Earnings call transcript Q2 2023

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Operator

Ladies and gentlemen, thank you for standing by. Welcome to the Qualcomm’s Second Quarter Fiscal Year 2023 Earnings Conference Call. [Operator Instructions] As a reminder, this conference is being recorded today, May 3, 2023. The playback number for today’s call is 877-660-6853. International callers, please dial 201-612-7415. is number reservation playback XXXXXXXX. The

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

Mauricio Lopez

remarks Today’s you, will Thank afternoon, Amon everyone. good include Akash and prepared by Palkhiwala. Cristiano and call

Rogers Alex question-and-answer the join session. will addition, In

this You can accompany release our Investor slide presentation and access on a Relations our that earnings call website.

being our a replay available on website In today. and addition, will qualcomm.com, this webcast on call later is be

defined website. as Regulation will reconciliations use non-GAAP you During find G, the call can measures and today, we to financial GAAP in the related on our

We the including results or our statements. in statements. Please differ future business our of filings, actual make which materially or will trends results. our events, forward-looking contain including factors important financial differ also projected events could Actual forward-looking forward-looking projections and that SEC cause most those from to or industry refer recent results statements, business XX-K, or to could estimates from materially

And President now, and Amon. to Cristiano Officer, comments Chief Executive from Qualcomm’s

Cristiano Amon

afternoon, with delivered and of of to and today. environment billion, us a Thank our the In guidance. you, prior per results $X.XX joining for revenues were non-GAAP macroeconomic guidance. everyone. downturn QX consistent sector, midpoint fiscal share, Thanks we're of challenging deliver across semiconductor fiscal pleased QX the our We brought earnings Mauricio, $X.X good at

range. of delivered business revenues billion our $X.X near end guidance chipset Our high the of

billion of delivered on business licensing low $X.X demand revenues the weaker the end handsets. Our range at of for guidance

we previously enhances in demand particularly than a backdrop at magnitude macroeconomic resulted greater The further has evolving forecasted. deterioration

for least remain the assumption the a we're next operating significant inventory that As quarters. under drawdown a couple dynamics at factor result,

of are China the our recovery the assumptions. for into planning meaningful expectations half evidence and have we demand our of in not not are improvements in seen while incorporating Additionally, calendar year, second rebound

will continue are in and remain what diversification our within to we and strategy we roadmap. focused impacting execute the leading facing is challenges our the managing on control on While are technology semiconductor industry, product

limited, to operating we're sight remains opportunities efficiencies opportunities As and continue without actively market to and we'll automotive expenses, the additional growth managing IoT of visibility ahead. drive greater losing operating evaluate

key extended XG across business. capabilities across Let technology will with our modem and leadership highlights our segments, RF world's advanced starting from next XXX the new XG handsets, RF device XG we first that provide networks. ready product In of phase in now platform me system. The and XXXX drive the XG modem globally, types Snapdragon

next performance flagship is features the modem and all XXX benchmark smartphone now for XG for The launches year.

Our Snapdragon including X ASUS and Gen Samsung, OEMs, platform with is across ZTE. launches Android the X devices globally, Oppo, OnePlus, for Honor, Vivo, leading mobile Xiaomi, Motorola, standard flagship

Additionally, our Snapdragon is X high redefining tier. the Series

competitors' its outperform mobile winning for accolades power Our its premium-tier multiple Gen and platform recently-launched superior X+ X performance. Snapdragon solutions,

We resulting are gains. initial share are X+ strong Gen the excellent seeing adoption sales OEMs in products also across by for Chinese X. powered OEMs, reporting

and see by global adoption of automotive, digital Snapdragon driven In our Tier increased the automakers X traction we continued across chassis. customers,

a partnering an Mercedes-Benz Mercedes platforms various This new factory engineering and our be to software cockpit in the collaboration will next-generation Mercedes-Benz platforms. on and beginning pleased very XXXX. with in to are ambition our The MBOS result be with Digital We is Cockpit partners teams and create experience. vehicles premium close Snapdragon long of industry-leading featured

