are you thinking about sort of just a typical QTL run rates in the various quarters through the year?
Speaker #4: Do you think they're similar to what we've seen in the past? I think your guidance is maybe in line to maybe for March.
Akash Palkhiwala: Yeah, Stacy-
Akash Palkhiwala: Yeah, Stacy-
Speaker #3: Yeah.
Speaker #3: Stacy. Yeah. Stacy, it's Akash. So let me try to address it a couple of ways. I think first is just strong performance in December quarter.
Speaker #3: Stacy. Yeah. Stacy, it's Akash. So let me try to address it a couple of ways. I think first is just
[Analyst] (Bernstein Research): ... below. I mean, how do you think about that?
Stacy Rasgon: ... below. I mean, how do you think about that?
Akash Palkhiwala: Yeah, Stacy, it's Akash. So let me try to address it a couple ways. I think first is just strong performance in December quarter. We saw units, handset units, higher than expectation in the quarter. I think as you go into the next quarter, we are guiding QTL just slightly below what we did last year, so pretty consistent with trend, but of course, that's subject to supply considerations. As you think about the full year at this point, given the supply, we have a negative bias on units, but really, we're gonna have to see how it plays out as we go through the next several months.
Akash Palkhiwala: Yeah, Stacy, it's Akash. So let me try to address it a couple ways. I think first is just strong performance in December quarter. We saw units, handset units, higher than expectation in the quarter. I think as you go into the next quarter, we are guiding QTL just slightly below what we did last year, so pretty consistent with trend, but of course, that's subject to supply considerations. As you think about the full year at this point, given the supply, we have a negative bias on units, but really, we're gonna have to see how it plays out as we go through the next several months.
Speaker #3: saw units, handset units higher than expectation in the quarter. I think as We you go into the next quarter, we're guiding QTL just slightly below what we did last year.
Speaker #3: So pretty consistent with trend. But of slightly below what would be typically seen course, that's subject to supply considerations. As you think about the full year at this point, given the supply we have a negative bias on units, but really we're going to have to see how it plays out as we go through
Speaker #3: the next several months. Got
Speaker #4: So maybe a touch below those, similar to what we saw in March, seems reasonable given what we know, right?
[Analyst] (Bernstein Research): Got it. So maybe a touch below, though similar to what we saw in March, seems reasonable, given what we know right now?
Stacy Rasgon: Got it. So maybe a touch below, though similar to what we saw in March, seems reasonable, given what we know right now?
Speaker #4: now? I think that's
Akash Palkhiwala: I think that's the framework that I outlined is the way we are thinking about it now.
Akash Palkhiwala: I think that's the framework that I outlined is the way we are thinking about it now.
Speaker #3: the framework that I outlined is the way we are thinking
Speaker #3: about it. Got it.
[Analyst] (Bernstein Research): Got it. Okay, thank you, guys.
Stacy Rasgon: Got it. Okay, thank you, guys.
Speaker #4: Okay. Thank you,
Speaker #4: guys. The next
Operator: The next question's from the line of Timothy Arcuri with UBS. Please proceed with your questions.
Operator: The next question's from the line of Timothy Arcuri with UBS. Please proceed with your questions.
Speaker #7: question is from the line of Timothy Acuri with UBS. Please proceed with your
Speaker #7: questions. Thanks a lot.
[Analyst] (UBS): Thanks a lot. Akash, I wanted to ask about the op margin guidance in QCT. The drop through is more than 100%. I mean, it's not surprising that margins would come down, but they seem to be coming down pretty quickly, like faster than I would've thought. Is there, is there something else going on there? I know that, you know, wafer costs are going up and, you know, MediaTek said on their call that they're still gaining share at the high end. Is there something going on to make the drop through more than 100% on the op line for March?
Timothy Arcuri: Thanks a lot. Akash, I wanted to ask about the op margin guidance in QCT. The drop through is more than 100%. I mean, it's not surprising that margins would come down, but they seem to be coming down pretty quickly, like faster than I would've thought. Is there, is there something else going on there? I know that, you know, wafer costs are going up and, you know, MediaTek said on their call that they're still gaining share at the high end. Is there something going on to make the drop through more than 100% on the op line for March?
