QUALCOMM Aktie

Good afternoon. Thank you all for coming. I'm Stacy Rasgon. I'm Bernstein's senior research analyst for U.S. semiconductors and semiconductor capital equipment. And it is my honor to welcome our guest here today, Cristiano Amon, the President and CEO of Qualcomm. Now I always say Cristiano has been here for many years, and I always say here, Qualcomm is a company whose stock has been through a lot over the last 5 or 10 years. But I think now sitting where we are today, it really looks to be coming to its own, especially recently. Like handsets, as we know, the biggest part of the business today, we'll talk a little bit about that. But I mean the fruits of the company's diversification strategy really do look like they may now be ripening with auto and IoT and now potentially as AI goes mainstream, data center excitement. Even the handset piece, we'll see what it does in the near term, but it may have its own moment if and when AI broadly moves to the edge.

So we'll talk about that and probably many other things today. It gives me great pleasure to welcome Cristiano. So thank you so much for joining us.

Thank you so much.

You don't have like a safe harbor statement or anything...

No, we don't.

And again, I've been looking forward to this. Thank you so much for coming. We will get to the data center and diversification stuff. I think I want to spend most of my time there. But I think I do need to talk a little bit about the other businesses today. And I mean, like my own view, handsets are probably not in such a great place given memory prices, although I think you guys have tried to incorporate that into the forward outlook. In the meantime, though, I mean, IoT is recovering pretty well and automotive seems to be cruising along. And I guess maybe just to give you just an opportunity just to discuss sort of the recent results in near term. I don't want to spend a ton of time on it, but -- Just where are we sitting as we are like standing today, both for the existing business as well as maybe where the future may be taking us, like just given where we're seeing today, what are you seeing?

Yes. Look, I think, what we said on handsets, we -- handsets, it's kind of a stable business for Qualcomm. It is -- we have been very, very focused. I remember when I outlined our strategy for handset, that was kind of back in 2021 that we have an Investor Day, and we said we're just going to be focused on share of wallet. It's a market that it's going to -- it's stable. It grows single digit. I think we haven't still recovered in terms of total units used to be before the pandemic. But if you look at our performance, it's been great. We've been growing content. I think we've been growing -- the mix has improved. I think we've been growing share. And I think that's kind of we think about the business. We significantly improved the operating margin. Nobody was interested, not even ourselves in this whole price war that happened in the...

Yes, we've seen those in the past...

That's -- we had a completely different strategy in '21, focused on the premium and high tier and focus on silicon content. Now what the handset is right now it is artificially constrained by the memory situation. It's artificially. I think we have seen data points showing about the market was down like a 15% year-over-year. It is not a statement on demand. And a Qualcomm specific, I think, commentary that we provided in the last earnings call, which is we can now see the bottom in Q3. And the reason we can see the bottom is because we're significantly undershipping...

Not necessarily a bottom in the market. It's a bottom in your...

In Qualcomm. We are significantly undershipping to consumer demand. As you know, we have a sophisticated licensing business, and we have a lot of visibility on the channel. We have visibility in activations and what happens. So we can see even with the new prices, the prices became higher for devices. We're undershipping to market demand that give us confidence we're going to see kind of sequential improvement after Q3. And the magnitude of the market, I think, on handsets is going to go back to a larger -- once the memory situation gets resolved, and you go through the shift that we're starting to see right now that is happening on the market because of AI. Happy to elaborate on that. But that's kind of the 2 things going to drive the handset business.

We're very happy with our position. I think we had -- historically, we had on the Samsung about 50% share. Our baseline now is north of 70% share. And I think Snapdragon has become even more relevant when you have a smaller market. I think what we have seen from our customer base is for the high tier, the premium tier, then if I have to design for a smaller market, I want to make sure I design Snapdragon. So we've seen that dynamic play out. IoT, happy with the trajectory. I think a very diversified business for us. There's a lot of categories. Happy to elaborate what's inside.

And then automotive is this machine that we built. We talked about a $45 billion pipeline. We've been executing to that. And I think it's even exceeding our own expectations, how well is it performing. I think we just talked about now ending the year with like a $6 billion run rate, very comfortable when you look at our trajectory.

I can't remember what the target was, was it...

[ 29. ] We're very, very comfortable with that number.

Got it. So maybe that's just a good segue into this broader diversification story. So I mean, it was -- I can't remember the numbers said today, handset is probably still 70% to 75% of the chipset business...

It's smaller now. Memory has helped accelerate...

But I mean maybe talk a little bit about that diversification journey. And I guess it's not like the handset position that you have has not helped feed into that, especially in areas like IoT and auto, where I do think there was a lot of like crosstalk between the businesses. But maybe just talk a little bit about the diversification strategy, sort of like what set it off and where are you now? And then we can start to maybe talk about some of the individual businesses within there.

So I think before I answer the question, Stacy, I'm going to go maybe give you 2 comments, like higher-level comments. I think one is we are incredibly blessed that we have the handset business. The handset business has proven to be an incredible business. First, from an engineering standpoint, the handset is incredibly unforgiven. You have to pack, especially if you're focused on premium tier, you have to pack the computing performance you find today in PCs into -- and a lot of AI into a small device that has to manage thermals, cannot get liquid cool, cannot get hot. The battery has less out.

So it forces you to create a very comprehensive IP that has proven to be incredibly valuable as we diversify the company. And I gave us -- and I think you have seen that and you have seen even when you look at Apple, for example, their -- how handset can influence their computing strategy from the Neo to the M-Series, et cetera. So I think that is an incredible asset that we have in the company from a technology standpoint. The other thing is the handset become so concentrated as an industry that I decided when I became CEO, I'm going to do the opposite. I'm going to diversify Qualcomm to the max. And that's what we're doing right now. We're doing a lot of things in parallel because we're never going to see ourselves in a position again that it's highly concentrated like that.

And I think the strategy is working very well. I think the way the way we have done that, we have done with a mission with discipline. I think people can say a lot of things about Qualcomm, but our technology and engineering and execution, I don't think there's anything that people can say about our ability to execute. So first, we build a platform for the automotive. We saw that was an industry that we could be very disruptive. Then we look at the convergence between PC and mobile. So this is more scale for our IP, become accretive to the business. We've been executing that. We saw that there was an opportunity to drive a change in industrial. Industrial was about microcontroller and connectivity, and we changed it to high-performance compute and AI at the edge. We have built what we think is going to be a very important asset for the future of mobile platforms with AI.

We'll talk about that later. That's what we call in the personal AI category. And then we have been executing on our broadband business, continue to add assets robotics and then the next step will be the data center. So I think our -- by design, we said we're going to create a very diversified company. We're probably going to be very unique in having IP that goes from sub 2 milliwatts on an earbud to 2,000 watts on a data center. And I think the strategy is going well. We talk about $22 billion on non-handset by fiscal '29, not including data center. We stand behind that number. And we're very happy to see how some of those businesses are performing right now.

And to give you a plug, you have an Analyst Day on June 24, where...

Yes.

Presumably we'll get some updates to some of these numbers, I would say...

I think you'll get a lot of details, especially a lot of details on what we're doing in data center. I think people will be very positively surprised and please reserve a seat.

Okay. Let's talk about data center. So you've talked about data center before, different aspects of it. And there's a few pieces that I'm aware of, so you can correct me. We have the data center CPU, and you've announced something already with Humain, although I don't know that we've seen much in terms of actual revenue yet, but that's out there. You've sold AI accelerators for a while, several years, this AI 100, which was an initial product, but now we're talking racks, so AI 200 and AI 250. I recall a 200-megawatt deal with Humain that has been announced, although, again, I think we're still waiting for it to show up.

And then you announced a hyperscaler ASIC customer on the earnings call, which have been speculated and you confirm that, and there's been some chatter in the press on the identity of -- I don't know if you want to comment there or not. But I guess, first of all, maybe to take those one at a time. So maybe just to start with the CPU piece. Clearly, CPUs have been catching a lot of attention recently on the back of Agentic AI. And again, we have the Humain deal. I don't know if there's any other deals that are out there. And maybe you can talk to this if you would like to. But I'm curious -- and this almost goes across all the different categories. What is Qualcomm's value proposition, maybe to start with CPUs?

What is it about it that would make a customer want to buy a Qualcomm CPU for these tasks or for whatever tasks were versus something else that is available? Because to be fair, there are lots of other vendors that are already there and already established and scaled in that space. So what is it about Qualcomm that enables you to win in this market?

Okay. So a lot to unpack there. So let me...

I have similar questions about the other pieces, by the way.

No, Okay. So let me -- I'm going to give you as much as I can without front-running our Investor Day, but...

In a front run, by the way, if you...

But there's a lot to unpack. There's a lot to unpack. So first, I'm going to recap what we had said publicly, just to make sure because there's a lot of different information. We said publicly that we saw that as a data center now the next step and natural expansion is a massive TAM for Qualcomm and especially that our IP very relevant for that, especially the direction of traffic that data center was going. We said our data center strategy is going to be based on a number of factors, CPUs, we'll talk about that in a second. XPU, which is inference accelerator. We're not focused on training. We're focused on inference accelerator when we had a unique architecture, including how we think about memory.

We don't need HBM. So we have an XPU. And we have an incredibly large semiconductor machine. Most people don't know that we ship about 40 billion components a year that we're going to be able to do custom ASIC. The other thing we said is a lot of those markets are becoming bespoke markets. So we're very flexible. We're a new entrant. So those are the assets. What have we announced? The very first contract was a contract with Humain, actually not on the CPU. It's actually on the XPU is on accelerators. And we...

You came first, but maybe I'm wrong. Yes, you would know better than me.

I will talk about that in a second. And we're very happy that has been a process. I think we're now -- we started with the AI 100, but that's not the real scale is the AI 200, 250. I think we're on track on the execution. We're very happy with that. That's the very first one.

We're not having a shipment date for that yet.

So when that happens, we did say that we pull in when they announced you what data center would start having revenue in '28 -- fiscal '28, we pull into '27. The second thing that we said, we said we were very happy with the progress of our CPU with a U.S. hyperscaler. And we're very happy with that. And I think that is how we get started. And then given the traction that we have now with custom ASIC, we pull in now revenue that was supposed to be in fiscal '27. We said we're going to even see shipments within this calendar year. So that's what we said publicly.

For the ASIC?

For the ASIC. So that's what we said publicly. Now I'm going to answer your question. The first one was on the CPU. Look, I think if you want to support, I think, the valuation that you probably see right now companies I can tell, I think people realize that CPUs are very important, especially when you get mix of experts, you have orchestrated CPU, I think, is going to be a big asset when you think about the TAM. We have a pretty good CPU. I'll even say I probably -- when you think about the ARM compatible instruction set, we probably have one of the best CPUs in the industry, right...

Is that performance? Is it power? Is it TCO?

All of it.

All of it.

And a little bit of a track record, right? So we're the first one to put a 5 gigahertz CPU clocked on a smartphone. We did that. I think you saw what we did in PCs CPU. We also have our CPU with safety grade in automotive and the Snapdragon Ride Elite cockpit Elite. I think it's been second to none. So all of those markets, our CPU has been the test and benchmarks, and we have designed a CPU specifically for the data center. Very flexible architecture. It scales in the number of cores to a very big data center all the way to on-prem, and it's going to be -- this conversation is going to be relevant for future 6G networks. And it also can be a chiplet that can be part of a custom design. So that's -- I think the reason you should look at Qualcomm for the CPU is CPU performance, power consumption and TCU will matter a lot. And I think we have an asset that's been proven in at least 3 other markets.

Got it. Got it. What about the racks, the 200 and the 250? You mentioned some unique memory architecture. I mean, is that the value proposition of that rack?

So the value proposition of our NPU, I think the industry has been talking about XPUs and they have a lot of those, and they have different customizations. I think you have to look of where is happening with the data center right now. The data center is going to a process of disaggregated compute. And let me take a minute to explain this because -- this is actually -- I go back to what I said. This is actually very familiar to Qualcomm. The smartphone is the most disaggregated compute ever because there's -- I like to tell this story because it's a very simple example. When iTunes started, everybody buying their iPods and people will go have an iTunes running on your PC, the whole MP3 decode happened on the CPU and Intel CPU. Intel architecture has always been CPU does everything. You can never do that on the phone.

You have to have a separate hardware just to accelerate MP3. So the data center is going into that disaggregation. You started to see what it used to be one GPU from NVIDIA for training and inference. Now you start to have a different solution for inference. Now inference further disaggregate and prefill and decode. So we're building the XPU that is going to be very good and efficient in terms of compute density and power. for inference, some of those disaggregated workloads. We also have something that is very unique. We don't need HBM. We have a different memory architecture. I think we're going to talk...

Can you get the memory?

We're very, very confident about the ability to get memory for our engagements right now. And then the other thing I'm going to tell you is we're flexible. So we're building the chip. We're building the cards. We're building the servers. We're building the racks because different type of customers want different type of deployments. There is a value, I think, of at the system level, we can tap into the ecosystem that already exists for that. So those are all options of our solution on the accelerator. And happy to talk about the custom ASIC.

Yes. Okay. So the customer -- so part of this is you recently bought Alphawave, and that brings a number of components that I think are sort of table stakes for that. You have SerDes and other things. Now Alphawave used to talk about their own ASIC engagements. This particular -- I just want to level -- this is not something that was acquired with Alphawave. This was something that was...

It was the case, we will not get away paying $2.5 billion.

I get the question. So -- is there anything you can tell us about this ASIC? Or do we have to wait a few weeks...

So here's -- so there is a science -- I think there's science behind Amendus in Qualcomm, especially when you look at M&A. I'm going to give you a couple of examples, right? I think we bought Arriver. [indiscernible] had to do with [indiscernible]. We bought a Tier 1 Veoneer, got Arriver spin out. We bought Arriver because it was an important asset to complement everything else we're doing for automotive and help us complete the platform. I think we bought NUVIA to help us accelerate our efforts to design our CPU, combined with everything else we had and we enter some of those markets.

We bought Alphawave because it provided a lot of IP that we needed, a lot of the connectivity IP, a lot of the expertise on customizing combined to the -- what we had in engagement and then allow us to go. That's why we think we're very focused and consistently said, now we're serious about data center. We're missing some assets. We're going to go buy Alphawave, and we're going to complement the platform. And I think what that happens, there are 2 things that happened with the acquisition of Alphawave. One, it complements our portfolio. Second, it builds a lot of confidence, I think. Then what do we bring to the table custom ASIC?

We're not a small semiconductor company. There's a lot of companies that they decided to enter the semiconductor business, they probably have not a lot of experience doing a chip. We do have a lot of experience doing a chip. If you look at the number of chips that we do in leading node, we also have such a sophisticated -- and I'm going to say this, I don't want to brag. I'm just going to give you the fact. We have such a sophisticated machine to build SoCs. For example, what we do in mobile, like clockwork on Snapdragon 8 every year, we tape out a chip on a new node. When TSMC finishes the mask, we go to production. We don't even have to get the chip back, how sophisticated our [indiscernible] is. All of those things became incredibly attractive, I think, for companies they're trying to do bespoke solution. So it's our IP, a lot of the IP that comes off of wave, our ability to do this and our willingness to be very flexible. This has been incredibly helpful and kind of accelerate our data center ambitions.

Got it. And so you've talked about -- I'm assuming we'll hear more about the revenue outlook and everything to grow that like in June. But you talked about like -- I can't remember the wording substantial or meaningful revenue.

Material.

Material revenue in '27. What does material mean?

Well, just look at the Qualcomm revenue scale. Material has to be in the multiple billions of dollars. That's really what it means.

Okay. And what about the margin structure of these? I mean we're seeing a lot of other ASIC. I mean, Hawk over there, Broadcom gets pretty high margins in ASICs. A lot of other players don't quite get that kind of margin. How should I think about the margin? And to be, I guess, your margins right now are more mobile related anyway, so they're probably not as high as -- but I mean, can we think about this as being margin -- gross margin and operating margin accretive?

Operating margin accretive.

Operating margin.

It is -- all of those things that we're doing are going to be operating margin accretive for the company.

Okay. What about gross margin?

Well, say, I think we did provide a framework, I believe, for the gross margin of the company. The reason I'm going to hesitate about gross margin right now is because a lot of those engagements, some are chips, some are cards, some are servers, some are rack. So they kind of fluctuate. But I think it's going to be probably very healthy, and it's going to be about making operating margin accretive at the company level.

And the material revenue, that's across all of these things. It's not like it's CPUs and XPUs and ASICs collectively material.

That's correct. I think they all start ramping, but it is such that we -- like I said, we're going to -- it will pull in. So we're going to start shipping in the calendar year '26, '27, it becomes material for us.

Are you going to split it out as a segment at least so we can look at it or -- are you going to split it out as a segment at least so we can look at it or...

I haven't thought about that right now.

Okay. Okay. Okay. That sounds good. Let's talk about some of the other areas. So I mean, you mentioned Arriver in the context of automotive. Let's talk about automotive. So you've had these targets out there for a while. Again, it was $8 billion by 2020. $9 billion by 2031 or whatever it was. And you've been sort of dead on the trajectory, if not even ahead of it since then. So what are you doing in automotive now that's actually driving that? I guess Arriver brought some of the self-driving software in, but like what is a role does that play? How do I think about the split of maybe the revenue as well as the order backlog by things like infotainment versus like maybe the more attractive autonomous aspects of this?

Okay. So let's break this down in 2 parts. Let me talk about what the revenue that you see right now and go into the trajectory. And then I'm going to tell you some of the trends that are driving, I think, an acceleration and increase of content in automotive. Let's kind of break those 2 things. We did talk about publicly about a $45 billion pipeline. I think the pipeline has increased since that time. I won't disclose the new number now, but it's possible we're going to disclose that at Investor Day. And that has been converting into revenue. I think you see share gains, new models with Qualcomm silicon. That revenue today and that $45 billion pipeline, you should think about 1/3 is about all that's happening in connectivity on the car.

Another one is the digital cockpit, all the computer to power all the different screens. About 1/3 of that is ADAS. ADAS is processor, mainly processor for autonomy and ADAS, and then it has some components of the stack. This is kind of what is driving that growth. And you see those growth rates significantly higher than the market growth. I think we guided 50% year-over-year is because we're gaining share. I think those new models launched with Qualcomm technology. The exciting part is the second part. A couple of things happening in the car right now. First of all, the Chinese is accelerating, I think, premium content in the car. Actually, what they have been done right now is breaking records from silicon to SOP, and that is driving a lot of more premium computing content.

Are you talking about the speed at which they can get the stuff adopted?

New chips adopted and put it into cars and especially because -- the car right now is also being -- computing is being pre-provisioned in the car because over the lifetime of a car, we're starting to see a lot of Agentic AI experience coming to the car. We can talk about that across the board. So that is -- and it's China, you see that happening right now. The other thing that is driving a lot of the content is an acceleration, I think, of Level 2++, especially in premium car, more processing, I think, for ADAS and autonomy.

The #3 driver is what's happened with the stack. So we just -- we develop an asset, which I think is a very good asset. It's basically a Level 2+ safety stack that we've done with BMW and has been launched in the BMW iX3. We're getting a lot of interest from other OEMs. Some already engagements of that. And I think that's in combination with GenAI end-to-end stack. You always have to have a safety stack that go along the end-to-end. That's driving an increase, I think, of content for Qualcomm and cars alongside where we're seeing a lot more processing capabilities that is happening on the digital cockpit because of Edge AI as well as the ADAS transition to FSD, which is going to be like what a premium car would expect to have.

Got it. Got it. Maybe talk about IoT. And there's a couple of different pieces of this. And I'm going to go back to your prior Analyst Day. You sort of at the core business, which at the time was sort of at the bottom of the trough, I think. And you were sort of calling for growth of that business kind of reaching the prior peak in 5 years. It was, I think, getting to $8 billion or something. And then you had another $6 billion in the target, and it was $4 billion from PCs and $2 billion from XR, VR. And my at least outside-in view, it looks like the core IoT piece is in recovery, and that's great.

I feel like the XR/VR is maybe overachieving. And I guess on the glasses, to be fair, it's actually been on my big stack of things to do is to look at that market because it does seem like it's there. The PC piece feels like maybe it's lagging a little bit versus the trajectory. We haven't seen -- and now I mean, PCs just as a market are probably facing some of the same issues that smartphones are facing on that. Maybe if you could talk about the different pieces of IoT and what your perspective is on sort of where those markets are, where they're going and the growth?

Very good. Look, I'm just going to say, look, we're very happy with the trajectory. It's going as planned. I think that segment is also moving towards all the targets we set up for fiscal '29. Just to give an idea, I think we guided the IoT segment for next quarter. It's, I think, somewhere in the $1.8 billion in change. So I think it's kind of starting to approach like that $2 billion a quarter business. So you can look at the projection and you look at the growth rates to see how we're marching towards what we said we're going to do in fiscal '29.

No, let me unpack what's in IoT. there. It's a good question when you ask me about segment reporting because eventually, I think as those businesses mature, we're probably going to be thinking about how to break it down because there's a lot of things in IoT. And I think in hindsight, it wasn't a great term to represent what is in there. But anyway, we'll get there. So the first thing that you see there is the compute business, tablets and PCs. I will come and talk about that. The second thing that you have there is you used to have VR, XR and wearables, which is now all wrap around what's happening with personal AI devices. So that's in there. You have our broadband business that's in there. You have our industrial business as well. And it's kind of you kind of -- we often talk about -- if you look at some of our end markets, consumer, industrial and networking, it's kind of put PCs in the consumer side with wearables networking is broadband and industrial, it was about 1/3 each one of those segments.

Now let me tell you what's happening right now. PC, we're actually very happy with the trajectory. I think we've been tracking -- if you look at our projections for $4 billion, it's around in the order of magnitude, about 10% share. The markets that we launched, we're tracking to that. The problem with PC, you have to deal -- you have to have the patience because the first -- to be fair, you've sold into that market for like over 10 years, right? I mean it's -- it was not until Windows 11 that finally the emulator could run Win 64. And so you had a second-class Windows for ARM. And by the way, we have to do all of the heavy lifting ourselves. I think the effort to get ARM to run natively, we did it with Microsoft. No other company did it.

And what happened -- and of course, Apple did it for their ecosystem. But what's happening now, finally, on the consumer side, you now have -- there is no difference between an x86 and an ARM. It is now very mature in the consumer. We see that in the markets that we launched consumer. We're tracking in the consumer markets that we -- United States, top 5 Europeans, we're tracking 10%. We look at the position, the design traction in the channel, very strong. We're happy. That is now -- it's just going to get its own scale. We took the past year getting games and AAA games and all those things have to be more mature on the laptop side. Now we're tackling commercial.

Okay. To be fair, the 10% is 10% where you play...

No, no, no. If I get 10% of the market, I will already be at the $4 billion target. Yes. But you have to have this discipline. Now we're in the commercial, which is very important and which is the majority, I think, of the profit pool is. So we've been working. We have about 500 enterprises. We're going to get their CIOs comfortable. And I think Microsoft has been a great partner of this, and it's going to get there. You just have -- you cannot burn any step. But when I look at the [indiscernible], which is excellent because it kind of validates this convergence between mobile and PC.

And I think about the performance of some of the products we're building and what's happening in AI, I'll talk about it in a second. I think that's very good. We just have to have patience. The problem is both tablets MPCs have the same memory dynamics. There's no memory. So the market is artificially constrained until that's resolved. The other one in the IoT segment is what is now what we call the personal AI devices. I am incredibly optimistic about this. And if anything, I kind of agree with you that when we talk about the XR $2 billion by fiscal '29, I think we're beyond comfortable there. I think because of what's happening with those new mobile category of devices.