We on across quarter, third-generation designs Notably, to Automotive XX Xpeng we launched during OEM with during our on our remain partners platforms new the Snapdragon Connectivity our XG the track new Day. the the outlined Investor Lotu's with platform, Additionally, Snapdragon Eletre Cockpit vehicles execute won including and recently across PXi automakers and Cockpit globe. milestones SUV. Snapdragon

Dell by Inspiron recently the IoT, the consumer continue XX-inch powered we Snapdragon Xcx on laptop encouraged platform. X Snapdragon. be launched Gen momentum the Compute Windows to In positive by with

ecosystem to enterprise on addition We're ISVs also port channel ODM and optimize to software, Qualcomm applications Snapdragon test, hardware, launching partners. and OEMs, the their to and our across developer Silicon. vials, we're directly consumer portal expanding enable In Windows on

platform, Our launches is next-generation XXXX. custom Orion Snapdragon CPUs AI Compute with enable to industry-leading commercial schedule and on device acceleration, in

a in As notably joint and ecosystem all platform China. the we for reminder, Google for with remain of XR, and broadly players partnership the significant Samsung choice Meta,

and become physical still for phases, a believe opportunity While merger early in will significant the Qualcomm. its we digital of spaces

We Sony. Electronics, robotics, names LG such win also appliances household Samsung camera with designs for home to continue and Panasonic, applications Bosch, as smart and smart

to In of Edge across millions residents. very rolling collaborating Jio out on Reliance IoT, with we're FWA now servicing India, pleased Networking share we're that XG

also enabling faster deployment. recently service Fixed expand to X, the XG Access offering to Gen the and while Wireless Platform ability coverage areas We Qualcomm operators announced lowering new their cost

product these to of XX in continue points we designs XX categories. Additionally, all Wi-Fi with for lead more to designs, cumulative account the across X than the launches quarter. Access XXX transition with

tailored real-time easily In Aware an cloud-based enterprises we visibility hardware scalable with optimized power tracking services Qualcomm the solutions platform IoT, precise industries. to and Industrial many secure and extensive solutions. to location build and and intelligence developers to empower The edge and announced ecosystem platform combines across deliver simple,

that interact establish Bluetooth secure. shelf This highly labels and a labels working are store accelerate electronic new help ultra-low can that devices. group large the transformation both help led and store digital power we standard the the Additionally, to with retailers of for scalable, with will electronic consumer SIG to enable

across months. electronic XXX Our the an over OEM Walmart XX announced next shelf XX to to recently partner, SES-imagotag, stores deploy agreement labels with

in the significant artificial like provide trends for opportunity Qualcomm. on the a perspective intelligence disruptive would the space now to and I

grow intelligence of have models already computing period to continue growing models time. this ChatGPT, is of an popularity will evolve that and We exponential Demand DALL-E experiences for artificial mobile, automotive. and short in Stable AI to Generative in change generative as rate. user personal Diffusion a across millions users models scaled quickly, believe and at such

this productivity. transform also on search, text, have both many audio an impact industries. such as Internet images, will changing entertainment model and It creation will for video content Beyond and

to locally XXXX. completely models In Android capability significantly billion be the the see they will greater able of models the smartphone. we X a performance potential XX Congress, on World on For devices for to need in realize these in our this and demonstrated Mobile on-device run locally running to months, substantially a world's Snapdragon-powered we and we will will the edge. Stable parameters coming parameters foundational their increase and Diffusion, At device, products billion run improve at than applications on full first scale, text-to-image excess model for

IoT, action uniquely AI AI now, devices. With cases on-device enable to of platform to proliferation per categories to and as AI-enabled positioned on PCs, is device the automotive such core of Qualcomm of at millions of from edge creation. processing perception, is year, the reasoning, make use unparalleled performance ubiquitous shipments watts content We're AI and capabilities advancing smartphones transformation. this forefront range firmly broadest per the Qualcomm in upcoming

large infrastructure. AI models are placing incremental very cloud and Further, significant computing energy-intensive demands on expensive

such, by support on can hybrid device. the directly edge computing AI processing running at As leveraging accelerating the AI inferencing cloud offload or a architecture

