Qualcomm’s designing custom CPU’s for dominance in laptop markets; CEO: “We will go big in China”

Qualcomm’s new CEO believes that by next year his company will supply CPU chips for laptop makers competing with Apple.  Last year, the Cupertino, CA based company introduced laptops using a custom-designed central processor chip that boasts longer battery life. Longtime processor suppliers Intel Corp and Advanced Micro Devices have no chips as energy efficient as Apple’s.

Qualcomm Chief Executive Cristiano Amon told Reuters on Thursday he believes his company can have the best chip on the market, with help from a team of chip architects who formerly worked on the Apple chip but now work at Qualcomm. In his first interview since taking the top job at Qualcomm, Amon also said the company is also counting on revenue growth from China to power its core smartphone chip business despite political tensions.

We will go big in China,” he said, noting that U.S. sanctions on Huawei Technologies Co Ltd (HWT.UL) give Qualcomm an opportunity to generate a lot more revenue.

Amon said a cornerstone of his strategy comes from a lesson learned in the smartphone chip market: It was not enough just to provide modem chips for phones’ wireless data connectivity. Qualcomm also needed to provide the brains to turn the phone into a computer, which it now does for most premium Android devices.

Now, as Qualcomm looks to push 5G connectivity into laptops, it is pairing modems with a powerful central processor unit, or CPU, Amon said. Instead of using computing core blueprints from longtime partner ARM Ltd, as it now does for smartphones, Qualcomm concluded it needed custom-designed chips if its customers were to rival new laptops from Apple.

As head of Qualcomm’s chip division, Amon this year led the $1.4 billion acquisition of startup, whose ex-Apple founders help design some those Apple laptop chips before leaving to form the startup. Qualcom will start selling Nuvia-based laptop chips next year.

“We needed to have the leading performance for a battery-powered device,” Amon said. “If ARM, which we’ve had a relationship with for years, eventually develops a CPU that’s better than what we can build ourselves, then we always have the option to license from ARM.”

ARM is in the midst of being purchased by Nvidia Corp for $40 billion, a merger that Qualcomm has objected to with regulators.

Amon said Qualcomm has no plans to build its own products to enter the other big market for CPUs – data centers for cloud computing companies. But it will license Nuvia’s designs to cloud computing companies that want to build their own chips, which could put it in competition with parts of ARM.

“We are more than willing to leverage the Nuvia CPU assets to partner with companies that are interested as they build their data center solutions,” Amon said.

Smartphone chips accounted for $12.8 billion of its $16.5 billion in chip revenue in its most recent fiscal year. Some of Qualcomm’s best customers, such as phone maker Xiaomi Corp are in China.

Qualcomm is counting on revenue growth as its Android handset customers swoop in on former users of phones from Huawei, which was forced out of the handset market by Washington’s sanctions.

Kevin Krewell, principal analyst at TIRIAS Research, called it a “political minefield” due to rising U.S.-China tensions. But Amon said the company could do business as usual there.

“We license our technology – we don’t have to do forced joint ventures with technology transfers. Our customers in China are current with their agreements, so you see respect for American intellectual property,” he said.

Another major challenge for Amon will be hanging on to Apple as a customer. Qualcomm’s modem chips are now in all Apple iPhone 12 models after a bruising legal battle. Apple sued Qualcomm in 2017 but eventually dropped its claims and signed chip supply and patent license agreements with Qualcomm in 2019.  Apple is now designing chips to displace Qualcomm’s communications chips in iPhones.

“The biggest overhang for Qualcomm’s long-term stock multiple is the worry that right now, it’s as good as it gets, because they’re shipping into all the iPhones, but someday, Apple will do those chips internally,” said Michael Walkley, a senior analyst at Canaccord Genuity Group.

Amon said that Qualcomm has decades of experience designing modem chips that will be hard for any rival to replicate and that the void in the Android market left by Huawei creates new revenue opportunities for Qualcomm.

“Just for the premium tier alone, the Huawei addressable market is as big as the Apple opportunity is for us,” Amon said.

Another challenge for Amon, a gregarious executive who is energetic onstage during keynote presentations, will be that Qualcomm is not well known to consumers in the way that Intel or Nvidia are, even in Qualcomm’s hometown.

“I flew into San Diego and got an Uber driver at the airport and told him I was going to Qualcomm. He said, ‘You mean the stadium?'” Krewell said, referring to the football arena formerly home to the San Diego Chargers.

Amon has started a new branding program for the company’s Snapdragon smartphone chips to try to change that.  “We have a mature smartphone industry today. People care what’s behind the glass,” he said.

References:

https://www.reuters.com/technology/qualcomms-new-ceo-eyes-dominance-laptop-markets-2021-07-01/

 

3 thoughts on “Qualcomm’s designing custom CPU’s for dominance in laptop markets; CEO: “We will go big in China”

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  2. WSJ Update- July 17, 2021:

    Gallium is taking over in many of the places that silicon once reigned supreme—from antennas to charging bricks and other energy-converting systems known as “power electronics.” In the process, it’s enabling a surprising array of new technologies, from faster-charging cellphones, to lighter electric vehicles, to more power-efficient data centers that run the services and apps we use.

    A byproduct of extracting aluminum from rock, gallium has such a low melting temperature that it turns into a runny, silvery-white liquid when you hold it in your hand. On its own, it isn’t terribly useful. Combine it with nitrogen, to make gallium nitride, and it becomes a hard crystal with valuable properties. It shows up in laser sensors used in many self-driving cars, antennas that enable today’s fast cellular wireless networks, and, increasingly, in electronics critical to making renewable-energy harvesting more efficient.

    Many of the most tangible things made possible by gallium nitride, also known as GaN, are happening in power electronics. Today, you can buy small USB-C chargers with enough juice to power your laptop, phone and tablet simultaneously, even though they are no bigger than the much less powerful versions that have for years come with our gadgets.

    The market for GaN power electronics is still quite nascent, however. In 2019, the entire market for all transistors was about $16 billion, whereas the market for the kind offered by Navitas, GaN Systems and others was $45 million, says George Brocklehurst, a vice president of research at Gartner.

    There are other potentially revolutionary materials that are beginning to compete with silicon, like graphene, but GaN microchips have the considerable advantage that they can be produced in the same sort of manufacturing facilities—called fabs—that make conventional microchips, says Stephen Oliver, head of marketing at Navitas.

    Because they don’t require the most advanced chip-manufacturing technology, GaN chips can be produced in older, paid-for fabs that might otherwise be idled. A fortunate side effect has been that GaN chip supply hasn’t been caught up in the wider global semiconductor shortage, says Mr. Oliver. Navitas’s chips are currently manufactured in the oldest fab still operated by TSMC, the Taiwanese chip-manufacturing titan.

    Where the material revolution hasn’t taken hold is in the biggest market for semiconductors: the processors powering our computers. Until recently, Dr. Oliver says, GaN has been good at doing only half the things that a traditional silicon transistor can do.

    So far, GaN can’t handle the electric-current flows needed to run the kind of computations carried out by traditional silicon logic chips. But recent findings suggest that may be changing.

    https://www.wsj.com/articles/the-novel-material-thats-shrinking-phone-chargers-powering-up-electric-cars-and-making-5g-possible-11626494445

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