Speaker #4: Akash, I QCT. The drop-through is more than 100%. I mean, it's not surprising that margins would come down, but they seem to be coming down pretty quickly.
Speaker #4: Faster than I would have thought. Is there something else going on there? I know that wafer costs are going up, and MediaTek said on their call that they're still gaining share at the high end.
Speaker #4: Is there something going on to make the drop through more than a 100% on the op line for March?
Alex Rogers: No, there isn't, Tim. I think we're expecting gross profit margin to be largely in line with the December quarter, and so it's just the scale of the revenue coming through and the OpEx guidance that we provided.
Alex Rogers: No, there isn't, Tim. I think we're expecting gross profit margin to be largely in line with the December quarter, and so it's just the scale of the revenue coming through and the OpEx guidance that we provided.
Speaker #3: Gross profit margin to be largely in line with the December quarter, and so it's just the scale of the revenue coming through, and the OPEX guidance that we've provided.
Speaker #4: Okay, sorry. I just want to add one thing. No, look, we saw how, I think, the other company reported as well. Very consistent view of Vencon on what we've seen sequentially on the quarter.
[Analyst] (UBS): Okay. And then do you-
Timothy Arcuri: Okay. And then do you-
Cristiano Amon: I'm sorry. I just wanna add one thing. No, look, we saw how, I think the other company reported as well, very consistent view, I think, on what we're seeing, you know, sequentially on the quarter. It's just, the whole market is kind of being adjusted to the new build-out reality. So we actually don't see anything other than that. And remind you of the seasonality that we always have, regardless of this memory issue. A lot of the premium tier launch in Chinese New Year, so you actually normally see some of the Chinese go down on a sequential basis because they just, you know, build for the premium launches.
Cristiano Amon: I'm sorry. I just wanna add one thing. No, look, we saw how, I think the other company reported as well, very consistent view, I think, on what we're seeing, you know, sequentially on the quarter. It's just, the whole market is kind of being adjusted to the new build-out reality. So we actually don't see anything other than that. And remind you of the seasonality that we always have, regardless of this memory issue. A lot of the premium tier launch in Chinese New Year, so you actually normally see some of the Chinese go down on a sequential basis because they just, you know, build for the premium launches.
Speaker #4: It's just the whole market has kind of been adjusted to the new build-out reality. So we actually don't see anything. Other than that, and remind you of the seasonality that we always have, regardless of this memory issue, a lot of the premium tier launching Chinese New Year.
Speaker #4: So you actually normally see the some of the Chinese go down on a sequential basis because they just build for the premium launches. Okay.
[Analyst] (UBS): Okay, thanks. And then, do you have any update on the Huawei license? I know we're still waiting for it, and maybe what's the sticking point, and is there risk. We talked about this before, but is there risk and precedent for, for the big customer if you don't sign a license with Huawei? Thanks.
Timothy Arcuri: Okay, thanks. And then, do you have any update on the Huawei license? I know we're still waiting for it, and maybe what's the sticking point, and is there risk. We talked about this before, but is there risk and precedent for, for the big customer if you don't sign a license with Huawei? Thanks.
Speaker #4: Thanks. And then, do you have any update on the Huawei license? I know we're still waiting for it. And maybe, what's the sticking point?
Speaker #4: And is there risk? We talked about this before, but is there risk and precedent don't sign a license with Huawei? for the big customer if you
Speaker #4: Thanks. Thanks for that.
Alex Rogers: Thanks for that. This is Alex. Really no update on the Huawei discussions. The discussions are still underway. In terms of sticking points, I really can't get into what are confidential discussions. I see these two sets of negotiations as, you know, fairly distinct, actually significantly distinct, operating on different paths. And as you know, with the other, with the other company, whenever we see a renewal date, on the horizon, we start discussions, very well in advance. And so that's underway, and we don't have any update on that.