AI Qualcomm areas. ability in meet generative priority Beyond on new cost the of compliance of investment to running data This security, privacy opportunity one our additional requirements. benefits a and and improved device for optimization, latency, is include exciting

markets. reiterate the growth my technology Despite the driving like close opportunities prepared well customer remain us across would to I macroeconomic execute technology best strategy remarks, and unchanged. multiple the for As industries our leadership, history that position diverse secular across strategic trends our end disappointing to and investments our relationships product I in and expand road and Qualcomm map long-term environment, on new

I to would turn call the now to like Akash. over

Akash Palkhiwala

and EPS of quarter Despite delivered good our XX%, revenues revenues by which a both difficult end we revenues second of high $X.X approximately you, sell-in XX% midpoint start $X.XX. QCT of recorded of margin QTL $X.X reflecting was billion fiscal guidance. our afternoon, lower-than-expected above global of year-over-year margin billion Thank handset of results. we the and units operating I'll and and Cristiano, guidance, estimate near handset the XX%. billion, with $X.X On of global everyone. environment, our declined units. basis, were EBT a EBT of non-GAAP

$XXX are environment of billion, on and reflected revenues Snapdragon Gen revenues platform. adoption our million X% year-over-year, from demand X revenue XX% $X.X driven X, latest chipset with sequentially increased $X.X a IoT larger-than-expected with benefiting aligned of billion of drawdown. and impact by revenues Handset device the grew long-term of chassis launches target. premium-tier to Automotive inventory macroeconomic channel Snapdragon digital our our

in Non-GAAP operating $XXX $XX million. approximately to million relative in returned including expenses to favorable dividends. were our stock billion guidance of repurchases and $XXX stockholders, We by million $X.X billion $X.X

commitment to growth. have in to pleased our dividend, increase quarterly consistent our a we Additionally, X% with are announced dividend

impacting Before on quarter an give the semiconductor turning industry. you I'll fiscal challenges our to update third guidance, cyclical

in which XG, percentage relative fiscal be demand have down our combination headwinds single-digit handset 'XX XG units which a to We the calendar expect globally. 'XX, recovery least increased expectation. relative Financial and China, macroeconomic continued now high uncertain year. calendar into meaningfully global With initial to going a at than slower prior to of persistent our a inflation outlook, XG, is to in an lower impact expectations

forecast, weaker that with we reduce channel demand cautious improves, will visibility normalizes handset purchases and Given until further. the risk customers remain and anticipate inventory

on a it impact the as commitment factor long-term to this the our remains see for the are focused Since uncertain next the while couple leadership. effectively factors predict of are driving will landscape, that invest in a To to quarters. continue sustained least dynamics operating recovery, we efficiencies diversification we inventory drawdown significant we and IoT, the navigate maintaining Within of at technology to under remain of operating similar assumption timing difficult Handsets.

rebound well in capture once We positioned occurs. to believe we a it remain demand

includes reduction operating spending investments We meet reduction to exit 'XX in IoT. and to handsets fund further Automotive diversification our of X% in non-GAAP in a to our rate. relative expenses a commitment This are on fiscal track of

will we As help the and exceed evolve, opportunities to target. expense environment to operating additional execute evaluate our continues cost-reduction

third for to Turning fiscal quarter. guidance

forecasting to billion $X.XX. and $X.X non-GAAP billion EPS We revenues $X.X are to of $X.XX of

units a weaker we of QTL, handset Our larger-than-normal billion guidance billion a by drawdown. of of modem-only estimate billion revenues to we of macroeconomic expect EBT reflects guidance, XX%. customer. EBT global sequential XX% and of due $X.XX of to timing decline In the we inventory to revenue $X.X revenues and impact In estimate XX%. billion channel margin QCT, the XX% and $X.XX margins purchases Based of on headwinds, primarily midpoint handset to the QCT to $X.X

are margins elevated addition QCT supply from transition On reflect our second to sequential the mid-single-digit results, and quarter and in foundry inventory previous constraints revenues in we IoT. messaging basis, a forecasting with flat, to the gross growth of Automotive cost be roughly handsets Consistent impact Android with increases. to channel

expenses to operating non-GAAP be approximately expect Lastly, flat we sequentially.