Every AI company, every AI company and every cloud company from the United States and China and other places are looking those new kind of devices. You hear here and there in the press. We're working with all of them. We have over 40 designs of what is called this personal AI category...

Give us an example, what kind of devices are we talking about?

Okay. The one that is the most popular and is going to get the most scale is smart glasses. And smart glasses come in 2 forms: processing, connectivity, cameras, and then you may or may not have a display. Why glasses? Why glasses? And you have to really understand what's happening there because it has nothing to do with the definition of a wearable or smart glasses before. As AI now has a role in large language models, large visual model in the man-machine interface, becomes very natural for glasses which close to your sensors, close to your eyes, your ears, your mouth, you turn your head, you're watching it and then you can access a model.

And what we're starting to see right now is a little bit of the dynamic of the smartphone, not the same, but similar. Every week, somebody adds a new workload, a QR code, a payment system gets integrated, like, for example, some of the digital payment systems has been integrated, all of those glasses. So glasses is the big one. I think it's already in the multiple tens of millions of units. It could become 100 million units. Eventually, if this is successful, it could become as big as phones. The second one, I will put it in the...

Are you still buying phones in that scenario?

100% you're buying phones. Yes. Because if you give me time to talk about what's happening with the AI transition of phones. -- you'll see the role of both. Now the second form factor that is getting traction is a combination of pens, pendant, jewelry. I actually -- I'd be careful what I say, but there's some other form factor very interested. Go watch Microsoft build. go watch Microsoft build. You're going to see some interesting things there, too. I think there's going to be -- the form factors are changing because it's related to the easiest way for a human to get access to a model for a completely Agentic use cases that has no legacy.

So that is now we call personal AI category. And I said we have about 40 designs of day nature, all connected to models. The other thing in there is our broadband business, stable. It is -- we're happy with it...

This is like networking gateways and...

It's access points, retail, carrier, and for enterprise as well as broadband. We also now have wired connectivity. We've been executing our FGS-PON. -- we're doing -- and then also edge processing happening for AI at the broadband business. And that's going to grow for us with 6G. We're going to take a role into that area as well. And then the last one is industrial. Very diversified, very sticky. On industrial, I'll tell you right now, we're not bound by demand. We're bound by speed of building solutions across verticals. We have focused on retail, oil and gas, energy, manufacturing warehousing...

It really does require vertical solutions, I guess, in...

You have to have the silicon, some of the AI capabilities, it's common. Like think about, for example, computer vision, it's common. I think the -- what is the edge appliance, the smart cameras. But then a lot of the players and the software that goes on top is building an ecosystem across each vertical. So that's what is in IoT.

Got it. So let's talk more broadly about AI at the edge. Talk to me about AI and smartphones.

Okay. Why do I want an AI smartphone? You want it for sure. So it's really important. I need a few minutes to explain this because we have clarity now. Like I didn't have clarity. We knew that this stuff was going to happen. We have different pieces. But now we can see everything together. And the picture, at least for us, is super clear, and we're starting to see what the change is going to be in mobile. One thing I'm going to tell you, from the early days of cellular, from analog to 2G to 3G, 4G, 5G, one thing I can tell about cellular it changes every time. It changes, the players change, companies go from hero to zero.

We're fortunate enough that we survive all of those transitions. And we always want to look to understand what is happening, how is that transitioning. Now we have clarity. I want to explain that to you. So think about what happened with AI. First thing that happened with AI is you have chat box, people go in, they ask something to a chat box and a search and get a response. Then of sudden get reasoning, you start to generate tokens, but then something incredible happened. The OpenClaw happened. Those orchestrators happen. That's what's driving a lot of the CPU. You have now -- you have the ability to get a bunch of agents, you have a mix of experts.

You have different models for different things, and you have this orchestrator that does thing for you. And it started to operate your computer for you. It's so profound that if you're a SaaS company today, you have to design your SaaS software for a client, not only to interface a human, but to interface an agent because the agent is going to go to the client. And you start to see what people are doing OpenClaw, you send a WhatsApp to your computer and they start doing things for you. And that's how computers are going to get utilized and those things consume a lot of tokens.

So you're going to start to see now finally, somebody said, oh, this hybrid AI that Qualcomm has been talking about starting to make sense with different models, mix of experts and smart routing and all of that. So what's happening on phones? So what happened on phones, you have to understand there are 2 fundamental changes happening with the phone market. One, I'm going to give you an example of what happened when OpenClaw and all those different claws started. People started buying Mac Mini. Apple was sold out of Mac Mini. They put the Mac mini, they put the thing and run. Okay.

But you can run it on anything, not you didn't need a Mac Mini...

No, but that's not an interesting observation. The observation is in the phone, you only carry one device. You cannot buy a backpack, put a Mac mini, a car battery and walk around. So you're going to have to have it in your phone. So your phone is starting to get the double personality right now. You, as the human will pick up your phone and you do phone things. You're going to go to your apps and you're going to do the things you do every day of your phone.

Actually, the reason glasses are getting traction because it's not very natural for you to talk to the phone or pointing the phones to things that needs you're going to do your phone thing. But the phone now can also run those orchestrators. And then the phone is going to start doing things for you on your behalf. And it's going to be doing things for the other devices that you interact on your behalf because the agent take the center pay -- it's not the phone, the center, all the wearables are connecting to the phone. Now it's the agent in the center.

On the phone or is the agent in the cloud somewhere...

Orchestrator runs on the phone. And see, this -- I'm going to say this to be provocative. I have seen so much discussion about cloud and edge, cloud and edge. It's a useless discussion. It's almost like for me to ask you to go to your 300 apps that you have on your phone and let's say, let's say one by one. What runs on the cloud, what runs on the end. put an airplane mode, they're going to say useless. -- is a brick. It's probably an iPod Touch, right, with all the Qualcomm IP. So then you're going to think about it, this is going to be cloud and edge working together.

You see all of those orchestrators that run on a device, they do some things on the cloud, MCP protocol, things that go to your app and they start doing things for you. So what we're starting to see right now is the orchestrator comes to the phone and start doing things for you on your phone or for other devices. You may do something on another device and your phone is going to do something for you. And that drives the second change. you're going to see right now between now and summer, every one of the phone -- every one of my phone OEMs right now in China, they have their claw -- the claw equivalent. Coming into the phone, you're going to see every OS vendor talking about a claw as part of the OS.

And the interesting thing is the nature of the business is changing. I used to think about the OEMs as the customers. Now I think that the OEMs and the cloud companies as the customers. Just look, for example, what's happened in China. Some cloud and AI company actually took over the UI of the entire phone OEM and that's going to be the new change in phones. And I think that is driving a completely different discussion. On one hand, you have the existing OEM thinking about memory cost is too high. I need -- I don't know if I can afford all of this compute, this is a smaller market. Have an AI company said, I need more compute. I need more compute. I need to have the ability to do a lot of those things into that device. That's going to propagate to the PC. It's going to propagate because it's 6 billion people use the phones.

So yes, you're Mac Mini separate, you're going to see every OS vendor is going to talk about a claw and you're going to feel which one is secure, not secure. And you're -- and those are going to be token machines. And that's going to require a lot of competition. And leads me to the last -- that's going to happen to your access point is going to happen to your car. And the last part of this conversation is this concept of hybrid AI. I am going to speak at Computex, and we're going to show a couple of interesting demos at Computex.

Are you leaving there like -- you're going there shortly, I guess, right?

Yes.

And what you're going to see in some of those demos is how much is going to cost you when you start having those token machines running everything in the cloud and how much is going to cost when those cloud companies push some of those models to the device and they break the tasks up. I think we're starting to see a lot of conversations about how companies are thinking about how much you can afford, what is open source, what is not. All of this is goodness that is going to drive an upgrade. And then my last comment on this, none of the existing devices today...

So this is the killer app, though, that we've all been waiting for.

It's going to be those orchestrated and agents that's going to be generating tokens. And we're going to finally -- finally, we're going to start talking about what the real conversation because the real conversation in the early days of smartphone, if I have to tell you that the smartphone experience is going to be defined by what the OS vendor put into the OS or the OEM put into his apps, that is nothing compared to the apps the developers did. Those agents are going to be some of the applications. And I think the good thing for Qualcomm is none of those devices are ready for it. So you're going to have to go to an upgrade cycle. I can't predict the timing, but we now have clarity how those are going to play out.

Got it. Got it.

The phones today don't have the computing power that are necessary to orchestrate something like this, do they?

The -- right now, you're going to need much faster CPUs to be able to run those orchestrators. And then eventually, as some of the hybrid AI matures, you're going to need accelerators as well.

Got it. Got a few minutes left to go to the lightning round, see some of the audience questions.

I guess it has to be asked. There's the quintessential Apple question, which is here, which is baselines now that Apple starts leaving the model in a bigger way this year, do investors have the right trajectory in mind? And I would follow this up by also saying Apple's licensing business, which does have an expiration date, the current agreement, I guess, beginning of April of next year. So what are your thoughts on that?

Look, I hope investors have the right trajectory. We have been so clear...

We've been 100% clear, by the way. There's no excuse, frankly, if...

They don't have the right trajectory in mind, but anyway...

All right. Second question. Look, we -- as you'd expect, we're in conversations about the license. The license is independent of the chip business. And I will say, I think the licensing business is probably one of the most stable times of our licensing business. I probably feel very confident about the state of the licenses business and...

Probably we feel very confident.

And look, I think you have to ask yourself, especially a lot of those customers' renewals, this business is being battle-tested. So I think there's a lot of clarity about what the patents are, what the claim charts are, I think the size of the patent portfolio. And I think what I have seen from most of my customers right now, especially in the AI transition, the last thing anybody wants in the middle of an AI transition is a worldwide patent litigation. I think everybody knows, I think that we're always going to defend that business. And I think -- and the fact that we always have done that, that in itself, it's a positive thing that brings stability. So I am -- I will repeat. I think it's probably one of the most stable times for licensing business right now.

Okay. Is there any truth to the idea though that like the last time Apple settled is -- I mean, they had no choice. Intel was late with 5G, the only option less of an issue now they've got other options.

I think you should follow the court case.

Okay.

I guess -- to be fair, you've had a lot of disputes over many years. And I think eventually, you've come out on top on every single one. I think that is true. So one more question here. What's the next -- given memory issue hopefully is abating? I don't know if it's abating yet, by the way, but hopefully abating. Handset market share is well forecast. What's the next thing that concerns you? What are you most worried about? Is it competition from China? Is it something else?

Look, I think if you're in the semiconductor business right now and you're a global company, you have a lot to worry about. But I -- look, right now, for us, I think we can't wait, I think, for the memory things to improve because like it's just going to be an immediate acceleration, I think, of our business. I think we've been.

And there any signs, by the way, that is, are you seeing any improvement or getting worse?

It depends. I think it depends on how you look at. One thing I'm going to say for this, especially on DRAM, we have seen a lot of investments in China, I think, to build DRAM capacity.

And you're qualified with the local Chinese guys, correct?

If you have a memory right now, I'll qualify your memory. I'm qualified with everything. So I'm more optimistic than people are about maybe '27, there's more capacity coming in, in line. So that's one thing. And the other thing is we're like laser focused on executing on the data center. We see a great opportunity for the company. I think we're being positively surprised with the traction, and we need to make sure we're delivering on all the expectations.

Got it. So we've got about 40 seconds left. As I always do, I'll give you your soapbox, you've got a whole audience here. Why should these fine people buy your stock?

Look, one thing I tell about the company, and I'll give them my bias. I then I joined the company as an engineer in 1995 in the company for 30 years. So Qualcomm has an incredible, I think, engineering and technology capability. I think we also -- our patent portfolio, it's kind of reflective of our innovation engine. All those markets that we enter one way or the other, even some of the markets were new players and we have to grow, we -- if you look at our execution, we have the leading platform.

And I think Qualcomm has been on this trajectory to be a very diversified company. I will never bet against Qualcomm execution. So I think investors, if they understand the capability of the company, they understand the trends that is happening on AI. It's fascinating to see when everybody thought everything is about the GPU. Now people don't talk about that anymore. There's a lot of new engines. If people didn't talk about the edge before, now they talk about the edge. I think the company is unique because it has bets in many areas that are now -- have seen positive trends in AI. And we're just going to be on this mission. And hopefully, June '24, we'll have a very compelling story to see why this is an incredible long-term opportunity.

Got it. With that, I think we'll close it out. Thank you so much.

Thank you. Thank you very much.

Thank you. Good afternoon, everyone. We are here to host the fireside chat with Qualcomm and one of my favorite sessions from the -- at the conference every year and with one of my favorite people here, Akash, who we were discussing outside, proves me wrong every time. It's always a good time. Akash, thank you for being here. Akash, who is the Chief Financial Officer and Chief Operating Officer of Qualcomm. Thank you for the time here.

A lot going on. So let's get into them one by one. You've talked about 3 different opportunities in accelerators, CPUs and custom silicon now over different points of time. Let's maybe start on custom CPUs. That's driving the most amount of discussion with shareholders or investors at this time. How should we think about Qualcomm's opportunity, differentiation in custom CPUs, and remind me of timelines and any acceleration on the timelines as well?

Sure, sure. So first of all, it's great to be here. Thanks for hosting. So we're very excited. I think we've kind of waited for the right opportunity to have a set of assets that's extremely relevant and material to what's happening in data center. And so at our earnings recently, we talked about how we're going to enter the data center business. And there's 3 key areas that we outlined. The first one is custom silicon. So to Samik's question, what we discussed is that we are working with a hyperscaler, and we're going to have revenue starting later this year from that engagement. So very excited. This is, I think, an opportunity that's going to be very material for us in '27. And then hopefully, it's a stepping stone to an ongoing engagement and then scaling up from there.

So we're leveraging the fact that we have an incredible technology portfolio. We recently acquired Alphawave and they have -- they have been doing custom silicon for a long period of time. So we are leveraging their expertise as well. And then as these hyperscalers look to make chips and look for partners who can help them with the silicon execution, Qualcomm quickly emerges at the top of the list. I mean we've -- Obviously, lots of experience in doing chips. We have expertise in 2-nanometer, 3-nanometer, 4-nanometer other technologies. We have obviously tremendous scale at the foundries as well. And all of these things become very relevant when the hyperscalers are looking for a partner. So happy to have this engagement. I think this is an opportunity for us to grow from there.

The second area where we'll be entering in data center is the CPU. As several of you might know, we have a custom CPU that we deploy in handsets, where we are the performance leader. We also deployed that same CPU in PC. And so if you compare us to the x86 players, Intel or AMD, we think we have a very significant performance advantage. And we're going to bring all of that to bear in a data center CPU solution. So that comes in as well and excited about how the CPU use is changing in data center. It was a very large market. I think it's expanded very significantly now. And so as agentic comes in, the role of the CPU in data center expands, and now this allows us to play in that larger market.

The third thing we're doing is we're building an AI accelerator that is really optimized for certain workloads and inference. So as the data center kind of drives growth in inference, within inference, you have Prefill and Decode and what we're building something that is really optimized for certain workloads that happen in decode, and so very excited about that as well. So it's a series of products, we think of this as something that layers into our portfolio over the next couple of years and excited about being hopefully a very significant player in data center going forward.

So custom silicon this year and the other 2 CPUs and accelerators over the next couple of years from a timeline perspective?

Yes. We think those 3 layer on top of each other, right? And so happy to kind of have that come through. If you look at several of the chips at data center players, they're focused on 1 or 2 of these areas. And the fact that we have such a large portfolio of technologies and now it's coming together into products, we get a chance to play in all 3 of them. So very excited. I think it puts us in a unique position in data center and semiconductor companies. And you know, we've not had a position there in a very, very large market. So super excited about it.

Let's talk about competition and maybe starting with CPUs, how are you thinking about competing against ARM, which is now vertically integrating further?

Yes. So we compete with ARM at edge devices, right? So we have a core that's a custom core. If you look at our phones, we use that custom core into our phones. Our competition uses a custom ARM CPU in those devices as well. And if you look at the performance of the two, we're pretty comfortable that we have a significant performance advantage when you compare the two.

When you take that to PCs, we're using the same in our Snapdragon PC products. And if you compare our CPU core to the x86 ecosystem, we think we have an advantage as well. So I think we are unique on the edge where we use this custom core and we have an advantage across the other players, and that same advantage shows up as we get into data center.

Interesting. Okay. Accelerators. You talked about the opportunity with sovereign customers. How is the target customer for maybe AI200 different from AI250? And how are you thinking about customer adoption right now?

Yes. So I think this product line, the AI200, 250 product line is very much a merchant product line, right? So we're developing it and we'll make it available to really all hyperscalers globally. And we think we're bringing our low-power heritage that we've worked on for several years on the neural processing unit, NPU, on edge devices. We're bringing that to data center. We're bringing some novel techniques in terms of how we solve the memory bandwidth problem in decode solutions for inference.

So it requires us to kind of combine memory along with logic. And it's a unique way of solving the problem. We don't think there's anyone else in the industry who does that, and we think it brings tremendous performance advantage in terms of how strong the memory bandwidth performance is. So excited about that as well. We are engaged with multiple customers. And then, of course, looking forward to giving a lot more details when we do our Investor Day on June 24th.

Yes. So any more color on what -- how is the product line for AI200 different from 250, Who do you exactly target as a customer?

So we'll talk about it at our Investor Day, so I don't want to front-run it. But I think you should think of the -- a lot of the innovation that we're doing coming through with the AI250 product and AI200 becomes kind of the set up for that launch.

Okay. Maybe just taking a step back, I think one of the questions we hear often on these initiatives that you have is, okay, you have a design here like is it that easy to come into the market, break into the market and scale. As you're thinking about it, what are the primary hurdles you think about as you have to scale these platforms and address customer demand? What are the primary hurdles you have to overcome?

So as you know about Qualcomm, right, we're all about technology. And so we have a very, very strong portfolio of technologies. We're bringing all of those to bear. We're very confident that we can take those and deliver chipset solutions at scale, whether it's for custom silicon engagement or whether it's for merchant engagement. So I think given our track record, hopefully, everyone in the industry believes that. One of the things that we had to work through is the software ecosystem. It doesn't apply to the custom solutions because those are built custom for a hyperscaler and they are typically working on the software. But as we get to CPU, which is porting workloads onto the ARM architecture, which has largely happened already, but there's some additional work to do. And then when we get to our merchant solution for AI accelerator kind of fitting into the architecture that already exists and supporting the industry standards on it is what we're working on.

So that to us is kind of normal execution when we get to a new market. But when you start from a position of strength where you have competitive differentiation, if you think about the data center players, most important thing is how does performance per watt -- power is a very important metric now in data center and performance per watt leadership is critical. Performance per dollar leadership is very critical as well and both of these translate into a lower total cost of ownership. And so when we engage with customers, really the key question is, can you deliver significantly lower cost of ownership, lower total cost of ownership. And that's where the advantage of Qualcomm comes in through performance. So what we think of as best-in-class performance per watt translates into a better TCO. And that's what the hyperscalers are looking for.

Okay. Akash, another follow-up on this is a lot of constraints on the industry from a supply perspective as you scale, you need to have visibility that not only that there's demand, but that you will be able to meet that demand with supply. What have you -- what actions have you taken on that front already to secure that.

Yes. And so I think one of the advantages of Qualcomm is just the scale we have, right? So we're obviously a very large player for TSMC, a very large customer for them. We work across 2-nanometer, 3-nanometer, 4-nanometer. We work across foundries as well. And so when you -- when a hyperscale customer looks at Qualcomm as a supplier, the scale that we have in the industry, the knowledge that we have of leading nodes, the experience we have in building complex chips becomes very important. And so I think given our scale, we have some flexibility across our product categories, across the nodes, and we're able to leverage that into having supply assurance.

Okay. Maybe let's move to the third one of that order of initiatives or sort of areas of growth that you're looking at custom silicon. How is it different from the other 2 opportunities, CPUs and accelerators that you defined? And maybe more than that, how much of it was an opportunity Qualcomm could have addressed organically relative to the Alphawave acquisition helping you address it?

Yes. So Alphawave has been in the custom silicon business for a long period of time. They also have key connectivity IP, SerDes, optical other things that become also important when you have some of these engagements. And so you kind of take that advantage, combine it with the technology portfolio and scale of Qualcomm and the combination becomes a very interesting alternative to an industry that has a couple of suppliers still now at scale, and we become an alternative to those suppliers. And what we're seeing is really the interest from the industry in having a new supplier that enters with our scale, with our technology competence. And the traction we're getting is a result of those factors coming together.

Okay. Got it. Before we move forward, just your competitors on the CPU front are pretty well known. When you think about your opportunities in custom silicon and accelerators, Who would you define as the competitive set that you'll be running up against just for investors to better visualize that you will have different competitors in these aspects, right?

I mean I think it's well known in the industry, but the custom silicon, the largest players who are probably are Broadcom and then maybe Marvell is the #2 player. When I think about the amount of assets that we bring together, especially between us and Alphawave and the scale that Qualcomm has, I think we compare very favorably to the existing players. And if someone is looking for one or two alternatives, I think we would make that cut.

Okay. On the accelerator front.

Sorry?

Accelerator?

On the accelerator side, I think the same framework applies, right, whether you're doing a custom CPU solution or custom accelerator solution, it's the same set of players who are competing for those sockets. And I think what I outlined just applies to this as well.

So now that you are taking a view on these 3 opportunities, you are expecting them to layer on over the next few years. But is there a view yet -- early view yet on which of these 3 will be the largest for the company medium term, if we can rank order them in terms of size of how they play out?

I think just generally, when you look at the SAM in the market, by far the largest, and this is not a largest opportunity for Qualcomm comment, this is just a TAM comment. The accelerator market is the largest market. Now the CPU market, especially with agentic workloads coming in, there's a significant change upwards in the size of that market as well and then you have the custom chip market. So those are the three.

But the way I think about it is Qualcomm has an opportunity to be successful in all three. And each one by itself would be extremely significant. So whether you believe we can be successful in three of them, two of them, one of them, each one would individually be very significant to our financials. So super excited. I think we always -- we've always believed technology always wins in the long term, and we're going in from a position of strength. We are going from a position of technology and excited about what we can do for our customers there.

Okay. Great. So maybe let's move to another end market since we've talked about data center for a while, autos, it's remarkable what the company has done in autos and position itself to be a leader in -- I want to say short time, but we know autos takes a bit long cycle. But relative to some of your incumbents, you've done really well. You guided to an acceleration in the growth into the June quarter as well. So maybe outline for us what are the incremental growth drivers that are benefiting the company? How sustainable is this acceleration that you're seeing?

Yes. I think, first of all, super excited about what's happening in the auto industry and our role in it now. We have 3 set of products that make up the Snapdragon digital chassis. The first set of products are connectivity chips. I would say it's clear that we are the global leader in that. The second is digital cockpit chips. So these are chips that empower the screens inside the car. And clearly, we are the leader in that as well. And the way this -- and then the third is autonomous driving chips as well and then stack that goes with it. The way this has layered in is very similar to the data center conversation we had.

We started with one area, which was connectivity, then we had Cockpit and now we have ADAS. And what you're seeing come through in the recent quarters is this take-up rate that is ADAS, that's now on top of the other 2 which are still growing in themselves. What is interesting in ADAS is as we go from 1 generation to the other, the industry is accelerating, right? Companies are looking to go in from Level 1 to Level 2 to Level 2++ to Level 3 and Level 4. And the silicon content increase across all of those is extremely significant, right? So Level 3 going to Level 4 is what is coming through in our financials right now. Later this year, we're going to start seeing OEMs, car OEMs in China start deploying Level -- sorry, our next-generation Gen 5 chips as well.