Alex Rogers: Thanks for that. This is Alex. Really no update on the Huawei discussions. The discussions are still underway. In terms of sticking points, I really can't get into what are confidential discussions. I see these two sets of negotiations as, you know, fairly distinct, actually significantly distinct, operating on different paths. And as you know, with the other, with the other company, whenever we see a renewal date, on the horizon, we start discussions, very well in advance. And so that's underway, and we don't have any update on that.
Speaker #3: This is Alex. Really, no update on the Huawei discussions. The discussions are still underway. In terms of sticking points, I really can't get into what our confidential discussions are.
Speaker #3: I see these two sets of negotiations as fairly distinct—actually, significantly distinct—operating on different paths. And as you know, with the other company, whenever we see a renewal date on the horizon, we start discussions very well in advance.
Speaker #3: And so that's underway. And we don't have any update on that.
Speaker #4: Okay. Thank you.
[Analyst] (UBS): Okay. Thank you.
Timothy Arcuri: Okay. Thank you.
Speaker #7: The next question is from the line of CJ Mews with Canterford Sherald.
Operator: The next question's from the line of C.J. Muse with Cantor Fitzgerald. Please proceed with your questions.
Operator: The next question's from the line of C.J. Muse with Cantor Fitzgerald. Please proceed with your questions.
Speaker #7: Please proceed with your questions. Yeah.
[Analyst] (Cantor Fitzgerald): Yeah, good afternoon. Thank you for taking the question. I guess, curious, you know, obviously the DRAM makers have been talking about satisfying only 50 to 70% of the demand, and they're highlighting, you know, shortages into 2028. So curious, you know, how you're planning for, you know, a situation where this could be sustained. You know, are your Chinese customers looking to design in CXMT? And, you know, could you get qualified inside of that? I would assume your business with Samsung would be strong, given their internal supply from DRAM, and as well as your supply chain in terms of, you know, your wafer commits to TSM. I guess, how are you, you know, managing all of that, given all this great uncertainty?
CJ Muse: Yeah, good afternoon. Thank you for taking the question. I guess, curious, you know, obviously the DRAM makers have been talking about satisfying only 50 to 70% of the demand, and they're highlighting, you know, shortages into 2028. So curious, you know, how you're planning for, you know, a situation where this could be sustained. You know, are your Chinese customers looking to design in CXMT? And, you know, could you get qualified inside of that? I would assume your business with Samsung would be strong, given their internal supply from DRAM, and as well as your supply chain in terms of, you know, your wafer commits to TSM. I guess, how are you, you know, managing all of that, given all this great uncertainty?
Speaker #4: Good afternoon. Thank you for taking the question. I guess curious, talking about satisfying only 50 to 70 percent of the demand. And they're highlighting shortages into how you're planning for a situation where this could be 2028.
Speaker #4: sustained? Are your Chinese customers looking to design in CXMT? And could you get So curious, would assume your business with Samsung would be strong given their internal supply from DRAM.
Speaker #4: And as well as your supply chain in terms of your wafer commits to TSM. I guess, how are you managing all of that given all this great
Speaker #4: uncertainty? Look, very
Cristiano Amon: Look, very good question, and I'm gonna... I know it's obvious, but just in case, I'm gonna use this opportunity for clarification. For handsets, we don't buy memory. I think that, you know, there are some memory that gets stacked on modems, but the majority of the memory is purchased directly by our customers. You should expect, given our scale, we're probably among the first to be qualified with every memory provider, every single memory you can imagine, CXMT and other smaller companies; we have been qualified. And also we have flexibility versus some of the other companies. If you actually double-click, you're gonna see we have flexibility about working with new versions of memory as well as older version of memory on our platforms. We have multi-generation memory controllers.
Cristiano Amon: Look, very good question, and I'm gonna... I know it's obvious, but just in case, I'm gonna use this opportunity for clarification. For handsets, we don't buy memory. I think that, you know, there are some memory that gets stacked on modems, but the majority of the memory is purchased directly by our customers. You should expect, given our scale, we're probably among the first to be qualified with every memory provider, every single memory you can imagine, CXMT and other smaller companies; we have been qualified. And also we have flexibility versus some of the other companies. If you actually double-click, you're gonna see we have flexibility about working with new versions of memory as well as older version of memory on our platforms. We have multi-generation memory controllers.