ahead, As resulting we seasonality the fourth in dynamics look we handset muted revenues. QCT to timing including fiscal impacting purchases extend by to the a of quarter quarter, third customer expect the the modem-only in

and are closing, IoT, confident current traction improved an not debt QCT handset our with global and navigate In environment, Despite XR. to positioned balance personal immune of success to handset units Automotive, remain mix a We're we eventual executing from benefited Networking macro inventory, OEMs the for ability drawdown and we We near-term from tiers. and in given largest while increased operating the recovery positioned our elevated growth sheet focused in and has our benefit our continued and rating. strategy content channel strong the opportunities, in per diversification are including headwinds, ourselves across computers expanded reduction environment. to revenues well in device, on Industrial

Thank you. you, Mauricio. Back to

Mauricio Lopez

you, questions. for Akash. we now are ready Operator, Thank

Operator

your is question with from question. Chatterjee JPMorgan. with First Samik Instructions] Please [Operator proceed

Samik Chatterjee

Thanks taking remarks. I in all questions. if can one. for start smartphone the on on prepared and X so for had the thanks I Hi, X my the auto, just smartphone on details

down know looking stabilization the I a taking imply outlook guidance at at But the absolute for think sell-through your level. I it of in that does QTL overall guide, market XXXX. of today your more you're you're look for at if I an sort of sort

guide if QCT revenue are have for there and I expecting that the rate the headwinds Maybe I'm And seeing when sort -- it the And maybe or most does if confirm the I quarter? suggest headwinds of QCT inventory third of way the timing follow-up. just of you're So of the the there, your right? at what's that look magnitude of that's and guide purchases. timing a to interpreting fiscal sort inventory

Akash Palkhiwala

related Yes, right drawdown. forecast right it to Samik, additional It's the and way. you're inventory QCT the the really that the is thinking to to thing factor about market has QTL, this then connect

fundamental really is what it the beginning and a driving inventory the so seen just the run the increased fiscal is was we've long drawdown takes run on year much through impact it existing in channel a scenario macro as view the increase since the Our to inventory the to of how into the market change of inventory. is We going don't meaningfully headwinds through how -- have we accessed. had it year, that have think longer It's of a forecast. market where result takes

Samik Chatterjee

Yes.

And the Good. on side, wins, mentioned talked XX Okay. about you auto them and being you Cristiano, design Cockpit but in the Connectivity.

terms update been road pipeline. wanted engagement check that related map? China your And concern some from your on think on to auto, I front the an ADAS your So exposure about volumes and you in product if have I to of there's to and customers

some your how ballpark production are is -- reliant about sort maybe China electric numbers. should If about estimate pipeline And those we just you risk you how how on of sort the vehicle of can much around thinking of volumes?

Cristiano Amon

good. happened the is Very designs XX quarter. The what

So ADAS as we XG of are some well on going just working designs take is quarter, half we're the as time. -- but that highlight digital to at had we telematics. do announcing us in throughout on designs We we for cockpit on the new year, the this not second the

market. is comment on China second The

We seen, China theme consistent overall China, have auto. think, with the some of in weakness I

think local continue consistent to with and is high. the presence very share. But we of I China with EV, our And very, I rest the think gain design with market. the the OEMs

Operator

The the of proceed Matt with Cowen next your TD Please question. is question line of from Ramsey

Matthew Ramsay

time quicker. I make just Thank Good afternoon. guys. same you to guess ask very I questions. much have two at this I'll them the

than Cristiano, you were China, flagging things were year recovery the shipped during you one, earlier -- in in the companies during this, over think first the of in into China the half peak, a most were guys The were you more bit second your China bellwether I pretty clear think and in but in be obviously, the I And might muted. script peak. being

you half that XXX on annualized now year back in what I an a running we're I to give or closer could were million basis China, think $XXX numbers us, right? we units, and And on sell-through think are update million numbers maybe that in how roughly are take, recovery? could those much Maybe to shipping seeing you parity help of guys in are the a as come of you with undershipping still terms of And your today you the back sell-through? basis.

maybe And I but guess I'll I a one just do do have that first. follow-up,

Akash Palkhiwala

Akash. it's Matt,

if In terms the the analyst pretty the same that's of I seeing market, of we're scale any China sizing much the of resources sell-through, at think you're looking number.