So a very strong portfolio of chips, very significant increase in content as you go to more capable chips and more capable autonomous driving capabilities. And then Cockpit still by itself continues to grow. So the setup is perfect. Our product leadership is, I think, very significant and clear. The entire industry has a very good understanding of it. But agentic AI now is coming on top of it, right? What used to be the Cockpit experience where you had to touch the screen to do everything in the car increasingly is going to become an experience where you're talking to the car and you're having an agentic AI conversation.

The car has the capability to understand the driver, understand the preferences, things like directional mic, being able to ask questions about the performance of the car, turn up the temperature, all kinds of things. And so I think transformation is continuing to happen, more digitization in the car is great for Qualcomm and you're seeing that come through in our numbers.

On the ADAS front, there's been a broader conversation about the impact of AI, right, on autonomous driving? And whether it makes it easier for new competitors the space with the help of AI on the software stack. Are you seeing anything change on that front? Where do you -- given your position now in terms of the pipeline that you have for ADAS wins? Where do you see the competitive moat that sustains your leadership here?

Yes. So I think our ADAS leadership is multifold. I'll say the first leadership is we have a single chip that does digital Cockpit and ADAS. So for lower-tier cars, that solution is optimal, and we create a sandbox environment where you can implement both at the same time. The second leadership vector is how strong our stand-alone ADAS solutions are at the premium tier and how -- when we go from 1 gen to the other, the content expands very significantly. And then the final, the third vector is bringing in an ADAS stack that we've developed working with our customers. And then we are advancing that towards now Level 3 and Level 4. That's the third vector of differentiation.

And it's really all of these things coming together in an end-to-end platform that if you're a car OEM and you're looking for a technology partner because this is not just a supplier relationship, this is a technology partner relationship. Our portfolio puts us in a great place and that's what you're seeing come through in the relationship with the customers.

Got it. Got it. Maybe let's move to talk about your opportunity in physical AI and how different or similar is it from what you're doing in automotive. And how, again, are you thinking about the market scaling in relation to physical AI?

Yes. So super excited about that as a long-term opportunity for Qualcomm, right? So new areas that we are pursuing in addition to what we've been doing in automotive and IoT is data center and robotics, right? Robotics is -- it's an incredible extension for us from what we are doing in automotive. In some ways, robotics is kind of the next step of ADAS. You were able to leverage all the technologies that we've developed for ADAS. But automotive is even more suited to Qualcomm's strength. Robotics is even more suited to Qualcomm's strength because you need to be -- have like very low power consumption, small form factor, wireless technology, very good camera, sensor fusion. All the things that Qualcomm does well comes together in the platform that's required for robotics and so very excited.

I think we're at the very beginning of what this market is going to turn out to be. It's going to be a massive market. There's no question. The debate is really just how long it takes to get there. And for us to be able to work with each of the leaders in the industry, both the U.S. and the global ecosystem pretty excited about it. I think we've talked about a relationship with Figure AI, with KUKA, with Booster, with Vingroup in Vietnam, with NEURA, there's a lot of different companies and then several customers, potential customers in China as well. There are several companies that are using our solution to build robotics at scale. And I think it's going to take a lot of different form factors.

You're going to have something that is manufacturing robotics, you're going to have something that is toy-like robotics. There's going to be a distribution center robotic solution. And then finally, humanoid. and each one kind of stresses on different things and requires incredibly capable chipset solutions. So very excited about it.

In aggregate, when do you see these opportunities starting to be material to Qualcomm?

I would say we expect this in kind of the next 3- to 5-year time frame, you're going to start with simpler robotic solutions. So think about home cleaning robots where we are already a very significant presence, they're going to become a lot more capable in the next couple of years. So that's one place to start. I think manufacturing robots now transitioning from fixed form factor to AI-based manufacturing robots that transition is going to happen faster. Warehouse robotics is probably a 2- to 3-year cycle, and you're going to see significant things at scale. And then finally, humanoid after that. So lot of different steps, and I think we get to participate in all of them.

Okay. And you start with the way it starts, you start with the lower content opportunities and as the volume grows and you get to humanoids, you have a higher front-end opportunity.

Yes. I think the amount of complexity in robotics is incredible because you need a solution for the locomotion, the movement. You need a solution for the brain, which is mostly AI-based. And then you need now, I think, distributed computing within the robot with chipset solutions in each limb, in arms and legs as well. So there's a lot of silicon content that will be required. And obviously, a great opportunity for us.

Is there any way to think about the content eventually on a humanoid robot like I remember the Automotive Investor Day, whether you outlined the automotive opportunity long term is like multiple thousands per vehicle, where does robotics opportunities say, related to automotive?

I think we had a range of, if I remember correctly, $300 to $2,000, something like that. I think actually, using a range like that for robotics is a reasonable starting point. I think it's going to evolve a lot might change. But using a very similar range to think of the range of robotics is probably a reasonable way of starting.

Okay. Great. So last 10 minutes, let's move to smartphones. What's your vision of what happens to smartphones with the agentic or what are agentic smartphones like...

Yes. I think in some ways a very interesting time to be in the kind of consumer device industry. If we just kind of quickly go through the history, you have the PC, the phone came in and the PC remained in its place and the phone drove a massive expansion of the SAM. There's this tremendous move towards a personal AI device. So what we used to think of as an XR device where you have virtual reality, augmented reality device that has evolved into a very different form factor now. I think -- there's a lot of companies who think of a device that is a personal AI device that can see what you can see, hear what you can hear and you can have a conversation with it. So we're seeing companies build glasses, companies build watches, earbuds with cameras, necklaces, broaches, just different form factors that people are experimenting with, but the core silicon content and the core function remains the same, it's this personal device that sits with you all the time and learns and understands about you and can be an assistant for you.

And so we see this trend as an incremental device that is on top of what we have in phones. And don't know yet which device form factor it will take in the end. We don't know if this is going to be a 50 million unit market, 200 million unit market or a phone size market. But any which way you look at it, it's a great expansion of our SAM. So that's one way of looking at the personal device market is an expansion of SAM through a different form factor.

Specifically to your question on smartphones. We're also seeing very interesting changes happening to smartphones. If you've seen a couple of the devices that have been launched in China, the idea is the interaction of the user changes from the classic app format to an agent format. And you can ask the agent to do an action, you could ask the agent to download an app or make a reservation, and the agent takes care of it from there.

And so you take this movement towards clause, combine it that -- combine that with agents and I think you put the 2 together and now you have a unique way of interacting with your device. I believe Google IO is happening today, and there's some of those discussions that outlines their vision on how the world will evolve. So I think super exciting time to be in smartphones in some ways from a technology perspective. This is not -- now putting those 2 things together, the personal device trend and the smartphone trend, this is not just something that the 5, 6 smartphone OEMs are working on, right? We have hyperscalers across U.S., across China, across other parts of the world, thinking about how to build this personal AI device.

And so we are very excited about what's coming up over the next several months. I think you're going to see a very large number of devices launched in the second half of the year. And it's -- each device is going to bring in a new kind of use case with AI. And I think it becomes a lot more clear about how different use cases are going to get implemented on devices with AI and then how the split works between the cloud and the device in each of those use cases.

Any more color on your engagement with either hyperscalers or Frontier Labs and helping them develop these devices?

I'd almost say pretty much -- everyone is working with us. We are in a very, very large percentage of those devices. The form factor of these devices are pretty challenging because if you are, say, building a chip for glasses, it needs to be very low power. It needs to have wireless connectivity. It needs to be very small. These are things that Qualcomm does well. And so I think we're very optimistic. We have a strong multiyear road map multi-design engagement with these hyperscalers. And I think just the beginning of a new category of devices, that's going to be super exciting.

From a content opportunity standpoint, in the past, you've talked about sort of this mid-teens content opportunity with some of your Android OEM partners, do you see the move to agentic AI driving a chipset capability that drives an inflection in that content increase?

Yes. So there's different architectures that people are experimenting with, right? There is a concept of having an AI co-processor in a phone that can allow agentic AI experiences that are persistent, that are always on at very, very low power. So if the architecture changes to something like that, that's a very, very significant increase in the content opportunity for us. There is also all these new devices that have different vectors of what it requires in terms of performance. And so there would be an expansion in some ways on a per user basis for us as well.

So a lot of conversations about how best to address this problem, but I think it follows the use cases. And when you think about a persistent AI use case where someone has to -- something has to stay on all the time, it will require a different architecture than what we have today, and that becomes an opportunity for us.

Got it. So maybe let's move away from the long term to the near-term dynamics. You did highlight confidence about getting to trough levels in F 3Q rate of the smartphone market and seeing growth beyond that with your Android OEM partners, and I think you specifically called out the China market or Chinese OEM handset OEMs. What is driving the confidence that there's no further inventory adjustment from their end?

Well, so there's 2 factors that can get -- that impact the revenue in the short term, right? First is just what is happening with the handset market given the memory industry dynamics. Second is the OEM decision to draw down on channel inventory. And so we have seen 2 quarters of drawdown, and we have seen this in history. Typically, the second quarter is the largest portion of the drawdown. We also have data on the channel inventory at this point. And so you -- at some point, you just get to a place where the channel inventory is too low and you cannot keep drawing down on it anymore. And so then our sales would reconcile to the size of the handset market. And that's what's reflected in our confidence. We also are going to have new devices launched in the September quarter, going into the December quarter, and that also helps us from a revenue perspective. So put those factors together, we feel pretty confident that June will be the bottom and we grow from there.

And what about the other consumer devices. So for example, when you look at PCs or consumer IoT or even maybe switching beyond that industrial IoT? Are they dealing with the same dynamic on the memory availability?

I mean the PC industry dynamics are well documented. I think the tablet industry is very similar to handsets as well, a lot of the same components go into those devices like handsets. But I think you go up from here for those devices as well as the OEMs have drained as much of the channel inventory as they could. And then now you reconcile closer to the size of the market.

Okay. Okay. Good. So before we wrap up, maybe a couple of questions, how are you thinking about as you put all these opportunities together, data center, you have autos already going well and scaling, you're doing well in PCs as well relative to your margin targets to keep 30% EBT margin for QCT. How do you feel about that? And whether we, in the long term, are thinking about something higher than that just given the amount of opportunities we are pursuing?

I mean, at this point, obviously, we are not changing our target. We will address it at Investor Day. A lot of our op margin targets are tied to the revenue scale in the business, right? And so when you think about data center and if we significantly scale revenue in data center, that should help us on op margin. That's just kind of a logical conclusion. And that will be the primary dynamic on upside opportunities to our target.

The other thing to think about is as we enter into data center, we are investing incrementally to build our product road map. And so that is -- and it's already reflected largely in our OpEx run rate, but that does have an impact in the short term on our operating margin. But I think as you look forward and the revenue that we're expecting now in the data center area, we feel very confident that the 30% is a reasonable target to have.

Any gross margin implications as you build out?

I mean the way I think about gross margin is that when we enter new industries, our gross margin in those industries reflect what other players in the industry have. Of course, if you're the new player, initially, you have to take a lower gross margin to get in. But in the end, it will reflect the set of markets we are in. As we get into data center, I think one of the most important things for us is to look for opportunities where it's -- their operating margin accretive, independent of the gross margin impact.

Okay. And final one, how are you thinking about capital allocation, including any potential M&A or further M&A that you need to fill in gaps in the portfolio to address the data center opportunity?

I mean, our M&A strategy has been, I think, very consistent, very successful. We have bought companies that have allowed us to accelerate our organic diversification plan. Example is Alphawave now latest one. Before that, it was Nuvia, we bought an ADAS stack company before that. And each one of these were extremely important for us in accelerating our diversification strategy. And we'll probably stick to the strategy we've had for M&A.

Of course, we've looked at the larger transactions. And so far, we've chosen not to pursue those. Never say never, but the focus is not on those things. The focus is on executing on transactions, the strategy that we've outlined.

Okay. No, that is great. I'll wrap it up there. Thank you, everyone, for coming to the conference. Thank you, Akash, for coming.

Thank you. Thank you.

Ladies and gentlemen, thank you for standing by. Welcome to the Qualcomm Second Quarter Fiscal 2026 Earnings Conference Call.

[Operator Instructions]

As a reminder, this conference is being recorded, April 29, 2026. Playback number for today's call is (877) 660-6853. International callers, please dial (201) 612-7415. Playback reservation number is 13759551. I would now like to turn the call over to Brett Simpson, Senior Vice President of Investor Relations. Mr. Simpson, please go ahead.

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 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.

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. Please refer to our SEC filings, including our most recent 10-Q, 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.

Thank you, Brett, and good afternoon, everyone. Thanks for joining us today. In fiscal Q2, we delivered revenues of $10.6 billion and non-GAAP earnings per share of $2.65, with EPS coming in at the high end of our guidance. QCT revenues were $9.1 billion, with another quarter of record automotive revenues as well as growth in IoT. Licensing business revenues were $1.4 billion. Before I share key highlights from the business, I would like to provide some perspective on Qualcomm's current customer design cycles and the opportunities ahead.

We are in a period of profound change, and it may not yet seem obvious to the financial community. The emergence of agentic AI workload with [indiscernible] as an early example are fundamentally changing user experiences across connected edge devices and reshaping our roadmap in every platform we develop.

For agents to work efficiently, they must run continuously in the background, fuel sensor data into context, orchestrate multistep tasks reliably and deliver strong security. Today's installed base of devices were not built for this new capabilities, and it represents a significant upgrade opportunity and expansion of our addressable market in the coming years. Agent orchestration is predominantly CPU bound and Qualcomm has the world's best-performing CPU across smartphones, PCs, auto and soon the data center. Qualcomm's unparalleled connectivity solutions empower efficient NPU for local models will also be key assets to delivering agentic AI experiences.

No other semiconductor company matches the breadth and scale of our technology and product portfolio, which powers devices spanning milliwatts to kilowatts from smart wearables to data centers. As a result, we're seeing a step function increase in strategic customer engagement and is changing how we think about the broad AI opportunity as well as the speed of our diversification efforts.

Beginning with automotive, in Q2, we exceeded $5 billion in annualized revenues for the first time, and we expect to exit fiscal '26 at a run rate above $6 billion. This growth is driven by our fourth generation Snapdragon Digital Chassis platform, which comprises connectivity, telematics, infotainment as well as advanced driver assistance and automated driving. Notably, we have now enabled more than 1 million cars operating ADAS and autonomy on our Snapdragon Ride processors.

By the end of the fiscal year, we will begin commercial shipments of our fifth-generation Snapdragon digital chassis platform. This represents the largest generation-to-generation content increase in Qualcomm's history, delivering 3x higher CPU throughput, a threefold increase in GPU capability and 12x higher NPU performance while supporting in-vehicle agents and processing for Level 3 and Level 4 autonomous driving.

Looking ahead to fiscal '27, we expect continued share gains and increased content, particularly in ADAS. We're pleased with the performance of our automated driving stack with BMW, and we're seeing broad customer engagement from other leading automakers. Our recent announcement with Bosch and Wave are good examples of what's to come as we build on our proven platforms and self-driving stack and scale ADAS. In IoT, agentic workloads and edge AI are driving major product renewal design cycles. Overall, our pipeline is healthy, and there is clear momentum for Qualcomm solutions.

In personal AI, we expect a significant increase in the choice of new smart glasses starting in the second half of the year. We believe these launches, combined with the rapid progress in agentic AI will catalyze an inflection point in customer demand across this category. Our 2026 Snapdragon X2 PC platforms are currently in production and our world-class Orion CPU unlocks powerful always on agentic experiences, making it a true competitive differentiator. Agentic orchestrators such as Open Claw, Claude desktop, Claude Code, OpenAI Codex desktop, Perplexity Computer, Crew AI, Armes agent, Landgraf and Humane 1 running on Snapdragon X2 are early proof points.

A recent PC MAG review of the ASUS ZenBook A16, notes the Qualcomm is now a serious challenger in the PC space and states, "the generational leap from the original Snapdragon X Elite to the X2 series is particularly striking. Qualcomm hasn't just caught up to the industry. In some cases, is now helping to set the pace."

In addition, our [indiscernible] NPU is the world's fastest for laptops delivering up to 85 tops together with our industry-leading CPU, which has the best on-device token generation rate. Snapdragon X2 delivers the full agent experience end-to-end and outperforms Intel's [indiscernible] Lake by nearly 30%.

In physical and industrial AI. Our Dragonwing IQ10 platform has generated substantial customer interest since our launch at CES. This is a significant upgrade compared to IQ9, feature an NPU with up to 700 [indiscernible] of on-device AI performance an 18 core Orion CPU over 20 camera sensors in an integrated safety [indiscernible].

Building on our design win with Figure AI, we announced an exciting multiyear agreement with Nora reinforcing our confidence that we can become a significant player in the broad robotics market. Also during the quarter, we introduced [indiscernible] at Embedded World. This is the second Arduino platform built on Qualcomm silicon and we view it as a world-class prototyping engine for both robotics and industrial AI developers as we expand our ecosystem across key verticals.

[indiscernible] is purpose built to bring AI into the physical world, enabling fully autonomous AI agents in a wide range of Edge AI applications, including voice assistance and vision systems. Several new industrial AI products are also moving from design win to deployment across retail, utilities, oil and gas, agriculture and other verticals. In data center, the Alphawave integration is off to a great start, and we're pursuing multiple opportunities with large hyperscalers, cloud service providers, sovereign AI projects and other global partners. Building on that momentum, we're also entering the custom silicon space beginning our ramp with a leading hyperscaler and we expect initial shipments in the December quarter.

In addition, development of our leading data center CPU and high-performance AI inference accelerators is progressing well. We look forward to sharing more details and customer wins at Investor Day in June. Regarding handsets, I would like to underscore 2 key points: First, the quarter played out as we expected. Sell-through held up in our chip business materially undershipped consumer demand. We believe our China Android revenue is bottoming out in fiscal Q3, and Akash will provide more specifics in his financial update.

Second, we think agentic smartphone will soon begin to influence the premium tier and we expect this [ theme ] will only get stronger into fiscal '27 with examples like the [indiscernible] powered, agentic AI phone from ZTE Nubia. Xiaomi's recent announcement of [indiscernible] agent framework and other agentic [indiscernible] systems now in development across the Android ecosystem, we have a clear line of sight into how the AI upgrade cycle will unfold, and this is going to be an important tailwind for premium demand over time.

Next, I want to highlight a major strategic initiative and long-term growth driver for Qualcomm, 6G, the next generation of wireless. Design for the age of AI will believe 6G will present one of the most significant transitions for the wireless industry. From a connectivity perspective, 6G will enable new classes of mobile and personal devices such as smart glasses with enhanced uplink capabilities to support agentic use cases like see what I see.

Beyond connectivity, 6G will be an AI-native network where AI reasoning, learning and autonomous action are core functions. It is intended to act as distributed intelligent infrastructure that integrates communication in wide area real-time sensing. With these new capabilities, the network becomes critical infrastructure and provides the telecom industry an opportunity to develop completely new business and economic models.

He will make possible new AI-enabled services, ranging from context relevant data data insights and analytics low altitude like aerial, terrestrial and autonomous traffic management, drone detection and tracking and 3D mapping with telemetry to build dynamic digital wins at scale. QUALCOMM's leadership in connectivity, AI processing and high-performance, low-power computing position us to be one of the key architects and beneficiaries of the 6G transition.

In addition to the development of foundational technologies and standards, we're building end-to-end solutions for devices and the network from a genetic modems and compute platforms that power phones, PC, intelligent wearables and cars all the way to the network, including power-efficient next-generation radio units, wide area network sensing platforms and high-performance compute and AI accelerators for the RAN network edge, core and data center.

To help shape and accelerate the 6G road map at MWC, we launched a 60 company coalition spinning carriers, cloud infrastructure, AI native partners and auto OEMs. The engagement and feedback on our 6G vision and plans from our partners, customers and governments across the globe has been very positive and we look forward to working across the industry to deliver on this generational opportunity.

Before I turn the call over to Akash, I want to note that we will provide a broader update at our Investor Day to include our data center plans and our progress in other areas, including advanced robotics, next-generation ADAS, industrial edge AI, personal AI devices in 6G. We hope you can join us as we will be highlighting meaningful new avenues of growth to support our long-term diversification story. I will now turn the call to Akash.

Thank you, Cristiano, and good afternoon, everyone. Let me begin with our results for the second fiscal quarter. We delivered revenues of $10.6 billion and non-GAAP EPS of $2.65, with EPS at the high end of our guidance. QTL revenues of $1.4 billion and EBT margin of 72% came in at the high end of our guidance, driven by favorable mix with global handset units approximately flat on a year-over-year basis. QCT revenues of $9.1 billion and EBT margin of 27% were in line with our expectations. QCT handset revenues of $6 billion came in as anticipated as OEMs remain cautious on handset bills due to the impact of challenging memory industry dynamics.

QCT IoT revenues of $1.7 billion were up 9% on a year-over-year basis, driven by growth across consumer and industrial products. In QCT Automotive, we delivered another record quarter with revenues of $1.3 billion, representing 38% year-over-year growth driven by accelerating demand and increasing content per vehicle due to the transition of new digital cockpit and ADAS launches to our fourth-generation chipsets.

On a combined basis, QCT automotive and IoT revenues grew 20% year-over-year, underscoring the continued diversification of our business, consistent with our long-term revenue targets. We also returned $3.7 billion to stockholders during the quarter, including $2.8 billion in share repurchases and $945 million in dividends, reflecting acceleration of our capital return program.

Lastly, we released a previously recorded tax valuation allowance, resulting in a $5.7 million noncash GAAP tax benefit in the second fiscal quarter. This benefit is excluded from non-GAAP results. This reversal reflects new guidance on corporate alternative minimum tax issued in February by Treasury and IRS permitting taxpayers to deduct previously capitalized domestic R&D expenses.

Before turning to guidance, I'd like to provide an update on the continued impact of memory industry dynamics on our business. Last quarter, we highlighted that the increasing demand for memory and AI data centers was driving uncertainty in memory supply and price increases to handset OEMs. And as a result, the handset OEMs, particularly in China, were taking a cautious approach by reducing build plans and drawing down channel inventory. These dynamics played out as expected in the second fiscal quarter and are also reflected in our third quarter guidance. As a result, in both quarters, our China QCT Android shipments are meaningfully below the scale of end consumer handset demand. We now estimate that QCT handset revenues from Chinese customers will reach a bottom in the third quarter and return to sequential growth in the following quarter.

Now turning to guidance. In the third fiscal quarter, we are forecasting revenues of $9.2 billion to $10 billion and non-GAAP EPS of $2.10 to $2.30. In QTL, we estimate revenues of $1.15 billion to $1.35 billion and EBT margins of 67% to 71% with sequential decline primarily due to the operating assumption of weaker low-tier handset units. In QCT, we expect revenues of $7.9 billion to $8.5 billion and EBT margins of 25% to 27%. We are forecasting QCT handset revenues to be approximately $4.9 billion as a result of the impact of the industry-wide memory dynamics I just outlined.

We anticipate QCT IoT revenues to grow by high single digits versus the year ago period, driven by industrial and consumer products. In QCT Automotive, following another record quarter, we expect year-over-year revenue growth to further accelerate to approximately 50% in the third fiscal quarter. Lastly, we forecast non-GAAP operating expenses to be approximately $2.6 billion in the quarter.