Speaker #3: Good question. And I'm going to—I know it's obvious, but just in case, I'm going to use this opportunity to make a clarification.
Speaker #3: For handsets, we don't buy memory. I think there are some memory that gets stacked on modems, but the majority of the memory is purchased by directly by our customers.
Speaker #3: You should expect given our scale we're probably among the first to be qualified with every memory provider, every single memory you can imagine. CXMT and other smaller companies we have been qualified.
Speaker #3: And also we have flexibility versus some of the other companies if you actually double-click, you're going to see we have flexibility about working with new versions of memory as well as older versions of memory on our platforms.
Speaker #3: We have multi-generation memory controllers, so from a platform perspective, we're going to work with whatever is available. I think that's kind of the approach we always took when you have a shortage.
Cristiano Amon: So from a platform perspective, we're gonna work with whatever is available. I think that's kind of the approach we always took, when you have shortage. So the second part of the question, which is the bigger question. Look, the trend, I think, of growth in the data center continues, and it's pretty obvious. I think the memory vendors have prioritized the build-out of HBM, and I think some of the data that you just provided is kind of what we see. As I said before, it's very clear indication that as of today, the availability of memory for consumer electronics, year over year, has been below the demand, and we've seen that in handsets. You start to see commentary on gaming consoles and other consumer electronics devices.
Cristiano Amon: So from a platform perspective, we're gonna work with whatever is available. I think that's kind of the approach we always took, when you have shortage. So the second part of the question, which is the bigger question. Look, the trend, I think, of growth in the data center continues, and it's pretty obvious. I think the memory vendors have prioritized the build-out of HBM, and I think some of the data that you just provided is kind of what we see. As I said before, it's very clear indication that as of today, the availability of memory for consumer electronics, year over year, has been below the demand, and we've seen that in handsets. You start to see commentary on gaming consoles and other consumer electronics devices.
Speaker #3: So the second part of the question, which is the bigger question, look, the trend I think of growth in the data center continues. And it's pretty obvious.
Speaker #3: I think the memory vendors have prioritized the build-out of HBM. And I think some of the data that you just provided is kind of what we see.
Speaker #3: As I said before, it's a very clear indication that, as of today, the availability of memory for consumer electronics year over year has been below the demand.
Speaker #3: And we've seen that in handsets. You start to see commentary on gaming consoles and other consumer electronics devices. We can't really predict if this will continue for '27 or '28.
Cristiano Amon: We can't really predict if this will continue for 27 or 28. I think there's capacity build-out in plans. It all depends also how, how much the trend on data center continues to accelerate. It is fair to assume at this point that for the fiscal year, the size of the handset market, which one that is probably getting the blunt of the impact in our business, is gonna be defined by the availability of DRAM.
Cristiano Amon: We can't really predict if this will continue for 27 or 28. I think there's capacity build-out in plans. It all depends also how, how much the trend on data center continues to accelerate. It is fair to assume at this point that for the fiscal year, the size of the handset market, which one that is probably getting the blunt of the impact in our business, is gonna be defined by the availability of DRAM.
Speaker #3: I think there's capacity build-out in plans. It all depends also on how much the trend on data centers continues to accelerate. It is fair to assume at this point that for the fiscal year, the size of the handset market, which is one that is probably getting the brunt of the impact in our business, is going to be defined by the availability of DRAM.
Speaker #4: And CJ, on your second part of your question on wafers, for leading nodes, as you know, kind of leading nodes are constrained on the wafer side as well.
Alex Rogers: CJ, on your second part of your question on wafers, for leading nodes. As you know, kind of leading nodes are constrained on the wafer side as well, but we have great relationships with our suppliers, and so we're confident that we'll have enough wafers to address the demand.
Alex Rogers: CJ, on your second part of your question on wafers, for leading nodes. As you know, kind of leading nodes are constrained on the wafer side as well, but we have great relationships with our suppliers, and so we're confident that we'll have enough wafers to address the demand.
