Semiconductor designer Qualcomm (QCOM) showcased its latest generation of chips and AI models for mobile devices at the 2024 Mobile World Congress in Barcelona, Spain. Qualcomm CFO and COO Akash Palkhiwala sits down with Yahoo Finance's Brad Smith to discuss the company's artificial intelligence hub and use cases across devices:
"You're already seeing the benefit of large language models on data centers. We've seen this show up in the financial performance of some of our peers. I think what's going to happen next is these models are going to be deployed on edge, on devices at large scale, and this includes not just phones but PCs and automotive and IOT [Internet of Things] devices, and that's a tremendous opportunity for Qualcomm, as these models get deployed in these devices. our chips will be at the forefront, making these deployments very easy for developers, for consumers, and bringing some incredible new use cases for the consumers to enjoy."
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BRAD SMITH: Qualcomm unveiled a new suite of AI 5G and Wi-Fi devices at the Mobile World Congress in Barcelona on Monday. The chip designer is saying its latest innovations will jump start a new era of intelligent computing and consumer experiences.
For more on Qualcomm's tech enhancements here, I'm joined by Akash Palkhiwala who is the Qualcomm chief financial officer and chief operating officer. Great to grab some time with you. And thanks for joining us from Barcelona.
First and foremost, we got to know when you make some serious announcement like this about an AI hub and some of the other language learning models that are really going to be put forward here by Qualcomm, where does generative AI sit in the pillars of the Qualcomm growth targets that you've set forth?
AKASH PALKHIWALA: Yeah. So first of all, thanks for having me. Excited to be here and talk about all the great things we have going on at Qualcomm right now. The AI hub we're particularly excited about, because it is something that addresses all kinds of models as generative models, but simpler AI models as well.
And the idea is there's one simple place that all our developers can go to on the web. And it's something that's accessible from Hugging Face and GitHub as well. And while they go there, they can take any of the models that are available. We have a curating of more than 75 language models that are available on the website.
And you could take those models, build it into an application, test it on a device, and deploy it into an application store, all in one go right at the website. So it just makes it very easy for the developers to take advantage of the hardware that we've put forward. And we're excited that this broadens the reach of our products. And it makes it very easy for developers to access them.
BRAD SMITH: It's so interesting, because AI chip demand has really been what's propelled so much of the semiconductor industry over this past year. When is LLMs, when our LLMs, the language learning models that really drive these applications, going to have their critical mass moments that companies like yourself at Qualcomm see the benefits of?
AKASH PALKHIWALA: I think you're already seeing the benefit of large language models on data centers. We've seen this show up in the financial performance of some of our peers. I think what's going to happen next is, these models are going to be deployed on edge, on devices at large scale. And this includes, not just phones, but PCs, and automotive, and IoT devices.
And that's a tremendous opportunity for Qualcomm, as these models get deployed in these devices, our chips will be at the forefront making these deployments very easy for developers, for consumers and bringing some incredible new use cases for the consumers to enjoy.
BRAD SMITH: Certainly. So from that mindset and perspective, does it feel like generative AI is really going to supercharge the next smartphone supercycle, perhaps?
AKASH PALKHIWALA: Yeah, absolutely. I think if you look at the smartphone market, what happens is every time there is a new technology that comes in, it drives an expansion in the market. And so generative AI, we are seeing tremendous traction across all the major OEMs. All the content companies are looking at how to take advantage of it. And there are several examples of use cases that the consumers, I think, are going to find extremely interesting.
So we're excited about what it does to the phone market. We're excited about what it does to several other edge devices that Qualcomm participates in as well.
BRAD SMITH: And when you think about those devices, you mentioned phones, will all phones released this year or perhaps next year have some type of AI-enabled chip on them? And what is that pass through as well mean for the revenue and the margins at Qualcomm?
AKASH PALKHIWALA: Yeah. So starting earlier this year, we launched our new chip, Snapdragon 8, Gen 3. And this is a chip that has highly integrated, advanced AI capability to run gen AI models.
And so as we go through the rest of the year, we're going to see a lot of our customers launch new devices, taking advantage of these capabilities. And that's going to translate into both content market share growth for us. And we're looking forward to it.
BRAD SMITH: It's been interesting, especially within the broader AI chip and AI hype phase that we've seen, where it's really just been lighter fluid, not just for the stock market that's really latched on to that as a theme. I wonder what you make of it from your perspective, and where Qualcomm sees itself positioned as part of that.
AKASH PALKHIWALA: Yeah. I think we're very much at the center of it. As I said earlier, I think you're seeing a lot of the use cases come through for AI on the cloud side at this point. We're seeing that transition over to the device side over the next year. And Qualcomm's at the center of making that happen.
And we're pulling together the ecosystem right across from developers OEMs, content creators. And then we'll be able to bring all that together to have some great use cases for the consumers.
BRAD SMITH: And just, lastly, while we have you. We do know that Apple has also said that they're going to, essentially, continue using your 5G modems until 2027. That's an extended timeline here. When you think about that and how that contributes to the bottom line, at least, for that interim period of time here, how does that change, perhaps, the margin profile or even the revenue profile from your perspective?
AKASH PALKHIWALA: I think there's a lot of things that Qualcomm does well, but probably at the top of the list is making 5G chips. We're clearly the leader in performance in making those chips. And you're seeing that benefit come through in our relationship with Apple. They're looking for us to supply those chips to them. And we'll continue to maintain the leadership in performance and looking forward to just being a great supplier to them.
BRAD SMITH: All right. I had the great privilege of going to Barcelona for the first time last year. You're out there right now. Akash Palkhiwala, thanks so much for taking some time from what I imagine is a great scene over at Mobile World Congress.
Thanks so much, Qualcomm chief financial officer and chief operating officer.
AKASH PALKHIWALA: Thank you very much. And talk to you soon.