In closing, while our near-term revenues are impacted by memory industry cyclical dynamics, we're confident in the underlying fundamentals around Snapdragon product leadership and content growth opportunities, including the adoption of agentic AI technologies. We continue to execute on our secular growth opportunities in automotive and IoT and remain confident in achieving our long-term revenue targets. In addition, we are very excited about the progress in our data center products and customer traction. We now expect initial shipments for our custom silicon engagement at a leading hyperscaler later this calendar year.

We look forward to providing an update on our growth initiatives, including opportunities in data center and physical AI at our Investor Day on June 24. This concludes our prepared remarks. Back to you, Brett.

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

[Operator Instructions]

Our first question comes from the line of Joshua Buchalter with TD Cowen.

Obviously, I'm not sure you're going to be able to front-run the AI day you plan to host in June. But any details you're able to share or context on what the custom silicon engagement, what the scope is, what the magnitude is? Is this a CPU? Is it an accelerator? Is it a networking chip? Just any help you can give us beyond the press release and prepared remarks, I think would be helpful as that's where investors certainly want to dig in today.

Josh, this is Cristiano. Thank for the question. Look, I can't provide a lot of details, as you said, we don't want to front run, I think, June 24. But here's a couple of things I can tell you, which is alongside what we said in the script. I think we have spent the time, I think, building assets and we've been building our CPU. We have accelerator. We have a different solution for memory in the accelerator. We have added a lot of capabilities for custom ASIC with the acquisition of Alphawave and Connectivity, we have been pursuing customer ASIC. We talk about have an engagement with a number of companies and pleased with the engagement several quarters ago. And I think given the capabilities that we're developing and what's happening in the market, that's accelerating. So we're very excited. The only thing I can tell, it is a large hyperscaler and we're really thinking about a multi-generation engagement. But I think that's what we can say at this point.

Okay. I guess we'll stay tuned. For my follow-up, can you maybe walk through why you're confident that -- I assume it's fiscal third quarter that you were referring to with the third quarter, but why you're confident fiscal third quarter can be the bottom for Android sales -- Android QCT sales into China. I mean that's typically -- September quarter is usually a typically down seasonal quarter. And just given how low visibility is right now overall in the handset market, I'd be curious just what inputs you're seeing that gives you the confidence it's going to bottom in the June quarter.

Sure, Josh. It's Akash. So if you think about the impact to from Chinese handset OEMs as a result of the memory dynamics. It's really 2 parts. The first part is the scale of the handset market. And there, we have seen some small decline in it, especially in the mid, low tiers. But by far, the larger impact have been the OEMs making a decision to slow down their bills and draw down on channel inventory. So both of these factors have been in our March quarter results and they're also represented in our June quarter guidance. And so what we end up doing in both quarters is really significantly under-shipping the end consumer demand for handsets as a result of the channel inventory drawdown factor.

So as we look forward, we feel confident that the third quarter is now the bottom. And so as we go forward, the revenue is going to be much closer to the scale of the handset business versus the inventory drawdown factor continuing into our forecast.

And Josh, this is Cristiano. I just want to add one thing because -- there's another way to look into this. As you know, because of our licensing business, we do have visibility of what happens in the market. So we know [indiscernible] true. We know how the [indiscernible] market is behaving even with increased price on the handsets. So it gave us a real good idea on activations and customer demand versus what we're shipping. So that dynamic outlined by Akash, is kind of very clear to us that Q3 becomes the bottom.

Our next question comes from the line of Samik Chatterjee with JPMorgan.

Cristiano, maybe just going back to the data center opportunity and just trying to think about if you can sort of help us think about the competitive landscape here. I mean you've had, which is the IP provider now announced they want to vertically integrate and make chips. You had NVIDIA announce that they are going to focus on the [ inferencing ] market as well. How are you thinking about the competitive dynamics where they are related to maybe 3 months ago or 6 months ago that you're now sort of going and trying to deliver these wins? And I have a quick follow-up after that.

Great question. Look, I'll give our perspective. And I think we have now, I think, more clarity than we ever have about where kind of we are in the AI space. So a little bit of maybe at a very high level, right? In the beginning, it was all about training. It was all about creation of AI, a lot of GPU, very GPU-centric deployment. Infra started gain scale and then the conversation changed to -- I'm going to use my GPU from training on the cluster that I build and when I'm not training, I'm going to use that for inference.

As inference starts to gain scale, we started to see dedicated solutions. The data center becomes more disaggregated. You have separate computing solution, some for compute bounds, some from memory bound. And now we're entering the, I will say, the next phase, which how AI is really going from infant generating tokens how do you generate demand for tokens, which all those agentic experience and those orchestrators, they run into a lot of the devices.

So when you think at that landscape and you look at our IP, in the places that we could be very differentiated, I will start by our CPU. I think when you think about agents, CPU becomes very important. And I will argue, we were one of the companies that have a pretty good CPU asset. We've proven that CPU performance with leading performance on the markets that we are right now, such as PC, smartphone and Auto.

And we have built and we'll provide details on Investor Day a dedicated CPU for agentic experiences in the data center. We're going to show the metrics, we're going to show how it performs. People will be able to compare. As you know, we have an architecture license, and we have a very, very high-performance CPU. So that's one of the assets.

The other asset is how you think about the scale of a semiconductor company like Qualcomm. We're not small. And the ability to combine the IP with the ability to do custom silicon, make sure that, that yields make sure it's delivered with quality and combine a lot of the connectivity IP, which I believe Alphawave because it was a licensing IP company has a leading IP, the more you license, the better your IP becomes.

The number three is how we think about the accelerator. You're going to need high compute density, low TCO. And we think that we have something unique, which is focused on a cluster that is disaggregating very specific function especially like [indiscernible].

I think the activity you've seen with companies like Grok and [indiscernible] just prove that you have opportunity for a dedicated inference accelerator. And the last point is, I would not discount the position that we have on the edge. If you actually track what's happening with Open Claw in all of the different desktop and co-work solutions, you rely a lot on a high-performance CPU device, which is also causing an upgrade cycle for us.

So we look at this whole landscape, and that's how we feel so good about the agentic transition of AI, what it means to Qualcomm. And hopefully, on June 24, we'll show the details on the road map and an investor will be able to see where we stand, and please reserve a seat.

Yes. No, please look forward to talking about that more at the Investor Day. Maybe for my follow-up, just going back to the handset business. Can you just remind us of the multiyear agreement framework that you have with your primary premium smartphone customer, Samsung. You did have some sort of changes in the market -- in the share with them this year. I think there are some more indications for the step-down in share and more use of the in-house SoC sort of next year? Or can you just remind us sort of how you're thinking about that engagement long term? And what does the multiyear agreement sort of capture at this point?

No, absolutely. I love answering the question. So this is a very, very stable, I think, a relationship with Qualcomm. I want to remind you all that we have reset the framework of this relationship. Historically, we always had a business with [indiscernible] that was in the 50% share between us and their own in-house silicon. That has changed to greater than 70%, as you know, and that has been the framework. And sometimes we get more than that, but we plan our business in greater than 70% share, which is exactly what we have said. You should expect that that is the framework of this year, and that is also the framework for next year. I would say that, that's probably one of the most stable relationship that we have, and we have visibility of what that entails. And we feel good about the position of Snapdragon. And I'll argue, I think given what's happened with agents, we have an opportunity to actually have a positive bias on that share.

Our next question is from the line of Chris Caso with Wolfe Research.

I guess the first question is just returning to the data center briefly. And to clarify what you mentioned in terms of the hyperscale engagement for the December quarter. Is that an engagement for an accelerator or a CPU? I understand your targeting both, it sounds like, but what's the particular engagement for December?

This particular engagement, which we're going to have shipments in December is a custom product. We're working with a hyperscaler.

Okay. So no other specificity past that okay. Just with regard to QTL, and it looks like that's modestly down and likely due to what you've been talking about with regard to what's going on in the handset market. What's the right way to think about the QTL business as we go forward into the second half of the year? Do you think that we kind of maintain these levels and adjust for seasonality as you get to the end of the year? Or do you expect the impact on QTL to be more significant as you go in the second half?

Yes, Chris, it's Akash. So as you saw in our results for the second quarter, year-over-year handset units were flat for the global units. And this was really kind of impacting our guidance as well, our actuals as well. As we look at third quarter, what we're guiding is some weakness in the mid, low tiers in the market. I mean this is obviously something that we are projecting forward, and we're going to track closely. But what we're seeing is the premium high tier of the market is continuing to hold and weakness in the lower tiers. And that's what's reflected in our guidance. That's a reasonable way of thinking about the market going forward as well.

The next question is from the line of Stacy Rasgon with Bernstein Research.

So if the China handsets bottom in Q3 and then they grow in Q4, that September quarter, September quarter, I think, is when we're supposed to get the Apple step down, which may be an offset. So I guess just how are you thinking about handset seasonality in the September quarter, given those kind of competing dynamics? How should we be thinking about that?

Yes. Stacy, it's Akash. You're right. I think in terms of kind of handset revenues for QCT from Chinese OEMs, we do expect that the June quarter is the bottom, and you will see sequential growth from there. And Apple, you're right as well that typically, it's a growth quarter for Apple product revenue, and we do not see that at this point given the share assumption change. So those are the 2 factors you would use to forecast September quarter.

I mean do you think handsets growing sequentially in September or not given those two factors?

Stacy, we are not specifically guiding it at that point -- at this point, but I think those 2 factors would be the input into the forecast.

Okay. And for my follow-up, you talked about like agentic devices and agentic smartphones like driving a shift and things, I guess, into '27. Do you think the memory issues are going to be done by -- like how much memory does an agentic smartphone need? And is that something that's going to continue to be a headwind do you think on this as we go into 2027? How do we think about the broader dynamics around memory as we go forward?

Thank you for the question, Stacy. Look, it's a little early to talk about '27. I think 1 thing to see is I think the pace of change of AI is getting scale. When I think about the framework that I talked about it before, which you go from inference to now, you know how you generate demand for tokens with a lot of agents. And I think what we see is 2 things. One is the devices are changing the requirements in the design and the players. We see interesting associations now starting to form between smartphones and AI companies. We're starting to see some very interesting dynamics there which is changing the nature of designs. We see designs moving towards products they have much more capable CPU to run those type of products. And there's a lot of noise in the memory environment right now. I wish I could make a prediction on '27 is a little early, but we see a combination of some of the same companies that want a lot of demand for data centers and also getting involved with some of the devices at the edge as well. And we see new memory players coming and building capacity. So we're going to have to monitor the situation and see what happens in '27.

The next question is from the line of Timothy Arcuri with UBS.

Thanks a lot. I wanted to ask also about this custom that is going to ship in the fourth quarter of this year. I know you brought a team in from Alphawave. It seems a little fast to get something to market that includes your IP by the end of this year, given cycle time. So I think they had some chiplet stuff and maybe some custom DSP stuff. Is that the sort of thing you're talking about? Or is this truly something that includes a big portion of your IP that you've been able to turn around since the deal closed?

Look, I think 2 answers. So we have -- I'm pretty positive for the past several quarters, we've been talking about engaging with customers in the data center. So I think when we start engaging and talking about some of the Qualcomm capabilities, it's probably, I think, even before the acquisition of Alphawave. I think the acquisition of Alphawave increase our execution capabilities in the portfolio of IP. I think you should expect that we're going to have a longer multi-generation agreement with those companies that brings a lot of Qualcomm capabilities to the table. I wish I could provide more details, but like I said, I don't want to front run what we're going to do on June 24. But I think we will provide a detail of everything we're doing. Our customers win in our roadmap and our IP.

And then I guess just as a follow-up, is the assumption still the same that like around your share in Apple. I know there are some signs that there's going to be a little more aggressive displacement. Is the assumption still that it's going to be 20% for the new launch?

Yes. No change, Tim, to our assumption there. We've set of the 20% of the -- 20% share of the phones that will launch in fall this year and no product relationship beyond that. And this is -- this assumption has been consistent for the last couple of years. In terms of Apple product revenue for fiscal '27, we've seen sell-side models in the range of a little over $2 billion in terms of QCT product revenue in the year, and we think that's a reasonable place to model the business.

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

You alluded to the weakness being more in the medium tier and the premium tier as being stronger. Is that something you can see where you're sort of taking limited memory allocation and that sort of drives just to sort of limit that puts it in the heart here. Just what are you seeing in terms of what that's doing to your mix going forward?

Yes. I think the actions from the OEMs are obviously very logical. If you had to choose between which devices you put your memory allocation to, you would pick the premium and the high tier, that's where the profitability sits, and that's what you're seeing happen in the market.

Okay. And you talked about 6G in 2029. I mean is that -- what does that time frame represent? Is that sort of introduction of technology? Is there a shipments then? Just anything you can tell us about when 6G starts to become relevant?

Yes. And look, thank you for the question. The reason I brought it up is because 6G is going to feel, I think, very different than the other Gs for Qualcomm. I also believe that 6G creates some very interesting, I think sovereign AI and data center opportunities, I think, for Qualcomm as well. You should be thinking about our time line, and we've been consistent with it. We will have prototype base, I think, demonstrations in 2028. Likely, we're going to have first silicon in '28, and we want early launches in 2029, and then we expect that to get scale by 2030.

Our next question is from the line of Ross Seymore with Deutsche Bank.

I want to go back to the handset side. And if you could just level set us to whether it's the fiscal second quarter or fiscal third quarter, what percentage of handsets is China. And you mentioned that a lot of the dynamics is how far you're under-shipping versus true demand, are you believing that true demand, whether it's China or elsewhere, is truly weakening still? Or is that side of the equation stabilizing despite the memory fairs?

Yes, Ross, when you think about the total handset market, and this is more of a QTL comment, right, that's where we are seeing that the -- there's a slight decline in mid-low tiers, but the overall scale of the handset market has not changed much, at least in the March quarter, and we're going to obviously closely monitor that going forward.

In terms of QCT shipments to Chinese customers, it's a factor, as I said earlier, of 2 things. It's not just the scale of the handset market, but the OEM decision to drawdown on channel inventory. And so my comments earlier were about the drawdown of channel inventory will end soon, and that's us calling the bottom on the quarter. And then really, our shipments will reconcile to the size of the handset market.

Okay. And I guess for my follow-up question, shifting gears to the automotive side of things. You mentioned about the ADAS side starting to ramp and growing 50% this year, so -- or at least in the next quarter, so doing very, very well. As you go from more of a cockpit business to the ADAS mix increasing, how does that change the revenue trajectory and perhaps the gross margin trajectory in your automotive business?

Yes. So this is Cristiano. I think what you see is it accelerates revenue dramatically because it's a lot more silicon content. If you -- and that is true actually on both sides. I think what you saw is when we went from generation 3 to generation 4 in digital cockpit. We -- I think we keep mentioning the car, it's really becoming a computing surface. We saw a step function increase in the capability [ silicon content ]. You expect another 1 when we go from fourth generation to fifth generation. And as we add processors and you started to see more and more development of L2++ in direction towards Level 3, you're starting to see the amount of computing power going up. So for us, it's basically a significant revenue accelerator within automotive.

And specifically on your question on gross margin, I'd highlight maybe 2 additional factors to what Cristiano said. I think we have the we're transitioning from a chip sale to a [indiscernible] sale. And so as we go to a module, it increases the revenue opportunity for us as well. And then in addition, we have software opportunity on top of the the chipset, which also helps our margin profile. So net debt, we still model the business in line with our corporate average, but it really is a business that has several vectors of growth as both of us outlined.

Our last question is from the line of Vivek Arya with Bank of America Securities.

For the first one, Akash, you mentioned Apple product sales, I think, $2 billion plus for fiscal '27. What about the royalty contribution? How does that evolve as you approach the date for kind of renegotiation negotiating that business?

Yes. So pending the renegotiation, the royalty, we don't expect it to change, right? It should be in the same scale that it's at, and it's an independent business separate from the chip business.

And for my follow-up, Cristiano, back to the hyperscaler discussion, I realize you'll give more details at Analyst Day. But was -- is Qualcomm's intention to approach this from an ASIC perspective, I thought you plan to enter the data center from a merchant perspective. But are you saying that now the goal is to approach it from an ASIC perspective? And if that is the case, what impact does it have on margins? Like are you really going to compete head on with the other ASIC suppliers that are out there. So this is going to be more kind of a one-on-one right type approach to the market as opposed to approaching the market in a broader merchant. So just what is kind of the broader strategy, go-to-market strategy that Qualcomm has in this business?

Very good -- great question. I think the answer is all of the above. Look, we -- first of all, as a new entrant, I think we we're very flexible. But we also look at the reality of what's happening in the hyperscalers. You can see that the majority of the revenue for semiconductor companies is heavily concentrated in a few number of very large companies. And those companies have now had indicated very clearly, they have different -- as the data center gets disaggregated, you have different approach to compute to connectivity. And you should assume that Qualcomm will play on merchant, on custom and it's going to be a combination of how we're going to configure our IP and different IP blocks for different solutions is going to be a bespoke business.

And specifically on your question on this custom engagement we talked about, we do expect that to be accretive at the operating margin level.

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

I think the obvious thing I want to say is please ask everyone to attend our June 24 [indiscernible] Investor Day. We intend at the Investor Day to really highlight not only, I think, everything that is happening with the new Qualcomm, but also I think the details of the products and technology we have been developing for the data center space, provide an update in how physical AI is transforming our business and provide the clarity that we have today, how really agents and agentic experience exactly has a broad implication in our entire business. And I'm looking forward to speak to all of you, and I'd like to our partners, our employees for a great quarter as we continue to transform Qualcomm. Thank you very much.

Ladies and gentlemen, this concludes today's conference call. You may now disconnect.

Ladies and gentlemen, thank you for standing by. Welcome to the Qualcomm First Quarter Fiscal 2026 Earnings Conference Call. [Operator Instructions] As a reminder, this conference is being recorded, February 4, 2026. The playback number for today's call is (877) 660-6853. International callers, please dial (201) 612-7415. The playback reservation number is 13758127. I would now like to turn the call over to Mauricio Lopez-Hodoyan, Vice President of Investor Relations. Mr. Lopez-Hodoyan, please go ahead.

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 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. 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. 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 the comments from Qualcomm's President and Chief Executive Officer, 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 DRAM.

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. It's important to note that during the quarter, ByteDance launched their 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 micropower WiFi 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 7 of the 9 largest cloud companies globally and more than 40 personal AI devices are in production or development.

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 3.5x faster multi-core performance compared to the competition in previous generations.

Our Hexagon NPU provides up to 5.7x and 3.4x 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.

It features our 18 core third-generation Oryon CPU and 80 TOPS Hexagon NPU for AI workloads in an Adreno GPU, delivering up to a 2.3x 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 ultralight 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. We would also serve as the 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 Motor, NIO and Chery, bringing our total design wins 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.

With the recent acquisition of Augentix, we augmented our Dragonwing vision portfolio in Qualcomm Insight 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 systems.

Additionally, the launch of our new Dragonwing IQ-X 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. 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.

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 Micro Systems, 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 road map at our next investor event. 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.

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. 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.

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 billion to $11 billion and non-GAAP EPS of $2.45 to $2.65. In QTL, we estimate revenues of $1.2 billion to $1.4 billion and EBT margins of 68% to 72%, reflecting normal sequential trend. In QCT, we expect revenues of $8.8 billion 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 percentage 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. 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 first quarter 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 remains strong.

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. 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, 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.

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

[Operator Instructions] First question comes from the line of Joshua Buchalter with TD Cowen.

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 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?

Thanks, Josh, 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. If we look, 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 guide to Q2, is 100% sized by the availability of memory.

So as we all know, as all the indications show, the DRAM availability for consumer electronics, especially handsets, is actually down based on year-over-year because of the prioritization of HBM for data centers. I think the market is going to be sized by that. And I think we saw the reaction right away from our customers who are adjusting. I think they build production through the memory they have available. And I don't know, Akash, you'd like to add some more color to that?

No, I think that covers it.

Okay. 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. Is this some of the ADAS wins that you've talked about previously layering in? And maybe you could speak to both the drivers and the durability of the high watermark that you're guiding to.

No, thank you very much. As we have said consistently, I think the pipeline we have built in automotive, it has continued to translate into revenue, especially as new cars ramp and new cars launches. And I think that's why we continue to see record revenues in automotive. We don't move with the industry, we move primarily with our share gains. I think we're very excited about the trajectory. I will 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 '29, it's all going in the right direction. And we continue to have more design wins.

I think our position in the industry becomes stronger, I think, with the platform. We're seeing traction with Flex, which both the ability to bring ADAS and 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.

The next question is from the line of Samik Chatterjee with JPMorgan.

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 a big focus on that side of the sort of bill of materials as well? And I have a follow-up.

Thank you so much, Samik. So let me start with the data center. I think everything is going in the way we have planned. I think the only public, I think, customer announced today is HUMAIN. That is progressing well. We have started shipping. We have been working with them in ISV on third-party workloads. We're encouraged about the progress our teams are doing on our road map.

We continue to get very positive feedback, I think, from broad engagements you would imagine that a company our size will be engaged in conversations with some of the largest hyperscalers 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. 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 when you think about disaggregated data center, you have specialized hardware versus just a GPU that would do everything. 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 2 fronts. It's CPU. We added a RISC-V CPU now to our road map 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 road map in our investor event. But so far, everything is on track. We still restate that we expect '27 to start showing in revenues. And we feel good. We're just going to keep executing that.

And I don't know, Akash, you want to add anything before I go to memories.

No, I think the only thing I'll add on data center is, we've mentioned previously that we expect this to be a multibillion revenue opportunity in a couple of years. And so everything that Cristiano outlined kind of just reiterates that opportunity for us.

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. 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 the handsets get hit the most given its scale and its cycle time. So we expect that the impact is going to 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 and the BOM.

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 plays out. But the most important thing is 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 stand by what I said. I think the whole fiscal year mobile handset size will be determined by memory availability, and we're just going to monitor this on a quarter as the phones get repriced, tiers kind of shift towards high-end premium, and we'll see what happen in the marketplace.

Got it. If I just can quickly follow up on that, Cristiano. 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 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? And that's it for me.

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 result was very good. The consumer demand was very good. And what we have seen, which has been going on like for years now, the premium tier continues to expand. In a market that has been relatively flat, which is the handset market, we have seen growth in the mix with the premium tier 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 in 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 going to 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.

Next question comes from the line of Ross Seymore with Deutsche Bank.

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? And do you think normal seasonality is likely to occur after the step-down in the March quarter? Or is that too difficult to tell?

Yes. 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 adjust it down for the tiers that they play in, so our exposure would be less than what you would just see based on the units.

And the seasonality side?

The seasonality on the handset side. I think you should think of the seasonality in the demand from the consumers is going to be consistent with what we've seen in the past. I think consumers 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.

And 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 seeing in the memory side? Or are you guys kind of investing right through this?

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.

The next question is from the line of Stacy Rasgon with Bernstein Research.

For the first one, I want to ask that seasonality question a different way. I think it was really getting at June. Like usually just seasonally, I know your revenues step down in June. So you're guiding $6 billion 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 -- what can be supplied as 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 constrained, is like a good number to have given the current supply that is out there until things normalize? Like just how do we think about June in the context of March, given the March decline in the context of the memory situation?

Yes. So Stacy, 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 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 have seen in other years.

Got it. 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. 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 typically see for March? [indiscernible] and below? I mean, how do you think about that?

Yes, 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. We saw 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 going to have to see how it plays out as we go through the next several months.

Got it. So maybe a touch below, though similar to what we saw in March seems reasonable given what we know right now?

I think that's the framework that I outlined is the way we are thinking about it.

The next question is from the line of Timothy Arcuri with UBS.

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 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. Is there something going on to make the drop-through more than 100% on the op line for March?

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've provided.