Speaker #4: But we have great relationships with our suppliers. And so we're confident that we'll have enough wafers to address the demand. Thank you. And I guess as a follow-up, curious, if we do see a mixed shift higher Snapdragon but unit volumes lower, how should we think about that impacting your QCT EVT
[Analyst] (Cantor Fitzgerald): Thank you. And I guess as a follow-up, curious if we do see a mix shift higher Snapdragon, but you know, unit volumes lower, how should we think about that impacting your QCT EVT margins?
CJ Muse: Thank you. And I guess as a follow-up, curious if we do see a mix shift higher Snapdragon, but you know, unit volumes lower, how should we think about that impacting your QCT EVT margins?
Speaker #4: margins? Yeah.
Cristiano Amon: ... Yeah, I mean, as you know well, CJ, we do very well in the premium and high tiers. And so as the volume shifts up, that is usually a benefit for us.
Cristiano Amon: ... Yeah, I mean, as you know well, CJ, we do very well in the premium and high tiers. And so as the volume shifts up, that is usually a benefit for us.
Speaker #3: I mean, as you know well, CJ, we do very well in the premium and high tiers. And so as the volume shift up, that is usually a benefit for us.
Speaker #3: I mean, as you know well, CJ, we do very well in the premium and high tiers. And so, as the volume shifts up, that is usually a benefit for us.
Speaker #7: The next question is from the line of Ben Ricey with Millius Research. Please proceed with your question.
Operator: The next question is from the line of Ben Reitzes with Melius Research. Please proceed with your questions.
Operator: The next question is from the line of Ben Reitzes with Melius Research. Please proceed with your questions.
Speaker #8: Yeah. Hey, guys. I wanted to just kind of keep going on the memory side. As we kind of look at Apple and their propensity for double-digit growth, maybe even the whole year, it just seems like they are going to continue to get disproportionate share of the available DRAM, is it possible?
[Analyst] (Melius Research): Yeah. Hey, guys. Wanted to just kind of keep going on the, the memory side. You know, as we, you know, kind of look at Apple and their, their propensity for double-digit growth, maybe even the whole year, it just seems like they are gonna continue to get disproportionate, you know, share of the available DRAM. Is it possible? You know, how do you kind of navigate that with, with all your partners? And, you know, I, I guess, the question would be: Does that add to some of the uncertainty that could linger into the next fiscal year, with, with one vendor, you know, getting disproportionately this kind of unit growth and obviously, the kind of allocation they get?
Ben Reitzes: Yeah. Hey, guys. Wanted to just kind of keep going on the, the memory side. You know, as we, you know, kind of look at Apple and their, their propensity for double-digit growth, maybe even the whole year, it just seems like they are gonna continue to get disproportionate, you know, share of the available DRAM. Is it possible? You know, how do you kind of navigate that with, with all your partners? And, you know, I, I guess, the question would be: Does that add to some of the uncertainty that could linger into the next fiscal year, with, with one vendor, you know, getting disproportionately this kind of unit growth and obviously, the kind of allocation they get?
Speaker #8: How do you kind of navigate that with all your partners? And I guess the question would be, does that add to some of the uncertainty that could linger into the next fiscal year?
Speaker #8: With one vendor getting disproportionately this kind of unit growth and obviously the kind of allocation they get?
Speaker #3: Look, it's hard to make a it's hard to make predictions. But I will also probably remind you that we have another large customer. They also have the memory division as well.
Cristiano Amon: Look, it's hard to make prediction, but I will also probably remind you that we have another large customer that also have the memory division as well. So I think as a general statement, I think it is it's probably a fact that OEMs with larger scale will have probably better ability to, you know, have enough memory, and they will make priority calls than OEMs with smaller scale. But I think this problem is probably going to be industry-wide. I don't think any OEM has been immune. In general, I think the statements we have seen broader in the industry is not a demand issue; it's all supply constraint.