what me, quoting, I So you're numbers what of if that's front you're don't the be you're have quoting, -- that's but it'd exact consistent. in

And is near-term of win you -- phenomenon. strong, pipeline very the The Xone The way design we it's a it. to if get a past way our as to our about that strength if at thinking 'XX, seen of our is, we measure position are course, it the so of We're from inventory sell-through. our next of grow share that drawdown sense going share so year. 'XX we've look in going give should to you into minds

Cristiano Amon

following is one this back. I Cristiano bounce and been during -- very I the is think the and the China I market thing. during overall just to the Just the one want add going to Common has pandemic. lockdown suppressed, expectation was sense, think, Matt, thing. It reopening,

have now but our put to we're that basically assumptions, planning It's therefore, that's inventory see business. saying what QTL thought seen the you're in and so right an we yet, the going is and I outlined. not what signs be not prudence drawdown, we exactly think dynamic Akash the But why difference situation. those I between think monitoring the to QCT we is the

Matthew Ramsay

of three the my think, different mentioned digits the sort for of segments there I guidance mid-single As up, follow-up, in there. are you business IoT,

your could visibility basis business, the of -- granular business. think across us handset that IoT on less correction than an and I many in If been a there inventory you have there's

the helpful. you June, talk if dynamics bit recovering business that just could in So be that'd of a through

Akash Palkhiwala

Sure.

in initial When into it's kind edge networking, we've in saw then So and that was of China specifically significant industrial and we weakness. consumer, Akash. role the expanded seen that weakness in playing that IoT and a

So it's a areas. combination of all X

look Now there that so as growth across we actually the we're quarter across -- all I that be one isn't recovery going out stands forward, a that of to lot expecting X, point the to. within would is

digital our areas. step where be become to and IoT broader that's the you in important going and at, relevant. And PC, Edge when process about to on really think then continue going more maybe extremely point we be the transformation and AI, that's last to talked back Cristiano XR about is Industrial, another technologies technology and other are

So still very through the term. in we'll and term, short kind optimistic about how of things everything look work longer

Operator

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

Mike Walkley

follow-on a on for question just just market you dynamics. Cristiano, the

comments too you made do from maybe performing from back is maybe premium clears, about New Year sharper inventory in Can talk the gains the you Snapdragon on think QX? you're some the once inventory downstream some further tier share seeing And competitor. Chinese to You traction gains share that relative early you X premium calendar into coming side? to see and Is that how that to the call start tier? about design your well win

Cristiano Amon

say we no longer understatement, and supply-constrained no a Mike. are in longer We're -- Thanks into environment. for I an question. right? the will probably that's

us share outlined, Akash a if for environment you And supply China. the sell-through 'XX, see compared you think have in to look ability resolved, as and activations the So we got positive our very at as of to I constrained share. picture gain

tier. position call well high X X of X, the leveraging what We've very -- in including new the the share the Series, received made we gaining a lot brand the on been Snapdragon the The of investment and market. we

premium very the Our the share. X+ have Snapdragon as the And and in outperform, gaining a you X think, tier, it we from competition we're series. I floor. sets then like share positioned perspective, I uniquely think outlined because And

we the our on to we the inventory, into in position marketplace. Just just that markets whole but like dynamic the go outlined

Mike Walkley

Thanks Great. Akash. maybe quick follow-up for and a

on clearing we margins, QCT quarters? over on there work any go anything couple the shipments and modem-only less through Just else inventory you or the about inventory next this just is margins given there, think as should mix QCT of

Akash Palkhiwala

Yes.