I just want to 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 sequentially on the quarter. 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 launch in Chinese New Year. So you actually normally see some of the Chinese go down on a sequential basis, because they just build for the premium launches.

Okay. 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 a risk -- we talked about this before, but is there a risk and precedent for the big customer if you don't sign a license with Huawei?

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 2 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. And so that's underway, and we don't have any update on that.

The next question is from the line of C.J. Muse with Cantor Fitzgerald.

I guess curious, obviously, the DRAM makers have been talking about satisfying only 50% to 70% of the demand, and they're highlighting shortages into 2028. So curious how you're planning for a situation where this could be sustained. Are your Chinese customers looking to design in CXMT? And 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 your wafer commits to TSM. I guess how are you managing all of that given all this great uncertainty?

Look, very 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 clarification. For handsets, we don't buy memory. I think -- I know there is 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 going to see we have flexibility about working with new versions of memory as well as older version of memory on our platform. So 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 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 a 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.

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 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 is one that is probably getting the blunt of the impact in our business, is going to be defined by the availability of DRAM.

And C.J., 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.

And I guess as a follow-up, curious, if we do see a mix shift higher Snapdragon, but unit volumes lower, how should we think about that impacting your QCT EBT margins?

Yes. 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.

The next question is from the line of Ben Reitzes with Melius Research.

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 -- 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 with one vendor getting disproportionately this kind of unit growth and obviously, the kind of allocation they get?

Look, it's hard to make a prediction, but I'll 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's probably a fact that OEMs with larger scale will have probably better ability to 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 broadly in the industry is not a demand issue, it's all supply constraint.

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 I know you got asked about whether there'll be memory available for that. 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. What's happened since Groq with NVIDIA? And how are discussions going beyond HUMAIN, and just that overall trend and your ability to play?

Look, 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 our track record on technology execution has been very successful. And I think we also understand some of the dynamics on compute and memory, I think, given the breadth of our IP road map. We're probably one of the few companies that go from sub-5 watts to now all the way to 500 watts.

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, and we're going to 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, memory density.

And 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 court to execute, have hardware available and kind of show the results and/or just kind of continue doing that.

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

The only thing I want to add, 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 of 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 '29. 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. And we believe that we are creating really a completely different company with relevance in many, many markets, and what we'll just continue to execute, I think, on our road map. 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.

Ladies and gentlemen, this concludes today's conference call. You may now disconnect.

Okay. We're going to get started. Good afternoon. I'm Tim Arcuri. I'm the semiconductor and semi equipment analyst here at UBS. We're very pleased to have Qualcomm, we're very pleased to have Cristiano Amon from Qualcomm, who's the President and the CEO. So thank you, Cristiano.

Thank you, Tim. Good talking to you.

Great. So let's start talking about the business that everyone wants to know about, which is your data center business.

I'm surprised.

Yes. So you're attacking the low-power inference market. You announced the AI 200 and AI 250. You still haven't told us very much about the specs and the road map. What can you say?

Okay. Look, maybe let me start with the very top and I'll walk to some of the details. I think we look at the market, we look at what's happening with AI. And I think I'm assuming is the hope of everybody in the room that eventually, you go from training to very large-scale inference and you start doing inference, you're putting AI to work and you have a lot of customers.

And I think what's happening is we see this as a one of the entry point for us, as AI is going to go into inference, you're going to be able to build large inference-focused clusters, the data center is going to go to the next phase of this aggregation. You're going to have dedicated hardware tooling inference. And we think that creates an opportunity, I think, for us to enter. We expect there's going to be competition, everybody is playing to win.

And at some point, I think tokens per dollar will matter, tokens per watt will matter. And we have an opportunity to come up with something that is very competitive for inference. The second, I think data point, I think to drive the entry is how we see AI evolving.

Eventually, it's been kind of the as you put this into work and you started to see the combination of mix of experts and distillation, chain of reasoning. You see that the AI is really becoming mature to the point that it's not going to be farfetched that you're going to have small appliances that it could be doing multiple hundreds of billions of parameters of model.

If anything, you look at NVIDIA DGX that's kind of what we do, and that trend will continue. And I think you're going to end up in a situation that architectures are going to be available for inference in the data center is going to be competing, I think, for the efficient architecture. With those 2 things in mind, we look into some of the assets that we can leverage in the company.

And we have 2 assets, and that's what we'll be focused on. 1 is we're doing a CPU, which is the head node of an inference cluster. And the other one, which is the largest opportunity is leveraging on our NPU architecture, which we believe has very high computer density, a completely different approach to how we think about the compute and memory, I think, together and thinking about developing a very efficient inference solution.

The good thing about Qualcomm, we don't have to get a lot. I think we only need to get a small portion of this very large tenant is very significant for the company. We also like the fact that a lot of the market is concentrated. You have a few customers that buy at scale. The different thing is the market welcomes competition. Qualcomm is not a small semiconductor company. We can do things at scale. I think we have like a proven track record of executing in a number of different industry at scale.

And I think the market has been very intrigued about what we're doing. We're doing something different. We're thinking about the next disaggregation of the data center. And we're excited about it. We will unveil details of the road map, both the AI 200, the AI 250, what we're going to be doing after the AI 250. We announced it a little bit prematurely because we had a customer who had to announce it.

I think the first customer that we have is 200 megawatts of data center with the Saudi national AI company. We're very pleased with the progress they made with the license and everything that's moving to execution. We are in conversations, as you would imagine, with all the hyperscalers. And we're very pleased, I think, with the feedback we're getting so far.

Great. Is it fair to characterize so that 200 seems more evolutionary from what you currently have and the 250 seems more bottom-up purpose built, and that seems more ramping in [ 2020 ].

100% correct.

Is that fair? And then I think you're trying to attack the decode portion of inference workloads. When I hear that, it sounds a lot like what NVIDIA is doing with CPX, Rubin CPX. Is there really a window of opportunity for you? Or is it tide just rising so fast that you think you can get some of that market as well?

Look, I think -- like I said, -- the interesting thing about the inference clusters is you ended this aggregation. I think as other, I think what's happened with the decode. I think when -- some of the discussions we have has been fascinating to see how much more performance that you get on how much you manage cooling or even like a few percentage increase in performance, how it changes, I think the total TCO.

So I think there's definitely an opportunity for Qualcomm. It is driven by all those things. This is moving very fast. There is going to be competition. People need more compute that they can deploy. I think the demand is real. So any improvement it makes a lot of sense.

And I think we have a good technology. I think just if you look at our track record, all of the new things that Qualcomm have done, even things that were new to scale, our IP is a leading IP. So why would you not bet the Qualcomm can do a competitive solution? I think that's kind of the feedback we're getting.

Great. And relative to your financial model, this seems like it could be pretty significantly incremental actually?

Absolutely.

Your $22 billion for fiscal '29, that's non-handset. I mean this is a huge market. So you don't have to get a very big share of it to be pretty incremental to your financial models?

I agree. It's 100% incremental, not model in our $22 billion of no handset. Those are for the other markets we've been executing right now. And we did say in the last earnings call, I think we feel confident to -- we historically have been very conservative with some of those assumptions. We feel comfortable pulling in by 1 year, where we originally set.

And how does the Alphawave deal fit into the strategy here? Does it intersect the road map for 250, which ramps in 2028?

Yes. The Alphawave provides, I think, important, I think, connectivity IP that allow us to really scale the solution. So -- and they also have a team that has been doing custom SoCs for the data center. So I think it's both provide the scale, connectivity IP as well as additional resources to execute on the opportunities.

Let's just talk about the general -- the adjacencies in general. These have been growing very, very nicely. They're up to 30% of revenue. Obviously, more if we exclude Apple, which of these efforts are you most excited about between auto, IoT, there's a lot of submarkets within IoT. But auto, IoT and PC, which of these are your most...

Look, we -- auto has been a great success story for the company. We continue to be bullish on it. I think when we look at the opportunities we have on the horizon, we see a lot of opportunities to even expand our design win pipeline, which is very robust. I think so far, you're seeing this pipeline converted into revenue. And I think we're tracking very well, but we see opportunities to expand the design win pipeline.

And that's happening because the same thing that we see on personal AI devices, which I'll talk to you in a second, we're going to see that happening in the digital cockpit of the car, a lot of GenAI and Gentech experience coming to the digital cockpit of the car that's going to increase the value and the silicon opportunity there. The other thing that we see is we're super pleased with the stack that we launched with BMW.

This is an OEM-friendly stack 3.5 years into making -- we have a lot of inbound for OEMs really interested now that they'll be able to see the KPIs, the cars are in the road. And I think that could create expansion opportunity for ADAS stack. And we like the ongoing transition to software-defined vehicles. I think the architecture of the car is going more towards center computing.

So Auto will continue to see growth of the design win pipeline, and we're very pleased. I think the Snapdragon digital chassis became like an industry platform. The second one is the one that I mentioned briefly personal AI devices. So I think the best way to describe this, and I -- this is a topic that we spend a lot of time thinking about this, the evolution of mobile.

Phones will continue to stay on this trajectory that they are right now. They're going to require more and more AI compute. Phones are not going anywhere. Phones are like laptops. Laptops continue even after we all bought smartphones, but phones will do a lot more processing, but there's a new class of devices that are going to drive agentic experience are going to be personal advice.

Glasses is the 1 that is the most promising, but there are others. I think you see all of those companies that have models designing different types of devices. The good thing we're designing all of them. And we think that's going to drive new agentic experience that could be a significant opportunity. And it can grow dramatically. We talk about $2 billion in our $22 billion projection for that we said in the last 2024 Investor Day, we said that $2 billion will be XR devices.

We're well ahead of it when you think about what's happening with personal devices and glasses. I'm very bullish on that opportunity. And I think this is going to play out like this. When the phone is at the center of our digital life right now. So all of the wearable devices, they have been around the phone. They extend the functionality of the phone, like a watch get the phone sensor data, give you back notifications. They actually, the first project we did with Meta was to -- for you to do Instagram stories, extend the functionality camera.

It doesn't matter. Now the agent is at the center. And those devices, they get better every month. Every month, they are new use cases. I think we see customers for example, even completely new markets, we have a customer in India, they are doing glasses. They integrate it with the national payment system. You can look at the QR code and you can pay a bill. And I think that's going to be -- those new agent experience are going to develop this category can be very, very big, and it's going to change a lot the relationship that we're going to see happening in the mobile industry.

The phone will continue to do phone things. The phone will do more processing for those devices. But then those devices are going to be developing around the model. Once you connect to a model, it doesn't matter how you connect to the model. The model will understand the human intentions, and to take action. And I think that's going to drive a combination of connectivity and processing of those new devices and it may change the dynamic of the industry.

And here, I'm going to make -- provide an opinion. Humans already decided what they're going to wear. Humans will wear bracelets, watches, jewelry pendants, glasses and if the model understand what we see, what we hear, what we say, it's closer to our senses. That's why glass is very natural. You turn your head, that's the camera is seeing what you're seeing, close to your mouth, close to your ears. And this is going to be a combination of technology and fashion, different countries, different regions, different brands that is more conducive to a horizontal platform than to a vertical platform.

So I think we're very optimistic about what Google is doing with Gemini, what Meta is doing and what OpenAI is doing. And this could be an interesting new category. So that's the second one, and I'm excited about it. And then the third one, I think we recently closed the acquisition of Arduino. We've been saying that we've been building a platform for industrial.

I think that's the ability to bring high-performance compute and AI to industrial replacing microcontrollers. We were building a development platform, Arduino and Edge Impulse are big drivers for that and just build more confidence on our $22 billion revenue.

And so in that example, the model started on the phone. In your world, the models on your phone?

No. See, I know that there's a lot of questions like this. And before allow me to be, I think, very precise. Before we used to get a lot of questions about this, is a cloud or is edge. It's a cloud or it's edge. Now we get a lot of questions. Is the model running on the phone? Is the model running on the last, where is the compute is. Let me take a step back.

The smartphone today is the most cloud connected device in the world. If you put your phone in an airplane mode, you're not going to use it. You're going to be very frustrated. You're just going to put it back in your bag in our pocket. But having said that, there's a lot of processing that happens on the phone. I think you need to be thinking about this a little bit different.

First of all, the answer about models, where does the model understands what we see, what we hear and what we say are located. They are located in the device because latency is unforgiving. So anything that has to do with a user interface is located on the device. So we announced the first chip in a glass in a frame that does 1 billion parameter model. The next ship is going to do much more every company, things like voice to text, the ability to quickly annotate and image and do things, they're asking us, I needed to have that into the device.

At the same time, those devices are going to have to need a lot of connectivity because a lot of those things are going to be happening in the cloud. The other thing you're going to see is with mix of experts with chain of thought reasoning, you have smaller models, there are certain things and then the bigger model doing some other things. And you can easily see how this play out, whether you're looking at a QR code, for example, you look at an image, you're looking at a person and how this thing is going to transaction.

So at the end of the day, I will go in and make a statement that the work product of foundational companies right now. They're being designed in the way that they have a cloud component and an edge component. I think if you look about your road map of Google Gemini, you see that. You saw that the open weight OSS model from OpenAI, you see that.

So I think the models are being designed. It's the evolution of computing and I think what you're going to see is those are going to be a combination like a phone. There are going to be certain functions they're going to run on the glass, on the watch, on the phone. Certain functions are going to run on the cloud. And the last data point. You're going to see from us a big change in the computing architecture for a smartphone.

We're working on it for a couple of years -- we're going to announce, I think, as we head into 2026, maybe in the -- in regular announcements in the second half of the year. But there's a new architecture. One thing that is happening context is super important for agent experience. And even when you think about advertisement, right, if you remember, I'm going to quote when there was this incident that unmet that they lost access to some information on the iPhone and they use a lot of AI to compensate for.

So -- when you think about context that happens around you, that becomes incredibly important for an agent, incredibly important for you to create a personal graph. So we're seeing a lot of demand models that they run on the phone and they run in a very pervasive way at a very high performance or very low power just to get context. Just to basically get sensory data.

And then I think a lot of people want to do that on the phone because that's how it's going to scale and the phone in real time has real-time knowledge about what's happening -- that's also true for the devices. So that's another change of computing that we're going to see unfold. Sorry for the long answer.

No, it's great. So how much -- in all those cases, how much R&D dollars, like how much can you repurpose versus how much do you have to spend from an incremental perspective because all those markets seem to be peripherals of what you've already -- of your existing sunk costs?

Look, if you look at the company financial results, with the number of bets that we're doing in parallel, right, we are -- we are in the phone business and we are like clockwork. We execute on our Snapdragon premium every year plus other Snapdragons and the rest of the road map. And we have maintained the performance leadership.

And now on top of that, we added our own CPU. We don't license anymore. We design our own CPU. On top of that, we're in the PC market, we are into the broadband market we are into the industrial market right now, automotive, including the STACK and you have now the data center and robotics. Those are the things we're all doing.

And if you look at the financial performance of the company, we have been increasing efficiency a lot, if you look at the number of bets that we're making. And that is because we leverage a lot of IP, and we create an ability to scale our IP from 5 watts to 500 watts.

We're probably 1 of the few companies. They have the engineering capability. If you think about how broad our portfolio is to scale from 5 watts to 500 watts I think that muscle we develop in the company as we set ourselves by necessity to diversify is really helping us and enabling us to do more things that have become efficient and accretive to the results of overall Qualcomm.

Let's shift to the handset business. So you had a great quarter last quarter. You're doing very well in handsets as especially in Android. If you exclude Apple, your trailing 12-month handset revenue is up nearly 10% in a market that's basically flat. How are you doing this? And how long can you keep doing that?

Okay. This is an important thing that we have been seeing playing out for several years now, several years, quarter after quarter after quarter. Actually, most people don't realize, the phone market right now is still smaller than it was before COVID. Still smaller. We have not yet recovered in units, the size of the phone market that was before the pandemic.

But how are we growing on continuing to grow into a relative flat market? We have seen this trend that has been very consistent in the phone industry, especially as you get fully penetrated that the premium and the high tier expense. If you go to the United States market today. The United States market today, there's only 2 phones to buy. You have an iPhone or have a Galaxy phone. That's a 2 premium phones or you go to Walmart and you're buying a prepaid phone. There's nothing in the middle, right?

And I think China is now becoming like that. you have an expansion of the premium and the high tier, you have a low-end market. The middle is contracting. I think if you remember back when I became CEO, I think I said in 2021, I said our strategy and phone is going to be very simple.

We're going to go after share wallet, we're going to concentrate on technology leadership in premium and high on Android, and we significantly increased the up margin of the business because the premium here is more resilient, I think, to the cost of technology, once more compute, once more performance and it's been in expansion.

Even markets that are -- like India, which has been historically very price sensitive, we see an expansion of the premium tier that is happening across the board.

I wanted to ask about India, since you mentioned it, can we actually talk about it, it seems like China maybe 10 to 15 years ago. How much of that -- how much of a driver of your interbusiness can India be?

Look we see continued healthy growth for that market across multiple categories. We're designing and all the Indian automotive companies. We were doing -- Snapdragon continues to gain share -- we're very happy about our Snapdragon brand position in India. It's probably as high as in China right now on consumer preference. We see a healthy expansion of the premium tier.

And here's what you need to think about it. I think I may give numbers that are not entirely precise, but they're directly correct. The phone market today, it's about 1.2 billion phones get purchase every year. $200 million is iPhones, $1 billion is Android.

So -- and a market like India, like your comparison is correct. It's a very large market. So as that android market starts to drive towards a high tier or a premium phone. That's the most important, I think, electronics purchase. That continues to drive quarter-after-quarter, year-over-year, a positive outcome of our handset business.

Great. And then can we talk about -- there's kind of a strange dynamic where some of the major Android OEMs have their own internal efforts for modems. And yet these same customers seem to be more dependent on you than ever. Samsung, we used to say 50% baseline share, now it's more like 75% baseline share Xiaomi, you just signed a big deal with them yet they too also have their own internal efforts. How do you look at that?

Look, first of all, Tim -- and by the way, I don't mind we love doing this. But I've been answering this question for about 25 years. 30 at Qualcomm 25 years remember, it was managing CDMA and people said, the our customer just designed their own CMA chip. And I think historically, there has been an ongoing thing in the industry.

I think the answer to that question is you need the scale. You need to have the ability to change to technology transitions very fast. Every year, we have a new Snapdragon 8 that's kind of designed to set the pace of performance. You have -- it's a very competitive market. Maturity of silicon design is very important.

The mobile market is super unforgiven because what happened is you design on a brand-new process node, brand-new IP across your CPU or GPU, you have to bring up a whole new technology. You have to ramp from 0 to $100 million in 2 quarters. You have to make the selling season. Then you kind of tail off, you prepare to ramp the next one on an annual cadence.

Look, we're called Qualcomm. It stands for Quality communications. Some of the things we had to develop as being part of this business, some of the other semiconductor company, when they find out about it, they think we're crazy. Sometimes we go into mass production. Mass production on a design before we actually get our chip back. We haven't even got a chip back. We don't know if it has any bugs. We do a mass production because of the speed of mobile. So I think that has maintained our ability to stay in front to continue to have the designs that matter for our customers and have a leadership in IP.

And there's another thing that most people don't think about that, don't think about Qualcomm. We actually -- ourselves, we're very focused on our speed of our CPU or NPU or GPU or modem, but Snapdragon brand is very powerful. And I point you to do one thing. We had a Snapdragon Summit, and we do it every year when we launch it, 0.5 billion views impressions on the media. We had a simultaneous event in China.

Every single one of our customers decided to launch their phone at our event at the same time. If you look some of their advertisements, you see a bigger Snapdragon than you see a picture of their phone. And we didn't know. I think through the process and knowledge, like we're 39 on Interbrand 100. So Snapdragon also has a big community effect that continues to drive our customers to put Snapdragon in their flagships.

Great. Let's talk for a moment about Apple. You've been very clear about how that's going to come out of your business. baseline being that the fall launch this year or sorry, next fall will be 20%, and it's fully out in the fall of '27 launch. However, if you look at how the internal modem is selling, not selling as well, maybe as they hoped, and there are -- there's some talk that they're kind of coming back to you again, had in hand, maybe wanting to extend a little bit longer. Can you just talk to all that?

Look, first and the most important thing in this conversation, I think we have been planning our business, assuming that this customer is going to go away in '27. I think that's our planning assumption. That's how we've been managing the company. That's how we're accelerating our diversification. We had provided metrics, which we're very pleased with it, how the non-Apple business in the company is growing. It showed that our strategy is working, our engine is working, and we're going to keep doing that.

Having said that, I think, look, -- we are a high, I think, quality provider of modems to them. I think it is -- it is a very reliable modem, and they can continue to use our modem as long as they want to use our modem. We just are planning our business on the assumptions that we told you, and that's what we're marching forward.

Got it. And maybe I'll ask you the question that is still a debate. So how do you think about the lack of when they don't need about them? How do you think about the precedent that they will continue to pay a royalty and just the precedent that they say, well, Huawei is not actually paying a royalty. Now by then, they might be, but today, they're not.

Look, the licensing business, the oldest business of Qualcomm, I think, has been probably battle harder by at least 4 generations of wireless. And I think look, we have one of the largest IP portfolios in the world. I think the -- it's -- we're the #1 company in -- across all American companies and patterns applications in 2024. Let's see, '25 didn't close it yet.

I think we have a very strong patent portfolio, not only in cellular. We have that on video and WiFi. I think our model has been proven to be fend, been tested in any government or every regulatory agency. We battle tested that with Apple.

So look, we're confident in our position. I think like -- like every other licensee. I think I point you to -- I know you mentioned about Huawei, but every other Chinese company has renewed their agreements. I remind everyone, I think, we're licensed with Samsung, including 6G. So we think that's a very stable business, and we expect to continue to be that way.

Great. Well, thank you for the time. We're out of time. Thank you.

Thank you so much. Great taking to you. Thank you.

Ladies and gentlemen, thank you for standing by. Welcome to the Qualcomm Fourth Quarter Fiscal 2025 Earnings Conference Call. [Operator Instructions] As a reminder, this conference is being recorded, November 5, 2025. Playback number for today's call is (877) 660-6853. International callers please dial 201-612-7415. The playback reservation number is 137 5609. I would now like to turn the call over to Mauricio Lopez Hodoyan, Vice President of Investor Relations. Ms. Lopez Hodoyan, please go ahead.

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 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.

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. 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.

Thank you, Mauricio, and good afternoon, everyone. Thanks for joining us today. In fiscal Q4, we delivered another strong quarter with revenues of $11.3 billion and non-GAAP earnings per share of $3, both of which exceeded the high end of our guidance range. QCT revenues of $9.8 billion, up 9% sequentially were driven by strong end customer demand for Snapdragon power premium tier Android handsets continued traction for automotive Snapdragon digital chassis and strength in IoT across industrial WiFi 7 Access Point, 5G fixed wireless and smart glasses. In addition, all 3 QCT revenue streams exceeded our expectations, including record automotive quarterly revenues in excess of $1 billion. Licensing business revenues were $1.4 billion. Fiscal '25, non-GAAP revenues of $44 billion were up 13% year-over-year, with record QCT annual revenues of $38.4 billion, up 16% year-over-year, including automotive and IoT revenue growth of 36% and 22% year-over-year, respectively.

We delivered 18% year-over-year growth in total QCT non-Apple revenues above our prior estimates. We remain on track to achieve our fiscal '19 long-term revenue commitment as outlined at our 2024 Investor Day. I will now share some key highlights from the business. At Snapdragon Summit in September, we introduced our Snapdragon 8 Elite Gen 5 mobile platform for next-generation flagship AI smartphones. This platform is equipped with our custom-built third-generation Orion CPU and the fastest mobile CPU ever, along with an upgraded NPU and GPU with the Snapdragon 8 Elite Gen 5, we continue to set the pace of innovation in mobile processors. This year marked our tenth Snapdragon Summit with simultaneous events held in Maui and Beijing, validating the strength of our Snapdragon ecosystem leading China OEMs, including Xiaomi, Honor, Vivo and Oneplus announced their flagship phones at our event.