Cristiano Amon: Look, it's hard to make prediction, but I will also probably remind you that we have another large customer that also have the memory division as well. So I think as a general statement, I think it is it's probably a fact that OEMs with larger scale will have probably better ability to, you know, have enough memory, and they will make priority calls than OEMs with smaller scale. But I think this problem is probably going to be industry-wide. I don't think any OEM has been immune. In general, I think the statements we have seen broader in the industry is not a demand issue; it's all supply constraint.
Speaker #3: So I think as a general statement, I think it is probably a fact that OEMs with larger scale will have probably better ability to have enough memory.
Speaker #3: And they will make priority calls than OEMs with smaller scale. But I think at this problem is probably going to be industry-wide. I don't think any OEM has been immune in general.
Speaker #3: I think the statements we have seen broader in the industry is not a demand issue. It's all supply
Speaker #3: constraint. Okay.
[Analyst] (Melius Research): Okay. Well, look, there's been a lot of questions on that. Just my next one, I just wanted to double-click on the data center. And, you know, I know you got asked about whether there'll be memory available for that, but just in terms of the recent events that validate, you know, I believe the decoding aspect of your solution, I was wondering if you could just, you know, provide a little bit of an update there. What's happened since Groq with NVIDIA and, you know, how are discussions going beyond Humane, and just that overall trend, and your ability to play? Thanks.
Ben Reitzes: Okay. Well, look, there's been a lot of questions on that. Just my next one, I just wanted to double-click on the data center. And, you know, I know you got asked about whether there'll be memory available for that, but just in terms of the recent events that validate, you know, I believe the decoding aspect of your solution, I was wondering if you could just, you know, provide a little bit of an update there. What's happened since Groq with NVIDIA and, you know, how are discussions going beyond Humane, and just that overall trend, and your ability to play? Thanks.
Speaker #8: Well, look, there's been a lot of questions on that. Just my next one—I just wanted to double-click on the data center. And I know you got asked about whether there'll be memory available for that.
Speaker #8: But just in terms of the recent events that validate I believe the decoding aspect of your solution, I was wondering if you could just provide a little bit of an update there.
Speaker #8: What's happened since Grok with NVIDIA? And how are discussions going beyond Humane? And just that overall trend and your ability to play? Thanks.
Speaker #3: Look, here's what I can say without front-running our investor event. First of all, I think we are—I would describe it like this.
Cristiano Amon: Look, I'll... Here's what I can say without, I think, front-running our investor event. First of all, I think we are... I would describe it like this: I think there's a lot of companies right now that recognize, I think, the technology and the technical capability of Qualcomm. I think, you know, our track record on technology execution has been very successful, and I think we also understand some of the dynamics on compute in memory, I think, given, you know, the breadth of our IP roadmap. We're probably one of the few companies that go from sub 5 watts to now all the way to 500 watts.
Cristiano Amon: Look, I'll... Here's what I can say without, I think, front-running our investor event. First of all, I think we are... I would describe it like this: I think there's a lot of companies right now that recognize, I think, the technology and the technical capability of Qualcomm. I think, you know, our track record on technology execution has been very successful, and I think we also understand some of the dynamics on compute in memory, I think, given, you know, the breadth of our IP roadmap. We're probably one of the few companies that go from sub 5 watts to now all the way to 500 watts.
Speaker #3: I think there's a lot of companies right now that recognize I think the technology and the technical capability of Qualcomm. I think our track record on technology execution has been very successful.
Speaker #3: And I think we also understand some of the dynamics on compute and memory. I think given the breadth of our IP roadmap, we're probably one of the few companies that go from sub-5 watts to now all the way to 500 watts.
Speaker #3: And we have said in the past, as we're going to enter this market, we needed to kind of intercept where the market is going.
Cristiano Amon: We have said in the past, as we're gonna enter this market, we needed to kind of intercept where the market is going, and we're gonna be really, really focused on inference and especially the disaggregated. I think you pointed to the right way. I think, for example, decode applications, we believe we're incredibly competitive, not only from a power consumption, but also from an overall TCO, compute density, and memory density. We're really focused on execution. The feedback we have been given from a lot of the large companies on the technical side and on the product side is very positive. Now, the ball is in our courts to execute, have hardware available, and kind of show the results, and we're just gonna continue doing that.