It's So from a and past said, I and the with -- drives really forward, look But we margin mature the that's environment other, to enough market. through. devices step a some mix that just perspective, consistently that so isn't margin from pressure how and look last that call X seeing or gross earnings call remaining you this well. at we've expected as constraint, supply current as as in said pricing grow through. Once then we last margins, we And discuss. if in on as gross as playing way of anything back the we there significant come you're get disciplined

Operator

Our the Please Research. is next question. from proceed Rasgon of Bernstein Stacy with your question with line

Stacy Rasgon

taking guys. my question. Thanks Hi, for

mean first what September by you I For could was if seasonality the muted you quarter. for one, wondering define

different maybe you you're think could not talk into be guess drivers, IoT, up. I QX? Auto thinking you And digits. little the I mean, up bit What if you about uncommon are Handset, double I a for usually it's now? to

Akash Palkhiwala

Stacy. Akash. Sure, It's

If there typical third for Outside the driver and device of takes, build quarter you and that, some of a happens fourth seasonality to new puts that the the it's other that growth. are flagship but launch that's primary primarily the our by driven really quarter, of look device. from at

we we comment handset outlined modem-only as little so is, as -- a is the in the this is expect and not the And demand that customer the is from the not a be June buy purchases either. from from our into from To clear, their lower remarks, extends of more we're to sell-through this What kind just from the within to of because saw OEM it's this suggesting them just on quarter prepared for reason year, be us. timing muted a on chips September and earlier us. of in balancing comment this comment clear, I the is well. This the chips purchases share a not was be

Stacy Rasgon

Thank you.

the said couple in inventory drawdown follow-up, drag expect next guess, better of quarters. June, what even But trying still my For you you the is into I same though or the better worse worse you given we know like, March? I of the there? is least at directionally, getting it's last just or about or it know I'm to saw in gauge the magnitude as

Akash Palkhiwala

Yes.

the There honestly, we there's story profile in every different So next ones happening are OEMs discussed, there including the the are with further Stacy, and just OEM. couple inventory a others, much over of are who certain reducing quarters. ahead

specifically it scale, terms from impact haven't that of So in I phenomenon. of each sized but an say has quarters the would I

Operator

Next question your is from Deutsche proceed Bank. of question. Seymore with the line Please with Ross

Ross Seymore

markets, the asking given amount opportunities of diversification side IoT versus that? the Or they because focus organically me penetrate, I the doing especially and reasonable there Automotive. just I Handset-oriented take Cristiano, to take to but just diversification your effort know a their you're to time things. in time simply what of smaller Are is inorganic and size are going Automotive IoT for on accelerate to great businesses? Thanks relatively wanted question.

Cristiano Amon

the market. Thank been clear. We've you, we Ross. to Look, there that into continue look inorganic opportunities are

are do at focused this just diversification. well of accelerate to been options We to looking wanted to as to that have the because actionable We've and inorganic continue down accelerate help is been identifying in identifying, but environment, careful something opportunity current M&A diversification. in process we us we'll very we

power in strategy incredible across have. devices Even be very that new to segments. -- mentioned all as our diversification to into a think We're but that's AI in what now opportunity the cycle it's the it uniquely we also think this going and all very I could remarks, I at of low and I of and though performance the about relevant excited going do we're And prepared very diversification all a to the other upgrade positioned phones, the to accelerate create segments new edge, well. high

Ross Seymore

for Christiano. Akash for Thanks as guess follow-up. one that, my I

sequentially. looks Handset know you like that you're guiding just the and a that be On Android are modem-only you kind Or How flat inventory I there? the flat on teens customer Android's segment, saying what's burn's said problem, share is problem, cetera? still Is et gain? down a it low the of is if headwind. macro would evidence of the going

Akash Palkhiwala

Yes. was assume Ross, question, your related to I QCT?

Ross Seymore

guys Just That's aggregate. what QCT, you that's it. call not

Akash Palkhiwala

Yes. Yes.

-- you roughly to about quarter. quarter if staying the Android flat, guiding of think third quarter, Android So mean, kind last in and was between the business, consistent that quarters second our at if look two you I we're year, our historical very with trend year. this we're these business this same

both and So exist drawdown and in it's quarters. same market just the factors, following the trend inventory the

Operator

question. Moore from Next Morgan Joe line the with of your question Stanley. is with proceed Please

Joe Moore

guess Thank Great. in a how Can out of like-for-like separate kind at change ago, I much any you look you. Handsets, of inventory those build now X of inventory decline you would attribute that in depletion year in kind as kind just to pricing? you or the of factors? year-on-year