More than 1,100 partners, analysts, tech influencers and press attended in person and our key notes capture over 26 million unique views across both events. Together with our announcement, Snapdragon Summit generated over 547 million social media impressions. In addition, our Snapdragon in ciders community of tech enthusiasts, developers and fans has grown to more than 20 million members worldwide. Our highly differentiated technology continues to drive increased brand visibility. And during the quarter, Qualcomm debut at 39 on the Interbrand Top 100 Global Brands list for 2025, reflecting the strength of Snapdragon. And for the first time ever, Kantar's brands the most valuable global brands list included Snapdragon, where we ranked #38. Also at Summit, we unveiled our newest platform for premium laptops, the Snapdragon X2 Elite and X2 Elite Extreme. Once again, our industry-leading processors continue to outperform competitors surpassing Intel and AMD in both speed and power efficiency.

Our latest NPU sets a new benchmark as the world's fastest AI engine for laptops also exceeding Intel and AMD and performance. And with the new Orion Gen 3, we have the world's first 5 gigahertz CPU for the ultra mobile laptop category with extended battery life. We now expect approximately 150 designs to be commercialized through 2026 and remain optimistic about the continued momentum for Snapdragon powered AI PCs. As AI transforms HUMAIN computer interactions, intelligent wearables and specifically smart glasses are evolving into personal AI devices that can connect the user directly to an AI agent or model. This emerging category is growing at a remarkable pace and has reached an inflection point fueled by very strong demand for smart glasses from Meta. This quarter alone, Meta introduced several new Snapdragon power styles, including the Ray-Ban meta second-generation glasses, the Oakley Meta Vanguard performance classes in the Meta Ray-Ban Display and neural band.

In addition to Meta, our leadership in this space is reflected by the 30 designs in production or development with our global partners. They include Samsung, which recently launched Galaxy XR, a truly multimode AI headset in the first device for Google's new AI native operating system, Android XR. We achieved a significant milestone in automotive with the launch of Snapdragon Ride pilot, our first full system solution for L2+ automated driving, developing close collaboration with BMW, a debuted in the automakers BMW iX3 EV SUV. Powered by our advanced self-driving software stack, Snapdragon Ride Pilot sets a new standard in automated driving. It's designed for universal compatibility and seamless integration with automakers unlocking L2+ driver assistant features like hands-free highway driving and urban navigation for vehicles worldwide. Snapdragon Ride Pilot is currently validated in 60 countries and extends to 100 in 2026. The broad interest from leading automakers globally is exceeding our expectations.

At IAA Mobility, Qualcomm and Google announced an expanded partnership, including the integration of Google Gemini models to our suite of Snapdragon digital chassis solutions. Together, we will enable automakers to build and deploy personalized AI agents to act as an in-vehicle assistance, bringing multimode edge to cloud AI to next-generation software-defined vehicles. In industrial IoT, we completed our acquisition of Arduino, a premier open source hardware and software company with an IoT development ecosystem of more than 30 million users worldwide. This builds on our acquisitions of Edge in Pulse and foundries I/O and accelerate our plans to provide a comprehensive edge development platform for a broad set of applications. With these new assets, we're expanding our portfolio to a wide range of customers and verticals, further cementing our position as a leader of AI for the edge. Additionally, we recently released the Arduino no single board computer, powered by a Dragonwing processor. This full stack edge AI platform enables the rapid development of solutions for applications ranging from smart home automation to industrial robotics, drones and more. AI data center growth is moving from training to dedicated inference workloads, and this trend is expected to accelerate in the coming years.

The mass adoption and continuous use of AI applications is driving the industry to look for competitive alternatives that prioritize power-efficient performance and cost. We announced our entry into this market and recently unveiled our AI inference optimized AI 200 and AI 250 SoCs and associated accelerator cards and racks. We are very pleased to have you Main as our first customer for these solutions with a target deployment of 200 megawatts starting in 2026. Looking ahead, we're executing on a multi-generation road map with an annual cadence I would like to share that we're looking forward to providing an update in the first half of 2026 on our data center plans, including our road map performance and differentiated memory and compute technology. We will also highlight our progress in other areas, including advanced robotics, next-generation ADAS, industrial edge AI and 60 devices and AI-powered RAN. As we execute on our strategy and expand our IP and capabilities, we believe we are 1 of the best positioned companies to lead the expansion of AI to the edge to cloud hybrid AI and develop a power-efficient cloud inferencing solution. I will now turn the call over to Akash.

Thank you, Cristiano, and good afternoon, everyone. Let me begin with our fourth fiscal quarter results. We are pleased with our strong non-GAAP performance with revenues of $11.3 billion and EPS of $3, both of which were above the high end of our guidance. QTL revenues of $1.4 billion and EBT margin of 72% were above the midpoint of our guidance driven by slightly higher handset units. QCT delivered revenues of $9.8 billion and EBT of $2.9 billion, with year-over-year growth of 13% and 17%, respectively. QCT EBT margin of 29% was at the high end of our guidance. QCT handset revenues of $7 billion increased 14% on a year-over-year basis. reflecting increased demand for premium Android handsets powered by our Snapdragon 8 Elite Gen 5 platform. QCT IoT revenues of $1.8 billion grew 7% year-over-year, driven by strength across industrial and networking products and increased demand for AI smart classes powered by our Snapdragon platform. In QCT Automotive, we surpassed $1 billion quarterly revenue milestone, delivering 17% year-over-year revenue growth as the adoption of our Snapdragon digital chassis platform continues to accelerate. With the recent enactment of the One Big Beautiful tax bill, we now expect our non-GAAP tax rate to remain in the 13% to 14% range going forward, and we anticipate lower cash tax payments relative to prior expectations.

This new legislation resulted in a noncash charge of $5.7 billion in the fourth fiscal quarter to reduce the value of our deferred tax assets. This charge is excluded from non-GAAP metrics, but impacts our GAAP results. Before turning to guidance, I'd like to take a moment to highlight our strong performance in fiscal '25. We are incredibly pleased with our execution with non-GAAP revenues of $44 billion and EPS of $12.03 representing year-over-year growth of 13% and 18%, respectively. In QCT, we achieved 16% year-over-year revenue growth driven by double-digit increases across all revenue streams with IoT up 22% and automotive growing 36%. We also delivered QCT operating margins of 30%, in line with our long-term target we have previously outlined. Over the past 5 years, our non-Apple QCT revenues grew at a 15% compounded annual growth rate. Similarly, over the last 2 years, our non-Apple QCT revenues grew by 17% and 18%, respectively.

Lastly, we generated record free cash flow of $12.8 billion. And consistent with our commitment, we returned nearly 100% to stockholders through repurchases and dividends through the year. Now turning to guidance. In the first fiscal quarter, we expect to deliver record results with revenues in the range of $11.8 billion to $12.6 billion and non-GAAP EPS of $3.30 to $3.50. In QTL, we estimate revenues of $1.4 billion to $1.6 billion and EBT margins of 74% to 78%. In QCT, we expect record revenues of $10.3 billion to $10.9 billion and EBT margins of 30% to 32%. We anticipate record QCT handset revenues with low teens percentage growth sequentially, primarily driven by new flagship Android handset launches powered by Snapdragon. Following our outperformance for QCT IoT revenues in the fourth quarter, we expect a sequential decline consistent with last year, driven by seasonality in consumer products. In QCT Automotive, following a record fourth quarter, we estimate revenues in the first fiscal quarter to remain flat to slightly up on a sequential basis.

Lastly, we forecast non-GAAP operating expenses to be approximately $2.45 billion in the quarter. In closing, as we approach 1 year since outlining our growth strategy at Investor Day, I'd like to provide an update on the progress towards our $22 billion fiscal 2019 revenue target across automotive and IoT. In automotive, we've established ourselves as the most strategic silicon partner for OEMs globally. The accelerating adoption of our StapDragon digital chassis platform and 36% year-over-year revenue growth in fiscal '25, puts us on track to achieve our $8 billion revenue target. Across IoT, the increasing importance of artificial intelligence, high-performance, low-power computing and connectivity and validated by our 22% year-over-year revenue growth in fiscal '25 reinforces our confidence in achieving our $14 billion revenue target. In Industrial, increasing customer engagement and growth in design win pipeline, combined with our recent acquisitions to unlock access to 30 million users, underlines our confidence in strong revenue growth through the end of the decade.

In XR, we are exceeding prior expectations on strong demand for AI smart glasses, and we remain the platform of choice for smart glasses and mixed reality devices across leading global OEMs and ecosystems. In PCs, we extended our technology leadership with the recent launch of Snapdragon X2 Elite and X2 Elite extreme platforms, which deliver multigenerational performance increases across CPU, GPU and AI. Given our strong pipeline of approximately 150 design wins, we're optimistic about the growth potential for Snapdragon powered AI PCs as we expand our presence across global consumer and enterprise channels. In networking, our continued innovation and leadership in WiFi, 5G, edge processing and AI combined with our integrated platform approach positions us to drive content growth and adoption globally.

As Cristiano outlined, beyond our revenue target, we're also pursuing incremental opportunities across data center and robotics. Finally, I want to thank our employees for exceptional execution and continuing to deliver industry-leading technologies and products. This concludes our prepared remarks. Back to you, Mauricio.

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

[Operator Instructions] First question, which will come from the line of Joshua Buchalter with TD Cowen.

Congrats on a stellar set of results in a bumpy backdrop. I wanted to start with the data center business. I realize you're going to provide more details in the first half of 2026 and my questions might get pumped as a result. But -- maybe you could spend a few minutes talking about what you see as Qualcomm's right to win in the data center space? And any details you can provide on the specs of the 200 and 250 beyond what you were able to offer in the press release when the Humana engagement was announced. And then lastly on this topic. Last quarter, you called out a, I believe, a hyperscale engagement. I assume that's distinct from the HUMAIN engagement and any details on timing there?

Josh, thanks for your question. And thank you. Yes. Look, we're very excited. I think this is the next chapter of I think the process we have been in Qualcomm to changing the company, diversifying the company, spending our IP. I think that's 1 of the reasons I think we made acquisitions such as Alphawave. We think there are 2 areas that we outlined that we can participate into the data center. We are incredibly excited about the size of the opportunity in the next phase I think, of data center build-out, where there's going to be real competition, we go from training to inference. We have been focused in 2 areas. One is we believe we have one very strategic asset in the industry, which is a very competitive power efficient CPU that is both for the head node of AI clusters as well as general purpose compute.

And then we also have been building what we think is a new architecture dedicated for inference. I think the focus has been increased computer density and and simplify the architecture for the data center in terms of increase, I think, performance per watt. I think it's all going to be about generating the most amount of tokens with the least amount of power, and that's our right to play. We're excited about what we're doing. That has been in development. It's something that we're actually doing in a very disciplined manner. We spend a lot of time. I think with our early experimentation with AI 100 to develop the software and then we're now building AI 200, 250 both the SoC, the card direct solutions. And I think we're pleased with what we're seeing. We will provide more details on that as we outlined early next year.

Specific to your questions, I think we were in discussion with a hyperscaler. We're very pleased with the outcome of that conversation, and that's going to be part of our update when we provide details on the road map, the performance, the KPI we'll be able to show details of the solution as well as our customer engagement. We are in conversation with a lot of companies. It's clear the market wants competition for this. But in a typical Qualcomm way, we're just going to be focused on executing and show the products performing. Like I said, this is exciting in the new chapter of our expansion. And alongside robotics, those are kind of new opportunities for us.

Appreciate all the color there and looking forward to the update. For my follow-up, I wanted to ask about the handset market. So you highlighted your ongoing momentum in the Android space as driving growth in the fourth quarter -- or excuse me, calendar fourth quarter in your prepared remarks. There's been a lot of noise, I think, about at your lead Android customer potentially looking to use an internal modem more than they have in recent years. Could you maybe just talk about your visibility into your share at that customer? And any sort of share that you would expect to -- how that you would expect that over the next year or so?

Look, thanks for the question, I want to spend a little bit of time on this because I sense that there is potential for a lot of noise when noise is actually not required. I think first of all, there is one thing that is happening with our Snapdragon and our premium tier Snapdragon Android, which has been very consistent, and this is going to happen over the past few years. The premium tier is expanding. I think if we look at the overall market, we have this trend that is very healthy and the premium tier is expanding and is adding more compute. That is the reason why our Android business, even on a market that is relatively flat, which is a handset market. We continue to grow content, ASPs and earnings because we see premium tier expanding. A lot of the upside we have in the handsets is primarily driven by the Android premium tier.

Second part is our relationship with Samsung. We have said for a number of years -- a number of reasons. And that's been true in the past, I think, several years what used to be a normal relationship at a 50% share, the new baseline is about 75% share. And that is always going to be our financial assumption. When we out-execute, sometimes we get more than 75%, on Galaxy S25, we got 100%. Our assumption for any new Galaxy is always going to be 75%. That's our assumption for Galaxy S26.

The next question comes from the line of Samik Chatterjee with JPMorgan.

Cristiano, you mentioned the -- on the data center side, starting with that. You mentioned the price performance for the inferencing performance that you're trying to deliver. I mean most of the training clusters that we've sort of seen the other incumbents sort of talk about the ranges of installation cost is somewhere in the sort of $30 billion, $40 billion per gigawatt that we're hearing off. Can you just rightsize us in terms of when you're thinking about the deployment on a gigawatt basis, what kind of cost performance or price performance are you thinking of relative to these inferencing workloads that you can support on the AI 200 or AI 250. And I'm also trying to get to sort of what revenue implications are for HUMAIN when you sort of deploy 200 megawatts with them? And I have a follow-up, please.

Okay. I'm going to try to give as much color as I can without getting ahead of the update we're going to provide next year. So first, let's just have a broader discussion about revenue. before, what we said before that we expect data center products to start leading to a revenue ramp beginning in fiscal '28. I think as a result of the HUMAIN engagement and our progress on the AI accelerator, I think we're pulling this forward into fiscal '27. So you should expect now what we said before, I think data center revenue is going to start to become material in fiscal '27. So I think that's the extent of what I can provide at this moment is about a 1-year pull-in.

The second thing is we are getting interest. You should assume the companies that are having to deploy as much compute as they need in the data center for inference, especially now that you see the constraints you have on power, the constraints that you have on the amount of computer density I think we have a lot of folks interested. We will not have in conversations if we didn't have a solution that is competitive, but we will show the KPIs of the platform, I think, when we have a road map update earlier next year.

Okay. Okay. Got it. And maybe the second one, similar to Josh's question, I think, Akash, if I'm interpreting the market's reaction to your strong numbers, there seems to be that concern about what March looks like with the change in share at the primary Android customer. Typically, on the handset side, your quarter-over-quarter decline into March has been sort of this high single-digit pace. Is that still a good run rate with sort of the lower level of share? Or would you sort of guide us otherwise? Because I think that's really what the market seems to be sort of concerned about at this point.

Yes. Samik, thanks for the question. We're not guiding beyond first quarter at this point. But when you look at our strong business momentum exiting fiscal '25 you see the benefit of that showed up in our results also showing up in the December quarter guidance. And so that carries forward into the rest of the fiscal year. The only additional thing I'd note is just a reminder that we expect to close our Alphawave acquisition in the first calendar quarter of 26%. But otherwise, I think the business momentum is strong and just a couple of factors that you outlined.

The next question comes from the line of Timothy Arcuri with UBS.

Akash, when you talked about September, you said that the beat was driven mostly by premium Android, but it seemed like it came a little more from your top customer because before you were saying to take like 30% of units out and that was like $500 million roughly, but it seems like nowhere near that much came out from that customer. So I mean it was kind of barely down year-over-year. So can you just square that? And then also as part of that, can you speak to how much that customer is as kind of a baseline assumption for December. I think we've seen the model that has their modem and it's not really selling very well. So I would assume that that's a tailwind for you also in calendar Q4. And then I had a second question.

Sure, Tim. So as we had said earlier, we expect it to be in 3 of the 4 models of the phone that was launched. And so that is exactly what happened. And share, of course, is based on what -- how sell-through plays out. Specifically on the September quarter question, we already had kind of demand from the customer that was factored into the guidance we gave. So the upside we saw was not from Apple. It was really driven by Android customers and primarily premium tier with the launch of our new Snapdragon chip. When you look at the sequential trend as well, as I mentioned, the -- we are forecasting approximately low teens sequential revenue growth in the handset revenue stream for QCT and primarily driven by Android as well. So there is some benefit from Apple, but the primary driver for the growth quarter-over-quarter is actually Android premium tier shipments.

Okay. And then is there any update on the negotiation with Huawei for a license? It seems like it's kind of dragging on a little bit. Can you just talk about that?

Yes. This is Alex. Thanks for the question. No, we actually don't have an update now. Discussions are still underway. Really nothing substantive to say beyond that.

The next question comes from the line of Stacy Rasgon with Bernstein Research.

So you noted the non-Apple QCT revenue was up 18% year-over-year. And even if I take out the auto and the IoT, it's clear that the Android piece was up like pretty strong double digits year-over-year. So am I right in assuming that's all content or primarily content given, I don't think units grew that much? And is that the right sort of pace of like further content increase that we ought to be thinking about as we go forward?

Yes. So Stacy, you're doing -- obviously, doing the math right. There are 2 primary drivers on this. One is just the mix shift of units up. And so this is a trend that we've seen over the last several years. And it's -- sometimes it's thought of as a developed market trend, but that's not true. It's across all developing regions as well. The devices that are purchased continue to move up and so that shows up in the benefit to our revenue stream. The second trend is within premium tier. Content continues to grow as we deliver more and more capable chips and more capable handsets are being delivered as a result of it. And those are the 2 primary drivers of kind of the long-term trend of our handset business.

Got it. And if I could have a quick follow-up. Just the Snapdragon Android strength in September and December. Is that primarily China? Is there any concerns? I mean, is that just the timing of the launches? Like any thoughts on pull forward or anything like that, anything we ought to be thinking about there?

Yes. No, there's no pull forward there. I think what we've seen is all of our -- most of our China customers, actually all the major customers have already launched devices and the initial reception to the devices have been very positive. We'll see a lot of our global customer launch devices as well later this quarter going into early next year. And so it's just a reflection of kind of normal purchase patterns around the launch of these devices and the great initial consumer reaction to the launches.

The next question is from the line of Chris Caso with Wolfe Research.

And a question again on AI data center, and I realize you're going to provide some detail coming up, but there's some spend out there, so which is why we ask. But for we've seen what was in the press release was perhaps a different architecture than what we've seen others attack the market with DDR memory, PCI Express in that. Should we interpret that as sort of a first approach by Qualcomm with more to come? Or is this rather a different sort of philosophy for attacking the market? You talked about being more efficient on power consumption. Is this sort of a different -- attacking the market differently than what's in the market today.

I think the answer to the question is yes. For us, I think we were approaching this, thinking about what the future architecture should look like. We had said before, and I think that's -- we have thought about this for the edge as well, which means when we think about dedicated inferencing clusters and the goal is to actually have the highest possible computer density at the lowest possible cost and energy consumption to generate tokens we thought there may be an architecture that is beyond the GPU and what you've traditionally been doing with GPU and HBM is what we should be doing. That's we're developing. And and we have to execute, and that's the focus on the company right now.

Got it. Just back on handsets. And you talked about a mix shift towards the premium tier. To what extent has the growth that you've seen in handsets been driven by Snapdragon ASPs. And obviously, wafer prices are going up as you go to finer geometries. Maybe talk about the impact of higher ASPs on handset growth, both now and going forward and how the industry absorbs those higher ASPs.

Yes. So I think there's a long-term trend that we've seen. This is a conversation that we have every year, but we continue to see just very strong demand for more capable chips, more capable processing in these premium tier chips. And so the competition between the OEMs drives it, the demand for consumers doing more activity on the phone drives it. And we know the next couple of chips that we are making, and we're already in discussions, advanced discussions with our customers. So we feel pretty confident that there is legs to this trend over the next several years.

The second factor that I outlined is important to keep in mind as well is this very significant mix shift towards more premium devices. And that's not about content growth within the tier, but it's more about more capable devices being purchased by consumers. And that is a multiyear trend as well that we're continuing to see going forward.

The next question is from the line of Tal Liani with Bank of America.

If I look at this quarter, you grew handsets by 14%, and it looks like next quarter you're guiding again 600 basis points of above market growth or above market expectations for QCT. When you look at next quarter, what are the components of this outperformance? Do you -- can you go over kind of IoT autos and handsets, where do you think you can performed better than you initially thought last quarter, et cetera. Can you give us a little bit of color on how next quarter is behaving of the QCT breakdown?

Tal, just to confirm your question is about the December quarter first fiscal quarter?

Yes, first fiscal quarter -- sorry, the question is about the guidance for next quarter. Yes.

Yes, perfect. So in -- specifically in automotive, we had a record quarter in September. So $1.1 billion -- approximately $1.1 billion and we are guiding flat to slightly up in automotive. We do think that we're in this very strong position as additional cars get launched with our capabilities in them. We will continue to grow revenue through the year. IoT is similarly positioned, right? We saw significant upside relative to our guidance within the September quarter, and we are positioned to continue to grow revenue starting first quarter going into the rest of the fiscal year as well. Within handsets, the upside that you're seeing in the December quarter is really the success of our launch of our new chip. We've seen all the major OEMs launch devices with it. As I said earlier, strong consumer reaction, and that is reflected in our financial forecast. On a sequential basis, as I mentioned earlier, we are forecasting low teens sequential revenue growth in the handset stream in QCT.

And my follow-up is on a like a historical perspective, when you launch a product into China and it's into the New Year's -- the Chinese New Year, et cetera, is first fiscal quarter, the strongest quarter? What happens from a seasonality point of view, what happens for the next few quarters -- from a historical perspective?

I mean as you have seen in the past, we expect our first fiscal and second fiscal quarter to be the stronger quarters in the year and usually the June quarter, the third fiscal quarter is the lower quarter. So that's seasonality should be consistent with what you've seen before in the handset business.

The next question comes from the line of CJ Muse with Cantor Fitzgerald.

I wanted to kind of focus on QCT EBT margins and revenues grew 5% year-on-year, yet margins were down 100-plus bps. And I'm curious, is that a function of mix? Or is that a function of higher manufacturing costs? Or is it simply R&D investments for future revenue growth?

Yes. I think when you look at the year-over-year trend, I think you should think of we are investing in the data center area, which over the last several years, we've been kind of just focusing OpEx on moving from mature businesses into growth areas. Data center is incremental to the investment profile that we have.

Okay. Very helpful. And then I guess just to hone in on your non-Android handset business. Is there an update in terms of how we should model that for calendar '26?

No change to what we've said on share within Apple versus what we've said in the past.

The next question comes from the line of Ben Reitzes with Mellius Research.

Just to touch back on the data center again so you don't do updating this in the next calendar year. previously, you had an Analyst Day where you've put out these long-term targets for FY '29. I would assume Rob, the smallest opportunity was an XR at $2 billion. I would assume that we're going to have an event and go through something like this, you have the opportunity to be something pretty material bigger than the smallest opportunity you outlined at the last Analyst Day was $2 billion for XR by '29 and more like another multibillion opportunity. Can we just -- can you guys clarify that?