Cristiano Amon: We have said in the past, as we're gonna enter this market, we needed to kind of intercept where the market is going, and we're gonna be really, really focused on inference and especially the disaggregated. I think you pointed to the right way. I think, for example, decode applications, we believe we're incredibly competitive, not only from a power consumption, but also from an overall TCO, compute density, and memory density. We're really focused on execution. The feedback we have been given from a lot of the large companies on the technical side and on the product side is very positive. Now, the ball is in our courts to execute, have hardware available, and kind of show the results, and we're just gonna continue doing that.
Speaker #3: And we're going to be really, really focused on inference and especially the disaggregated. I think your point is the right way. I think, for example, decode applications.
Speaker #3: We believe we're incredibly competitive. Not only from a power consumption, but also from an overall TCO. Compute density, memory density. And we're really focused on execution.
Speaker #3: The feedback we have been given from a lot of the large companies, on the technical side and on the product side, is very positive.
Speaker #3: Now the ball is in our courts to execute, have hardware available, and kind of show the results. And we're just going to be continuing doing that.
Speaker #7: Thank you. That concludes today's question and answer session. Mr. Ramon, do you have anything further to add before we're joining the
Operator: Thank you. That concludes today's question and answer session. Mr. Amon, do you have anything further to add before adjourning the call?
Operator: Thank you. That concludes today's question and answer session. Mr. Amon, do you have anything further to add before adjourning the call?
Speaker #7: Call? The only thing I want to
Cristiano Amon: The only thing I want to add, look, you know, it's unfortunately, I think that the whole sector is impacted by memory, but we remain incredibly encouraged about, I think, the foundation was set up with the company to be relevant to many industries. We are on track to the commitments we made on the diversification revenues for the company for fiscal 2029. We have, in a record time, I think, been having a very good traction in the future opportunity of robotics. Physical AI in a robot is the best example I can provide other than autonomous driving of what edge AI is. We believe that we are creating really a completely different company with relevance in many, many markets. And while we continue, we'll just continue to execute, I think, on our roadmap.
Cristiano Amon: The only thing I want to add, look, you know, it's unfortunately, I think that the whole sector is impacted by memory, but we remain incredibly encouraged about, I think, the foundation was set up with the company to be relevant to many industries. We are on track to the commitments we made on the diversification revenues for the company for fiscal 2029. We have, in a record time, I think, been having a very good traction in the future opportunity of robotics. Physical AI in a robot is the best example I can provide other than autonomous driving of what edge AI is. We believe that we are creating really a completely different company with relevance in many, many markets. And while we continue, we'll just continue to execute, I think, on our roadmap.
Speaker #1: Look, it's unfortunately—I think that the whole sector is impacted by memory. But we remain incredibly encouraged about, I think, the foundation we set up with the company to be relevant to many industries.
Speaker #1: We are on track to the commitments we made on the diversification, revenues for the company, for fiscal '29. We have in a record time, I think, been having a very good traction in the future opportunity of robotics, physical AI, and a robot is the best example I can provide other than autonomous driving of what edge AI is.
Speaker #1: And we believe that we are creating really a completely different company with relevance in many, many markets. And what we continue we'll just continue to execute, I think, on our roadmap.
Speaker #1: I would like to thank all of our partners, suppliers, their dealing with us in this memory shortage. And our employees. And we're looking forward to talking to you next
Cristiano Amon: I would like to thank all of our partners, suppliers, they're dealing with us in this memory shortage, and our employees, and we look forward to talk to you next quarter.
Cristiano Amon: I would like to thank all of our partners, suppliers, they're dealing with us in this memory shortage, and our employees, and we look forward to talk to you next quarter.
Speaker #1: quarter. Ladies
Operator: Ladies and gentlemen, this concludes today's conference call. You may now disconnect.
Operator: Ladies and gentlemen, this concludes today's conference call. You may now disconnect.