Akash Palkhiwala

a years One combined. on or the it it at to it. year the has specific of of haven't you we that bill, rate at two Joe, give what numbers year framework But will look frameworks look talked of is. look the to second combined, Yes. if it given you the strength would And the the at one about business be bleed. the had run

The has continued rate as look the also other the of market start a is come I to that's, figuring to to just the out way thing framework the in one business. calibrate think, market overall size at I least that would run to say But thing at the down. good is

Joe Moore

causes that Okay. Is headwind. you as that margin felt -- before? any allocation kind you And getting pricing that? out gross are kind you of in has a out like-for-like promotional be always as like it there expedite a it we're now? came little of Is just then more supply of been mentioned easy environment? moved you've there there that mode And of change of of of What bit an sort type

Akash Palkhiwala

Yes.

combination just constraints, of and leverage playing them. supply we pricing able out exercise through it's that's in inventory environment, given current mean numbers. that gets were So excess some a the I the so neutralized to

to from factors should keep foundry two and ran we our some a comes increase get through filled is fabs had over will in and that starting as January back, in price underutilization back mind front-end other going The that so in a demand as that time of forward. well, first us tailwind be RF for

Operator

Please Our the is from question. your of Barclays. line Blayne question next Curtis with of proceed

Blayne Curtis

your ASP looking still just on Thanks numbers, seems following at But it is maybe on last I'm for taking I up. going that like my up question. if one gross margin. mean the guess I

really it just the is So cost? higher

of there's is, competitive high concern guess it second more of a I think environment, the And MediaTek lot I moving up end. part to about

I and moving MediaTek I lot taking think of just up. there's back and like-for-like, but buying about more go people and no you I a maybe you not X products older environment? can talk said just there's So think mean, about concern Gen that

Just kind touch points. of on those

Akash Palkhiwala

about address first of Yes, way it's Blayne, it. I and will so I'll part. the reasonable second address percentage, margin Cristiano thinking a part gross On then think the

and by gross margin that's I those gross couple the seen impacted business. have ins outs to the outlined. get but percent it of to dollars kind kind are, of strength business, of and the and But per continues device again, factors just Our we profitability of scale adds the margin grow, me, and to

opportunity new all And an to well. for chips, And with the the just of our better we into an last outlined, as opportunity us longer-term at into and years. over It's successfully of custom lines, X product have kind for then Cristiano especially that, will coming including play Handsets. do create to our done course that broader CPU add very to which with to our have AI opportunity that content we step look back the to continue us

Blayne Curtis

ahead. Go

Cristiano Amon

No, couple took this, road this pretty investment. make questions. I'm the we we add are means I going we positioned good well the outlined. very the your tier. the Look, right just X above think, feel to I'm in which and sorry, we very, specific competition about We strategy see comments that that very the have way choices of premium outperforms done, a focused our landscape, I map sure X, and tier of changes to And as the that

within especially Our all design good is traction very the exception. of OEMs, no

are Samsung. globally you with I we remind that

we of the that launch GSXX. It's them, just have with then happened, Snapdragon of have Fold be globally. our the agreement then outlined we And and good, to And going the of Samsung position is with not is of Our but And strong. years before, number we Flip. as the we're a have XX, GS brand size of share. gaining market I association very the

Blayne Curtis

then I could if with follow just And modem-only. the up

timing to -- point? away. In waiting if you of guess be of any the you terms Or curious timing, notified customer if at with there's to that of that guys timing do I if this you move that their anything decision shipments transition? just had would the have I'm been there's thought

Cristiano Amon

we no that product transition, in to do further assumptions. we're I said nothing 'XX. the to in be they The 'XX, No, it we our transition. number ago with to have And change launched calls a of has earnings think planning expecting in the that

Operator

the question. proceed Research. of from Brett line Please next question of Simpson your with come Our Arete

Brett Simpson

and guess, just to Cristiano, much. pre-COVID, state seems about business since so market. growing Android back Apple structural loss losing even been be wanted And the COVID the their a of to share. here. I ask consistent share sort to Android keep of There has seems going I Thanks

you Android? much in size is think Android, going decline secondhand how do what what you to business? So the the know this, you you it's And do structural iPhone is value on? do whether how is their the to going secondhand think how the and do big And of is think market chain market? And Android do I can think, reboot affecting then you don't