Yes, Ben, that's a great observation. I think we're seeing this market take off very fast, especially AI smart glasses. And so we definitely feel like we're significantly ahead of the guidance that we had provided and very significant upside opportunity. I mean if you kind of step back and think about the broader opportunity around personal AI, and you could think of it as the glasses form factor or the watch form factor or hearables form factor. This could be a very, very large market. And so if that plays out, as we suspect it might, it would create significant upside opportunity.

Yes. Sorry, just to clarify my question, I appreciate that is that if you're going to outline the data center opportunity and have a special event, could we assume that it's a multibillion opportunity something that you would call out that's at least as big, if not bigger, than anything you laid out at your last Analyst Day which is the smaller opportunities or $2 billion to $4 billion.

Ben, no, thanks for the question. I understand it now. Yes, it's upside on that number and success in this area, I think, presents to us a potential multibillion-dollar revenue opportunity in a couple of years, and that's how we're thinking about it right now.

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

I just want to thank all of our partners, our employees and we are continuing to change Qualcomm into a very diversified company. We're probably one of the few companies among all the semiconductor companies that can go from 5 watts to 500 watts with a very flexible and very broad technology capabilities. I think one thing that we take pride of in every industry that we enter, we have a platform that is a leading technology platform, and we're excited about the future of the company, and we're just going to keep executing on this strategy. Thank you very much for supporting our call.

Ladies and gentlemen, this concludes today's conference call. You may now disconnect.

All right. Good. I guess it's still morning for us out here. So thanks, everybody, for coming back. We'll get started with our next fireside chat. We're very happy to have Nakul Duggal, who is the group GM of the Automotive and Industrial business at Qualcomm. Qualcomm as you all know, is heavily into the handset side of things, but is over the last 5 years plus is heavily invested on diversifying their business, and Nakul is the head of some of the biggest portions of that. Probably, at least in my estimation, I don't think the company has really said it, but probably runs somewhere upwards of 1/4 to nearly 1/3 of the company. So we're very happy that you could come up.

Thank you for having me.

So why don't we jump into a little bit about the diversification strategy at the highest level. How are you -- and we'll dive into the individual businesses here in a bit. But at the highest level, the goal to diversify, the resources you're given, the strategic imperative, all of that, whether it's the Board or Cristiano or Akash, how are you tasked for running that?

So thank you again for having me. I've been with the company for -- I celebrated 30 years in June. So I understand the history of the company. I understand how we invest. I understand how we build ecosystems. One of the things that became pretty clear as we were focused on diversification about 10-ish years ago was what is the value of the technology stack that we build in markets outside of our mainstream markets. And what became pretty apparent was our understanding of markets outside of our core mobile business was fairly limited.

The approach that we took when we were starting to build out our automotive business was -- how do we build a much more intimate, much more proximate business that is aligned around the needs of the auto industry. And this was a decade ago. So automotive was obviously very different from what you see today. And it allowed us to appreciate the complexity involved in quality, in safety, in supply chain resilience, in the long life cycle that is required, the software differences. And we have since taken automotive as a business that we manage pretty much completely independent of the mobile business.

So it gets not only the resources and the investments needed, but it's a much longer view on how are we going to see success there. The approach that we took in automotive helped us in formulating a lens through which to look at other markets like industrial, markets that have a slower-moving cadence, but obviously much more committed to the transformation that then comes along. And so those approaches have certainly helped us cement the way that we then invest as well. And then the bets that we make, whether M&A or strategic partnerships, that's all part of that same strategy.

So let's dive a little bit into the automotive side of things. I think you guys are doing -- you're on track for nearly $4 billion in revenues in this calendar year. You're a bit ahead of what your targets were. And I think over the last 5 years, the CAGR of that business has been about 40%, incredibly impressive, especially at a time where many of the auto semi companies are having some challenges just cyclically. So talk a little bit about what has driven that growth looking backwards, and then we'll get into some of the forward growth drivers as you drive towards your goal of having, I think, $9 billion towards the end of this decade.

Yes. So I think one thing that automotive requires apart from everything else that you have to do is a tremendous amount of predictability that the supplier has to provide to their customer. It's become a very complicated market in the last 5 years or so. And because of all of the complexity that automakers already deal with, electrification, geopolitics, supply chain resilience, when they look to us, one of the things that they find is a global player that invests heavily in software has a very broad portfolio of semis -- is able to think 5 years out, make those investments on behalf of the automaker.

And that just makes us a very stable, reliable supplier that is focused on the transformation that's going on in the automotive space, central compute, SDV, driver assistance, automated driving, all of that. And a lot of those bets were made by automakers 5-plus years ago. So as they make those bets, they look at what bets are working, which ones are not. I think the revenues that we delivered a year in advance are really an indication of winning at the right time, those programs essentially launching at the right time. And frankly, being very broad-based. We supply into pretty much every automaker globally. So we are not as affected by changes in the type of drivetrain that is selling or what happens in one part of the world versus the other. We are fairly insulated to that.

So how would -- if we just took the $4 billion in revenues now and the $9 billion that you have as your target, I think, at fiscal '31, talk about how the mix changes within that. And I know you have even just to keep throwing around large numbers, $45 billion design pipeline, I believe. And how important is that transition from probably the connectivity side to the ADAS side, et cetera?

So I think connectivity is a very predictable -- I guess, it's the most predictable part of the composition of the revenue. It's mostly our modem business, the RF business, some WiFi attach alongside it, some Bluetooth, some GPS. We have a power line communications business. The remainder of the business is actually very proportionate to the rate at which cars are moving towards central compute. -- bringing in a tremendous amount of integration of a number of different ECUs that were previously discrete and disparate. Now these are all getting integrated. And it's happening across multiple automakers and multiple generations at the same time.

So to give you an example, there are more conservative automakers that are launching products that we introduced in the 2020, 2021 time frame this year on a very large global footprint. So they will essentially take some of our Gen 3 cockpit products and deploy them across their global fleet. And those will last for 7, 8 years. And then there are others who are taking our Gen 5 platforms, which we only sampled beginning of beginning of '25, and those will go SOP first quarter of '26. And the -- I won't get into the content delta, but the performance delta between Gen 3 and Gen 5 is probably 15x. So we have this very interesting trend that is now happening in the auto industry where everybody is moving towards their next-generation architecture, but the rate of adoption is not the same.

So we benefit from being able to see really fast-moving companies adopt new technology and rush to compete, while at the same time, we have a very stable, very predictable foundation on top of which previous generation silicon is getting deployed. To add to that, as we start to see ADAS wins coming in and ADAS on the silicon side really started to scale for us early part of, I guess, middle of '24 is when we started to actually get designs to scale up with our Gen 4.5. So we started to build our ADAS silicon about 3 years ago, and we have announced 20 OEMs. This number will just keep growing because everybody is going to start to kind of move in that direction.

Because architecturally, we have aligned the cockpit architecture and the ADAS architecture, it allows automakers to significantly save in software cost. They have to build once and then they can deploy based upon the workload that they have. So you will see a lot more of the compute concentration over the next 5 years. And I think it will be a combination of high-performance, high-value compute with a foundation of a lot of the legacy programs that we have won that will continue.

So in some ways, it's analogous to Qualcomm going from a connectivity leader to a compute leader across the entire company, whether it even be in handsets, the same thing is happening in automotive.

I think that's right.

So is the majority of -- and you might even have had charts in this at your last analyst meeting, so forgive me if I didn't recall. But the majority of the $4 billion today, is it safe to say, is more the connectivity and cockpit. And then towards the $9 billion side, the ADAS side will be a significantly larger portion than it is today, and that's the direction of travel.

Yes. I think -- and I think you will start to see a blend of ADAS and cockpit just in terms of architectures. We introduced the Flex architecture. And so that blends it. But yes, I think you will see a lot more of the compute portfolio in the next 5 years.

So when we think about the ADAS side of things, what's the primary differentiator that Qualcomm has?

So I think there are a couple of things. In markets where the ADAS stack is well understood and you know what you're looking to deploy, whether it's urban Navigator an autopilot or highway navigator an autopilot where the number of sensors are well known, the stack is fairly robust. We excel at being able to then optimize that for silicon, optimize it for power, optimize it for performance. That is something that is there in the history of the company. It's there in our architecture. And so that's where we are really able to extract a significant amount of performance on a per millimeter square basis on the thermal envelope that we have provided, and that's helping us win quite a bit. The other piece that helps is our tiering.

So we have built a portfolio, especially for ADAS that allows us to go towards the -- I wouldn't say the real tier, but entry and then above. And so we are very well positioned with the portfolio on entry, mid and then premium. And so customers who are building their stacks and are starting to mature them, harden them, they want to be able to have a common portfolio that allows them to be able to think between tiers in the same generation and also across generations. That I think, is making a huge difference in terms of the rate at which we are winning in ADAS.

And that scalability that you're mentioning, how is that applicable on both the hardware/semiconductor side as well as on the software side?

Yes, absolutely. So the software architecture that we have is the same software platform that travels from a premium tier SoC all the way down to an entry-tier platform. And so that saves OEMs a significant amount of switching cost. And then to the extent possible, we also try to maintain that across generations.

And discuss on the software side, the importance of the Arriver acquisition from a few years back.

Yes. So we decided perhaps a bit late that the stack business was something that we had to get into because it was going to have high attach. It was going to be global. It was going to become part of every vehicle. And I think clearly, that's how it's turning out. Rather than doing it organically, and we've had a team that has been working on the stack for quite some time. We decided we needed to have a team in-house that had real-world experience in actually deploying this. It was the right idea. We did this right in the middle of COVID. So it was not the best time to get into the middle of a complex acquisition.

But what helped us was BMW was very interested in working with somebody that they could have a very close partnership with in terms of driving their next-generation stack requirements, ADAS requirements. So it became this 3-way and 2-way once we acquired Arriver, where we've built out our stack team over the last 3 years or so. We have built the computer vision stack in-house. It's going to be commercial by the end of the year across 60 countries, 100 countries next year. And if you think about it, this is something that we did from a standstill.

So in 2022, we had no stack. We will have this global stack launching next month. And then with BMW, we partnered to develop the drive policy stack together. So the Arriver team was very instrumental in not just bringing in the expertise, the IP, the experience, but also creating a foundation inside the company on how to go build a stack business, a stack product, which is something that Qualcomm obviously has not done before. So I think it was the right time and has been hugely instrumental in the success.

So when you put together the hardware and the software side, what is the primary differentiation that you offer versus -- in the ADAS realm versus, say, the Mobileye side or the NVIDIA side, which tend to be the 2 primary competitors. And if there's other competitors you want to highlight, go ahead, but those are the ones I think of.

Yes. So I think there are multiple layers to a stack. I think the active safety stack, which is basically the foundation for making sure that you are able to be compliant with all of the global requirements. That is something that I think we are now working to get to par and perhaps even ahead of some of our competitors. Mobileye, obviously, is the gold standard, has been doing this for a long time.

And so the goal is to be able to certainly meet and eventually get ahead of those types of requirements. I don't really look at many other stacks as really at that scale because if you look at the data, if you look at what's out there, other than stacks that have been built vertically by OEMs, there isn't really anybody else apart from Mobileye that I would say is at the same level. As you start to go to features and go higher up the stack, -- that then comes down to the OEM, what type of sensor set they're deploying, what type of features they are developing.

And we actually -- and we welcome for those of you that are interested to come check out the [indiscernible] in Munich, and we'll have some here in San Diego as well starting next month. You can experience the customer functions. You can actually see for yourself the type of performance. That we are very proud of because that is something that not only have we built together, but we have -- so that is a stack that we can take and extend over to other OEMs, which is what we are in the middle of doing.

So you talked a little bit about the importance or we talked about the scalability side of things. When you talk about Snapdragon Ride and then you have the Flex side of things, talk about the Flex platform and the importance of it. And I get the sense that, that is a unique ability that you have on the scalability front. So just kind of expand on that, if you could.

So when we decided to start building safety-grade chips for automotive compute, it became pretty clear to us that this whole separation in a car between what is the infotainment domain and what is the safety domain. This was obviously historically made sense. But going forward, especially with AI, especially with physical AI, these lines will start to blur. And so architecturally, we decided that we will allow for an architecture that allows us to be able to run a software stack that doesn't differentiate between infotainment and driver assistance. We did that with our Gen 4.5 products.

Now with our Gen 5 products, the level of performance that we are adding, it's 3 to 5x more powerful than the 4.5. You just have plenty of headroom to be able to run 2 stacks concurrently and still have room left over for more. So what we have started to notice is OEMs that own their own stack want to be able to run the stack as an application as opposed to a dedicated domain. And especially when you start to go mid-tier where you want to be able to get cost optimization, where you want to be able to go from 2 separate ECUs to a single ECU and potentially a single SoC. The Flex architecture makes a lot of sense.

We introduced the Flex architecture for the first time. I think it was I think it was maybe a Snapdragon Summit in '24. We will launch with Leap Motor in China, our first Flex platform in the middle of '26. So this is an example where somebody who actually owns the infotainment stack and the ADAS stack in-house, they can go deploy this on the same SoC. And we're starting to see that interest from a number of different players.

And do you get the sense -- we talked a little bit about the uniqueness of your stack and the gold standard from a competitor point of view. What about just on the pure silicon side of things, the competitive landscape on that, do you tend to think of Qualcomm is coming from kind of the bottoms up and so more working your way from the L1 functionality up? Or do you have the headroom to start kind of at the top and go down and what the competitive landscape looks depending upon which side you're coming from?

I think we made a bet 5 years ago that when it comes to ADAS, we are going to focus on L2+. Right or wrong, that was the bet that we made. So L2+ and below, and that's kind of the market that we want to focus on. We deliberately did not focus on L5 and robotaxis and all of that. So the platform that we started to build was the same common platform for both cockpit and ADAS because we started to add the safety capability. And I think it was a very good decision because it has allowed us to flex in the direction of getting down to entry-tier chips, which we've now had available commercially over the last 3 years or so. And then this next generation, we have moved up tier into premium and super premium.

So in the same window of time, we actually have this portfolio that really scales across the board. There isn't anything that we do not have as far as silicon road map goes on our platforms, except for some very basic entry commodity silicon. And so that makes it a portfolio that is super complex to contend with for many of our competitors because it is reliable. We have tens of millions of chips that we are deploying annually, multiple hundred millions deployed. They're all safety grade. They're all supply resilient, multi-sourced -- quality proven, software proven. And so for somebody that is trying to do this for the very first time in an environment where there's massive risk in terms of execution, in terms of a global footprint, geopolitics, I feel pretty good that I think we are actually in a pretty good place with the strategy. I mean, it's played out well.

Yes. Well, clearly, you're well ahead of plan and doing $4 billion in revenues already at a time, like I said before, that's been challenging. So something has gone very well for you. So that's definitely a complement. You said 5 years ago, the focus and the bet at the time was placed on L2+ and below. Has that evolved now to a higher level as you've succeeded and gotten more knowledge of the industry?

So we are transitioning to an end-to-end AI architecture for our stack, and that becomes very data-driven. And as you have a data-driven approach, then you want to be able to make sure that you can keep advancing the same stack towards L3. But we feel that the majority of the market is still going to remain in that L2+ space. And there are a number of reasons for that. I think one is just the liability that the automaker has to take on. The other is the cost pressures, the market adoption, consumer adoption. I think the teams that we have are developing a stack that will certainly be ready for an L3 implementation.

We are thinking about this more in the context of redundant architecture. So if you deploy an L3 architecture, what is the fallback how do you deal with the safety aspect. So for us, what has become a great learning in the partnership with BMW is that you really have to focus on the safety aspects of the architecture that you're building because at the end of the day, that is what matters, right? I think these are all great features to talk about and read about. But as a consumer, if the product that you're building, you can't stand behind from a safety perspective, it's not going to get all the much traction. And there, we feel like at least one competitor has taken that seriously, and I think they do a very good job with it, and that's the approach that we're taking.

So when customers -- when suppliers, semiconductor suppliers get design wins, everybody talks about them. You guys talked about getting 20 OEMs and a bunch of, I think, 12 new design wins last quarter, all great numbers. We hear from a lot of your competitors, the same customers, design wins with the same customers. How externally do we reconcile that everybody has the same design wins with the same customers? Are they on different SKUs, different models? And especially as you move into ADAS, it seems less and less likely that you would have a multisource agreement. So how do you guys suggest we reconcile that?

I think it varies quite a bit. I think it varies by OEM. It varies by region. It varies by the domain that you're referring to. For example, we see less and less multi-sourcing across telematics and infotainment. In ADAS, we see multiple generations of programs coexist because those programs run long, sometimes they get delayed. The next-generation program that needs more functionality will probably overlap significantly with the previous generation program. There are aspects of the car architecture that come into play.

For example, electrification has a massive impact on the architecture, the EV architecture of the vehicle. That has a very specific set of suppliers that have been selected. So there isn't really a single SoC supplier to a single domain, especially for the mid- to large-sized OEMs. The smaller OEMs, it's pretty much one or the other. But -- and then as you start to look at China, where the pace at which the market is moving is much faster, you absolutely have overlapping programs all the time.

So to try to put some rough numbers around it and your willingness to give these, if you guys don't give them, then fine, you can just say that. But as investors think about the content per vehicle and how that changes over time, not necessarily today to tomorrow, you could put it in multiples. But as you go from connectivity to cockpit to ADAS, how should we think about what sort of multiplier effect that could entail?

So I think yes, we have not really broken this down in terms of the actual ASPs. But I think connectivity is very predictable in terms of what are the types of ASPs, right? They're mostly they're mostly double digits. I think with infotainment and ADAS, that's where I think there is a significant amount of premium that is available, mostly because we are driving a tremendous amount of integration value. So we are massively integrating new functionality, coexistence. And we are reducing the overall system BOM for the automakers. So that's where we are able to extract the premium. But we haven't really provided any specifics on the ASPs themselves. I mean it's a range. It's a broad range depending upon which tier you're referring..

Right. But I think would it be safe to say the content per vehicle rises as you move along that range towards the ADAS side?

Absolutely, absolutely.

What -- and does the profitability scale directionally with -- you definitely don't break out what the profitability is gross or operating margin for your segment. I'm not asking that. But does it scale upward as you follow that same trend as the ASPs or content? Or is it more based on revenue scale?

Yes. I mean it's very dependent upon the tier that we are talking about, which underlying chip we are talking about. But yes, the profitability absolutely does scale. Yes.

So last question on auto because we do want to get over to the industrial side of things. You're doing almost $4 billion a year in revenue now. Your target is to get to $9 billion, like I said, in 5-ish years or so, 5, 6 years from now. What are the biggest steps for us to monitor externally that are necessary to get from the $4 billion to the $9 billion.

I think the biggest one is execution to the pipeline that we have shared. And so we have internally a way to track the rate at which the programs that we have won, how well are they executing. So that, I think, is a very clear leading indicator in terms of the rate at which the quarterly revenues are building up. I think the other is the win rate. Are we continuing to add to the pipeline? How quickly does it replenish? There is a lot of macro out there just in terms of tariffs, the sales of OEMs, China competition, what does that start to go look like, especially in Europe, especially rest of world. But I think the size of the market is also growing, right?

The silicon content in cars is growing. Every car is contributing to an expanding SAM. So I feel like, of course, there will be competition and there will be complexity. But I think cars by the end of this decade are all going to become fairly advanced products pretty much all over. And so that, I think, certainly plays very well to the strategy that we have. And as far as the road map goes and the investments that we are making, those are all made very well in advance. So most of the products that we have to go build are already designed or in design right now, and we are only doing this because customers have made a clear case as to what they're looking for in the next generation. So we feel pretty good about.

Good. Well, it's going well so far, indeed. So congratulations on that. Thank you. So why don't we pivot over to the industrial side of things. Now this is going to be a subset that you -- a subset of your IoT business that you don't break out, but I believe it's somewhere around $1 billion that you're responsible for of the roughly $6 billion, $6.5 billion of IoT. Is that -- it's a bit round numbers we're in the ZIP code.

It's a bit north of that.

A bit north of that?

Yes.

Good. better than south. So talk a little bit about the strategy that Qualcomm has applied to this market and how it might differ from what you did in automotive.

Yes. So -- so this is something that I've been managing for the last 18 months or so. And a couple of things ran through about this market that were maybe a little bit different from what we saw in automotive. I think one was there is a massive interest and need for Qualcomm technology to be adopted across these very wide industrial segments, but we needed to package our products a whole lot better.

They needed to be made much more relevant to the specific industries because there was not a lot of familiarity with Qualcomm in a lot of these spaces. They had to be made easier to use. We had to have the right channels in place, the right infrastructure in place. So that has now started to happen. And we've broken this down across 5 major product segments. We have an industrial connectivity product segment similar to what we have in auto, which is doing quite well. We have a camera segment that we are doubling down. So we have taken the camera space, called that out separately and focused on cameras as an area where we will see a tremendous amount of AI capability getting built out.

So that, I think, is actually growing very well. We have what we call our consumer and commercial processor business, which is really a very broad market from retail, enterprise, home and life, appliances, and that is growing very quickly. We have an industrial processor business, which is focused on all of these industrial applications, which we leverage a lot of automotive IP and products from. And then we have a new robotics and drones business. So we have organized the product segments to be very horizontal and very focused on a large number of verticals that can take that capability.

We have revamped our go-to-market team. So there's a lot of familiarity in terms of which verticals need what specific type of product. And then we are building solutions. So we are not just stopping it. So think of it similar to maybe not a great comparison, but like we felt the need to go build a stack because this was something that was going to have mass adoption. Similarly, we feel like in the camera space, there are going to be a number of solutions that will be needed because AI is just going to become the way that you engage with the camera.

So we are building out solutions across a wide variety of segments because we feel like as you get to the solution level, you're just going to be much more relevant to the end customer. We've also taken an approach to be very developer-focused, which is not something that it was a muscle that we didn't really -- we didn't have a need to really develop that in the past. But in this space, because there's just such a large number of people that are not developing with AI, having the ability to be able to be accessible to an ecosystem that as a B2B company, we had never really focused on.

So you'll hear more about this in the coming months about what we are doing there, but that's become a very urgent and important focus. So as you push in all these different bookends of the problem statement, I think overall, we just become relevant to a lot of players that we previously were not.

So at the highest of levels in the 2, 3 minutes we have left, the differentiation Qualcomm offers entering this space. And I know it's probably different in each of those verticals that you'd mentioned, but if there's a common thread, please summarize.

I think our scale, right? I think there are not many companies like us who exist in the industrial space. There are not many companies that are coming to meet customers where they're at in terms of trying to understand their end-to-end problems. Like, for example, we built a partnership with Aramco a year ago. We have 2 dozen projects that are going on. Just with that one customer, we have set up a team in Riyadh and in Iran to go support those customers. So our ability to be able to engage with the customer and get to a solution, given the scale at which our technology operates, our products operate, that is something that comes pretty naturally to us once we kind of provide focus to the problem statement.

I don't think there is really any other company that does everything from Bluetooth shelf labels to edge appliances to drones and robots and industrial processors, industrial PC chips. It's a massive portfolio in terms of what we have. So I feel very good about the projections that we have made in terms of the growth in the industrial and embedded IoT.

Is the go-to-market direct or more distribution heavy?

It's a mix depending upon the complexity of the product. Products that are more complex require a direct touch. We are also, as I mentioned earlier, very developer focused. So we are building out some more capability that allows us to make certain products simpler and easier to use, and that will make those products very distribution friendly. And then there are certain products that we do sell for distribution.

Talk a little bit about the -- I believe you're north of $1 billion in revenue, as you said. I believe in fiscal '29, Akash said you had a $4 billion target for the revenues, much like I asked on automotive in the last minute we have left, Talk about what it takes to get from where you are today to kind of quadrupling-ish or tripling depending upon where you are.