Cristiano Amon

to of number Yes. great and No, it's unpack. a are there question, a things

a bit back history. little in go I first, recent So want just to

declined became premium there a I an And did Apple addressable significant think their the devices, was as some for well, and share. high-tier and reality, as amount I that think. to market of share. extent, pick available devices premium We in Huawei

And as gained of everyone much that and that's that grew resulting Huawei I is -- that larger of as Apple the you competition, Android, the I the share. areas to our a market. expense think So net think look at loss for a Android

of The our those a even smaller planning hand-me-down it's in the of and -- phones, component market. smaller accounted market is

share smaller are until think next -- value the cycle, middle and we've the in our share that's on high I focus position has go market, to we Android you with that's market upgrade been But actually business. we on tier. improved, of look where the Android think the of our cyclical in the and a trajectory if and I concentration the gaining

Brett Simpson

would you to we've suggest data the because Do on growing market secondhand seen, the impact volumes. have this structurally? that dynamics it to the starting the I some just of Android an is think is mean, understand

Akash Palkhiwala

Brett, Akash. Yes, it's

So I into this parts. two divide

a around a market and has obviously exists. think of closely There we're and little been with bit so in hand-me-down there's phone time second numbers something top of at contemplated period our and refurbished been in that's a point. a market, long change markets emerging a has at this the for still device, the watching definitely I that that that as so hand definitely

Operator

question. from of Our with the your line of America. last with Tal Bank question Liani proceed is Please

Tal Liani

future more the of expectations? QTL, on Can about quarter. comments you you to some give September QCT your and us wanted indications Akash, quarters for provide sometimes us ask I

Akash Palkhiwala

Sure.

For our quarter. is pending the change in the well, should of slight as relatively revenue so market as is September and flat on that than between is There this on the last different think QTL, size flat going year a and is relatively isn't the specific I'd June typically, that the historical based recovery say in a something a trend. proxy There market market. year, you

is this remarks outlined perspective, growth. seasonality this fourth quarter, as of well. I we've been muted on discussing been prepared that factors the that have year in said we because we call the all expect on have a From in and typically what seasonality, prepared my And the seasonal remarks QCT

typically as go framework and for come a to we you strong be there. And go obviously, we would that that's quarter benefits would go from up us with then September. a number So as for season, holiday realize there, we into

Tal Liani

what's When say normal what's And muted, it. Got for QX QCT? seasonality you for your benchmark?

Akash Palkhiwala

Well, of to I a see to give close look factors. to We'll clear that. honest, last that would a and don't at into be a if be at say number that to be insight normal, don't we different point you probably lot forecast. We year, quarters you would this with would have, expect come

you wait on definitely updating call, for we'll be next can if So the you that.

Operator

question-and-answer to today's the anything you concludes session. further add Mr. ending Amon, call? have before That do

Cristiano Amon

call. for Yes. our Thank to so much you listening

the taking while near-term can estimates navigate confident remain as market continue summary. it's action to but our conditions reach strategy. the where from important, we to our our we at point. challenging, control We strategy. our Like We're we'll we're Here's very headwinds, QX the -- perspective, most on like this execute

in for and very comment are we're the think map, feel so the in the a I well to think in And going especially IoT investing right very market I growth. I when Auto. the benefit to competitive last and is technologies growth road to positioned we AI. have we relevant become returns we're diversification,

even of that us to to phone entering compromising well having the companies and in very locally. this the ability at look you see in run things as Automotive demonstrate models about on XX and battery the you for larger parameter billion how next-generation to As new the ability appearing of opportunity models without talk I creates new that life shortly speed be use can personal an new cases, investing, computing. able year, those run

invest excited So this continue in that, we'll area. about to

for focused many our for value dedication and stakeholders. Thank and on you. and to partners all our In I our thank Qualcomm very also suppliers. we're in maximum summary, to our to want And commitment their long-term we're the and success drive contributions employees steadfast

Operator

Ladies and gentlemen, this concludes today's conference call.

You may now disconnect.

QUALCOMM (QCOM) 3 May 232023 Q2 Earnings call transcript