I think it's pretty straightforward. I think there are 2 types of customer profiles. I think one is the ones that we are very familiar with who are now consuming a much broader portfolio that was exposed to them previously. And that, I think we are seeing tremendous growth there, cameras, industrial processors, consumer processors, et cetera. The other is customers that are less familiar with us and where we have to change the profile of the product for it to be much more easily available and accessible to them. But the size of the market is very large.

This is not a small market and the number of products that we are putting into the portfolio are also very large. By the way, the other part that is interesting is we are not building a lot of new products for this market. We may build 1 or 2 products for what is a very large portfolio. So what that should tell your audience is we have a lot of capability in-house that we can leverage and reuse. So that obviously also helps us significantly in terms of the expense that we have to take on to enter these markets. And we are directing that expense towards software, towards expanding the channel towards building out solutions.

Well, Nakul, we're actually out of time already, but congratulations on the diversification that you've done. Automotive has been especially impressive, and we can all see that, but I know the industrial side has done quite well underneath the surface as well. So thank you for joining us.

Thank you very much.

Great. Thank you, everyone, for being here. I have the pleasure of hosting Qualcomm for the next session. With me is Akash Palkhiwala, who's the Chief Operating Officer as well as the CFO of the company. Akash, thanks for being here.

Of course. Pleasure.

And we wanted to start with automotive this time around. We've done this session a few years now in a row and started with different topics. But let's start with automotive and just outline for us the pipeline of opportunities and how should we think about those translating into revenue, particularly how to think about Qualcomm share where it stands today on a revenue basis that we can look at versus the visibility of market share that the pipeline provides you on the automotive side?

Yes. So let me start with maybe a few financial metrics, then go to a qualitative part of the answer. So as you know, we had set a target of around $4 billion of revenue in fiscal '26. We are very close to that in fiscal '25, and our run rate indicates that we'll beat '26 target that we'd set. So executing to what we said. We have set a target of $8 billion in fiscal '29. That's a 20-ish percent CAGR from where we are at. As we've said in the past, most of that revenue, cumulative revenue of the next 4 years, greater than 80% is covered under design wins we already have. So a lot of predictability in this market. You guys all know how the auto market works. Once you won something, you know it for a while, and so there's predictability and high confidence in getting to the $8 billion number.

What we like about our revenue stream is we participate in the growing part of the SAM, right? For us, it doesn't not as important as what is the total size of the automotive market. A lot of other companies who are dependent on the scale of the market -- the conversation is, will the market grow or not? How will you grow with the market? Can you grow faster than the market? For us, it's not that. The part of the market we participate in, which is cloud connectivity, digital cockpit and autonomous driving, just the SAM for us is growing at 15% in a flat automotive market. And we are very confident we can grow faster than the SAM because we're gaining share, new car launches are happening with our content. And so it puts us in a very strong position to execute on what we've laid out.

Okay. Let me follow up on that. The $4 billion versus the $8 billion how does the composition look different when you break it down between telematics, infotainment or driver display and ADAS, how does the mix look from 4 to 8?

So a year ago at Investor Day when we laid out our kind of pipeline -- design win pipeline, we had split it into 3 parts. So if you just eyeball the chart we showed, about 1/3 was ADAS. And of the remaining, the majority was digital cockpit and connectivity, right? The rest was connectivity. So it is spread across all 3 things. We also showed a chart that split that across geographies. And so in terms of -- when you think about the auto market, a lot of the questions people have is who's going to win? Is China going to take a lot of share? Is Europe going to take share? What are the Japanese going to do? We have wins across the globe. And so I think it puts us in a very strong position because the portfolio is very diversified from an OEM and a geography perspective. And it's very -- you play in a very strong portion of the market.

At the Automotive Investor Day, you also highlighted that total content opportunity per vehicle can be in the thousands of dollars in some cases. So is that really playing out? Like when you now look at design wins, are you getting certain vehicles where you have upwards of $2,000, $3,000 of content?

Yes. So if you think about what is happening in this market versus 2 years ago today, the connectivity content has largely remained the same, but the digital cockpit content has increased by a lot. I think competition is fueling the need to have a more modern digital cockpit, more modern instrument cluster, and it's -- everything is software-enabled. And we are the -- by far, the #1 supplier for cars in those. So I think we're very, very well positioned. Agentic AI is going to change that further. Of all places, car is a place where your hands are busy and being able to have a conversation with your car about any topic and being able to ask questions and do things is going to be very critical. So I think that is also going to help us both from a content perspective, from an on-device AI perspective. And I think it puts us in a very strong position going forward.

Sorry, last one, I should have addressed it. On ADAS, we're seeing the same thing, right? The content is growing up over the last year, especially, you've seen an acceleration of features that everyone is trying to deploy. incredible trend for us because what has been happening is we would win sockets with folks and they would say, I have a top-tier car, a mid-tier car, low-tier car. And so I have -- I need 3 separate tiers of parts. And that's how we won the design. But when you get to the launch, they want to take the top-tier performance and launch it in more tiers of vehicles and which is great. The more the market moves up, the better positioned we are.

Okay. Let's talk about BMW. You've referred to them as a sort of big customer, and that's maybe for us to understand sort of why that's a big milestone for you. You focused on the Snapdragon Ride chips, the co-development of the stack for this market. But why is BMW win such a big milestone for investors to take note of? What is the volume implication of it?

Yes. So let me address it in 3 parts. When we think about our ADAS business, the first is the chip for the ADAS enablement in cars. We've said there are approximately 20 OEMs that we've won that are using our chips for enabling ADAS. So this would go all the way from BMW who are using our chip and our stack to some of the Chinese OEMs who will use our chip, but they'll use a China stack to another set of companies who are trying to develop their own stack, but they'll use our chip with it. So for us, business #1 in ADAS is to win the SoC socket. The second opportunity then is to win the stack on top of it. And the stack market, obviously, very interesting stuff happening. There's a -- there are a few stacks in China. Internationally, I think we are 1 of 2 or 3 stacks that are merchant and then you have certain OEMs who are working on their stacks as well.

The reason why the BMW launch is so important for us is it is a jointly developed ADAS stack. And so we've taken the assets from the acquisition that we did, combine it with BMW's asset, and we've developed this stack together, and it's being deployed at scale in new BMW cars globally. Most important thing about something like a stack is you have to verify it on the street at scale. And BMW allows us to do that. So once we've done that, the opportunity is to take that stack and sell it to other folks, other OEMs. And we already have a couple of wins. But I think there's a lot of OEMs who want to get a merchant stack from someone outside China looking for a non-China stack, we would become the option for those OEMs. So very excited about the launch that's coming up and very confident. Obviously, we've done a lot of testing very confident of the product and so looking forward to seeing the launch happen.

And the third part -- sorry. The third part that's important is if we broaden the horizon on this and think of ADAS as really physical AI, this is the first step for us. The second step then becomes taking the chip and the stack and applying it to robotics, to drones, to humanoids because a lot of the problem statements are the same. You need a lot of sensor fusion, you need low power, you need small form factor, you need wireless connectivity technologies. You need a very good camera. You need object tracking and things like that. You need to be able to take a lot of input that's coming in and make sense of it as central compute. And so in some ways, everything that Qualcomm does well in one device would be a robotics end market for us.

So the reason why I'm excited about ADAS beyond the direct financial opportunity in auto is that it becomes the platform for robotics going forward. And then obviously, that's very exciting for us.

I was going to ask you, so what you're saying is you have the stack with your own assets plus BMW, you're allowed to resell the entire stack? Or do you have to go add, integrate with every OEM?

So we are allowed to resell the whole stack. So the way the business relationship with BMW works is you develop the entire stack together, they get to use all the technology for free for their cars, and then we get to use the entire stack for free to everyone else, and so we can monetize it.

Got it. Got it. Okay. Robotaxis. A lot of excitement, enthusiasm around it recently. I mean the easy question is what is Qualcomm's sort of view on the market? What -- how does Qualcomm play into this market eventually?

Yes. So I think several parts to that question. Our view is clearly, it's a good thing because that drives more demand for autonomous driving features and content. In our minds, there's going to be select pockets where robotaxis will are taking off in the short term. But it doesn't change the overall auto market for a while. And I think we have a great position in it. And this will drive need for more content, more capable chips, more capable stacks. And all those things are positive for us. So I'm excited about what's happening. And as kind of we roll through the next few years, it will show up in our performance.

But in the announcements of the 20-plus OEMs that you won, like is that -- is actively engaging with robotaxi OEMs a part of that? Or are you sort of -- that will be incremental to the 20 OEMs?

Well, we have some content in each of the -- everyone uses our chips, right? So even if you take any robotaxi examples, there is a certain amount of Qualcomm content in those devices as well. It's really the question of how much of our content is being used in those cars and primarily on the ADAS side for cockpit and connectivity, we still have incredible opportunity in those cars.

Got it. Got it. Okay. Before we transition off from the autos topic, just relative to NVIDIA and Mobileye, which are your key competitors, where do you think your capabilities stand today, particularly if I take a 4 or sort of 5-year view and say, full autonomous driving, obviously, like Mobileye has been talking about it for a while. How do you think about sort of differentiation, particularly with your Ride Flex SoC on that front?

Yes. So we don't compete with them in connectivity. We don't compete with them in cockpit. The competition is really limited to ADAS. The Ride Flex concept, if everyone's not understood it yet, I think it's a key one to understand. What we've done is we've taken our digital cockpit chip, and we've enabled ADAS on the same chip. So you can take the same piece of silicon. And if you're a lower-end car, you get to enable ADAS with that same chip. And then as you go to a higher tier car, you can take the exact same chip, put a chip next to it, the same one, and the software is completely compatible, and they can act as backup for each other. And then you go to the premium tier and you want a more capable ADAS chip in that case.

So Flex is a unique way for OEMs to leverage that investment in cockpit and enable ADAS features, especially the low-tier cars and which is, I think, a unique position in the industry, and it allows us to kind of scale up from there. And it shows up in the design wins and the traction we're getting. Overall, when you kind of step back and look at our competitive positioning with those 2 companies, we think we're in an incredible place. I think the scale of our investment in cars across all different technologies is very differentiating versus what they're doing. The SoC in our minds, it's very clear that we have the best SoC in the industry. And then we're going to launch this stack with BMW, which will kind of verify our stack credentials as well.

So I think we're in a very strong position. By the way, today, we released a white paper, so doing it specifically for this conference. We released a white paper on automotive and ADAS and our position in it. So if you're curious about the topic, you can take a look at it.

We'll do. And maybe just a financial question on that front. You had strong performance in fiscal 3Q in the automotive segment, but the guide for F 4Q implies a moderation in the year-on-year growth rate. Our impression is those growth rates should start to track higher once you have more ADAS coming through from the pipeline into the revenue. So one, is that sort of a fair expectation? Second, what does the timing of that look like?

Yes. So it is a fair expectation. We had like incredible growth rates in the first half of the year. So it's a difficult standard to hold anyone to. You're not going to keep growing 60% a year in this market. But we're super happy, as I said earlier, kind of the key thing is based on the targets we have set, we are looking at a CAGR of 20%-ish over the next 4 years, and we're very confident we can well exceed that. Just in terms of timing, the way our ramp -- revenue ramp is working, we started with the connectivity portfolio getting activated and that drove the revenue in the initial years. Over the last 3 or so years, it's mostly been driven by cockpit launches, and that will continue. But now starting -- now going forward, we're going to have ADAS launches that overlay on top, and that will accelerate our growth rate. So that's how the pyramid is playing out over time.

Okay. Got it. Let me just pause and see if there are any questions from the audience -- just wait for the mic, I think.

Just in terms of the AI proliferation in terms of LLMs into the car, in terms of your conversations or how you anticipate it playing out, do you think that it would benefit the connectivity portion of the business first or the cockpit portion in terms of moving to 5G faster, enabling better connectivity and pushing to the cloud or on device?

Yes, yes. So very -- lots of layers to the answer. I'm going to try to be succinct so I don't keep talking. Let's start with cockpit. For cockpit, it is super simple. Using agentic AI as an overlay combine it with the cameras that are in the car, combine it with RAG of the manual of the car manual and then connect it to sources like salesforce that has service data and things like that and you create an agentic front end outside of really controls of cars. There's an amazing opportunity just around that, completely transforming how you interact with your car. I mean, today, in any modern cockpit, you still have to touch things while you're driving and doing it. And there is no reason in the modern AI-enabled agentic workflows for you to have to do that. And so that clearly, the cockpit experience is completely going to change. And you can argue whether it's 1 years or 3 years, but tremendous opportunity there.

ADAS, it's interesting what is happening with the stack. The stack used to be largely based on you drive the cars, you get the information, you train the stack on it, you improve the stack based on the scenarios you're getting and making sure that it's a stack that is highly performant. What has happened with AI is now you're creating synthetic scenarios and improving the stack much faster in the lab without any car really driving outside. So just tremendous acceleration of how you improve your ADAS stack with the use of AI. And what happens is when you adopt these technologies in the car, wireless connectivity, 5G performance becomes very, very important because some of these use cases are dependent on a wireless link to the car. And so it helps all 3 things that we do in the car.

But if you kind of forget the wireless link for a second, most of the processing is happening in the car. And it's a great example of the vision we've been talking about for a while of on-device AI. And we think it doesn't stop there, right? It goes -- it happens in the car. It will happen in any kind of physical AI, the robotics area that I mentioned. It's going to happen in personal devices, and then it is going to happen a lot in industrial devices. So I think you're seeing kind of a front end of a very, very broad adoption of on-device AI, and that obviously is a very strong trend for us.

Okay. So maybe moving to IoT and you've -- let's start with what are the big group of products that are driving the growth in the segment. You had strong results in Q3 as well. So maybe XR glasses are one, but what are the other product segments you would like us to think about that's driving the growth? And just given the strong results, the overall -- there's always this overarching sort of concern that there might be a bit of pull forward from the supply chain and trying to get around tariffs. So how do we think about whether that's -- you're seeing anything on that front or not?

Yes, yes. So as you know, what we call IoT is very diversified within itself, right? So you kind of have XR and let's categorize all wearables as a part of personal devices. You have PC, there's industrial and there's networking. So those 4 is what's driving the IoT revenue stream. Let's talk about each one. Personal AI for us is kind of -- we are at this place where there is a massive transformation happening. What used to be the scenario is you put a phone in the middle, all wearable devices, including XR, were just an add-on to the phone.

Increasingly, what is happening is, one, there is a very strong push from several players to make personal device a separate ecosystem that is -- and then glasses are the best example of it that can see what you can see, that can hear what you can hear and that can be your gateway for personal agentic AI experiences. And so it just -- it's the most logical form factor you can think of. There are people who are making lockets. There are people who are making a box that sits on the table with you. There are people who are making a watch. And in each case, -- what you're trying to solve for is how does this become the personal device that knows everything about you, that becomes the gateway for personal agentic AI experiences. And it's a device that can hear what you can hear, see what you can see. And that's kind of a gold mine of information, user data, services opportunity, just tremendous. And so everyone who has a model, an LLM model is trying to make that device and win that device.

The fortunate place for us is they're all using our chip. And so we are the underlying common thread across all those devices. And so it puts us in a very, very strong position. We very much believe in this vision. The reason why we like this market is this is a market that requires very -- think about glasses for someone to make a 50-gram glasses. It needs to be super low power because the battery life has to be strong. It has to be lightweight. It has to be very small. It has to be integrated with memory and other things like that, so that you can further shrink the form factor. You need very good wireless connectivity and you need on-device AI, right? So we showed a 1 billion parameter model running on the glass, which is required, at least that much is required to do at least the bare minimum of an agentic AI interaction with the glasses.

And so we're very excited about what we have there, and it's a new device category. It's not -- you shouldn't think of this as this is a watch market, which has 20 million units or this is a glass market that has 5 million units. It's really a new category of device that we'll see how big it gets, but it has the opportunity to be very significant. And it's not in any financial forecast for Qualcomm.

The second category I want to talk about is industrial AI. So one of the things that has happened over the last several years is, especially with phones, a little bit with PCs, is entire companies got created by monetizing data that was created at the edge in those devices. So obviously, Google and Meta are the best examples of that. In industrial AI, a lot of data gets created, tremendous amount of sensors. Camera is the easiest sensor to think of. And that data doesn't become actionable, right? I mean if you think about security cameras, it's still someone sitting in a room staring at 10 TVs trying to figure out what they should look for versus just running an AI model on the camera. And so we're kind of at this very interesting place where the industrial market was already transitioning from microcontrollers to microprocessors. But AI completely changes what you can do with it now. And so in our mind, industrial AI is kind of a next 10-year trend, tremendous opportunity.

As that happens, the market will automatically move from people who make microcontrollers to people who excel in edge AI. And this is an example of an area where edge AI is important. It's not just like ADAS, you need to do it in the device, in the factory for privacy, security, latency, cost, all those reasons. And so we think we have a great position there.

And then finally, on PC, this is a market that we said, okay, there is a disruption in the device because of what Apple did. They brought the power of a cell phone chip, a smartphone chip into the PC and change the performance metrics. We are doing the same for the Windows ecosystem. we are very convinced, especially with everything else that's going on in the market that this is a sustained trend that is going to happen, whether with Qualcomm or not, it is going to happen, and we are best positioned to monetize it.

What we've achieved so far, the step #1 for us was to come in and establish ourselves as the best performing chip for the Windows ecosystem. And we think we've achieved that. And we're going to double down on that in a month when we announce our next set of chips. So very excited about establishing ourselves as the performance leader. The second step was then to start building the go-to-market muscle, which, as everyone knows in the room, this market is not easy to get into. It's a very, very complicated go-to-market motion by design. And what we wanted to do was establish ourselves very strongly in U.S. and Western Europe because a lot of the market sits there in retail. Enterprise, obviously, is going to take longer and kind of overlays over a period of time. And we've done a very good job of that. I think we've talked about 9% share in the part of the market that we play in, in those geographies. And so very excited about that as well.

And any pull forward from a perspective of timing and trying OEMs trying to get around tariff.

Not really tariff related. I think as new launches of devices happen and XR being an example where there is obviously a big launch that happened, the new Ray-Ban glasses, but then also the Oakleys. There are builds that happen for launches. And so you see the benefit of that show up. But it's not necessarily tied to tariff. It's just tied to the normal launch cadences in the market.

Okay. Got it. And on the PC front, one of the questions I had for you was you keep -- like you've been referring to this 9% share, excluding the emerging markets and some of the lower price points, I think, below $600 is sort of what you exclude. Is that sort of what we should think is embedded in your $4 billion revenue guide as well? Or do you cover -- incrementally cover the white space in that emerging market as well as that lower price point over time?

Yes. So if you look at the dollar SAM, so there's a unit SAM and there's a dollar SAM. And as you know, the way we think about the cell phone market is you have to win in the dollar SAM, and we are by far the leader there. And our view here is the same. You have to be the performance leader and you have to win in the dollar SAM addressable market. And so very much everything we're building is focused on $500 and above. Of course, there is a very easy opportunity for us to just take an existing phone chip and apply it to the $300, $400 PC market, and we will do that eventually. But that's kind of later in our priority list. We want to make sure that we establish ourselves at the performance end of that metric.

Okay. Great. Let me transition to the data center opportunity that you've talked about. And maybe starting off, how should we think about how much of this opportunity for Qualcomm would be CPU related versus NPU related versus maybe even connectivity related?

So maybe let me step back and talk through how we're thinking about the opportunity, why we think it's an opportunity for us and then kind of stay away from specifics for now because we've not -- I'll stick with what we've already disclosed. We have -- in our minds, we have the best CPU on the device. Best custom CPU, right? So we've taken -- we have an architecture license. We've built our custom CPU. We've proven it in phones. Now we've done it in PC. Data center is the next logical step. The idea is to take that, scale it up and make it available for data center. As all of you guys will recall, when we bought NUVIA, the market they were actually focused on was the data center market. So we redirected them to phones because that is what was important to Qualcomm overall.

And now we're kind of -- since we've executed on that, we're going back to the opportunity that they were focusing on. And so that's very logical. The foundation of it is the performance of our CPU. It's that simple, right? And if we can go into positions where we have a performance advantage, then the incremental cost to us is limited. So when I think about it financially, the CPU is already being done for other reasons. And then we're taking that and applying it to a different market. So it's an incremental cost metric for us rather than an absolute cost metric for us when we think about it.

The CPU market is split into kind of the classic CPU market. And then now with AI, you need the head node for that as well. And so that is a market that is expanding by a lot. It's not a mature market anymore because of multiple reasons. And so we have the opportunity to play in both. And that's opportunity number one. The second one is the AI opportunity and inference is what we are focused on. And you should just think of it as we have core assets that apply to the data center market. So if you're looking to do things where power is the absolute requirement and you want to be very low power, certain -- several use cases are about power performance. We can bring our NPU from the edge to the cloud. And so that's the play. Clearly, one of the important assets in that area is having connectivity in the data center. And so especially for inference, that's important. And so our acquisition of Alphawave will add to the capability that we already have on the NPU side.

And so the focus is can we combine those work with data center first-party workloads where we can focus on a specific problem statement and build a chip that is highly performant versus the alternatives that they would have. And so that's the opportunity we are chasing. And as we've said, we have kind of one large customer that we are very engaged with. And there are a couple of other conversations, one with HUMAIN that I'm sure you saw that we have an MOU, but there's work to do in really kind of translating that into a product and revenue. And then we also had a press release on NVLink as for us being able to integrate the other side of the link into our solution so that it becomes relevant to the NVIDIA ecosystem of products.

So there's a lot of stuff we are doing. But the core premise is relatively simple. Core premise is we have a very strong technology base from the device side. How do we leverage that technology into specific problem statements in the data center? And how do we look at it as incremental investment, but then exploiting a very large available SAM for us.

For me to be clear -- so our focus on the business center will start with ARM CPUs. And then -- okay -- so in the data center will start with ARM CPUs and then we will work on the full ASIC solution, all under the NUVIA team. Is that correct?

So the team is not really relevant, right? Like it's a Qualcomm team. And the team that came from NUVIA is a CPU team. We obviously have a lot of accelerator expertise, our NPU on the device side that is independent from the NUVIA conversation. And that's in every chip that we make, right? So a very, very broadly used asset in our portfolio and which is relevant to the data center as well. I don't know if it is this one and this is 2, I wouldn't think of it like that. I just think of it as 2 separate opportunities, both are relevant. And we are in discussions with a lot of customers. And as we said before, when we have news to share over the next several months, we're going to -- we'll communicate that.

Have you talked to when we should expect some revenues?

Yes. We said fiscal '28 is what we've said for now.

Okay. Did we say whether it's CPU or ASIC...

We did not.

Okay. So if I can just follow up to the revenue timing question. I understand that a large hyperscaler, the engagement takes longer. But in some of the other engagements that you're highlighting, is there opportunity to see revenues earlier? Or is that just the road map in terms of your stack being fully ready to sort of commercialize and even with the other customers, it's probably going to be fiscal '28 or beyond because you have a stack?

I think for now, I'll stick with the time line we've talked about. Of course, we have chips that are already relevant today. We've been in the accelerator market for a while. And so that could be a way to accelerate it. But I think for now, let's focus on what we've said.

One of the other questions I've got from investors recently is how dependent is Qualcomm on the IP from Alphawave to pursue the data center opportunity as in if there was to be a roadblock on the acquisition, how can Qualcomm still pursue this opportunity independently?

So I mean, at this point, we expect to close the transaction in the first quarter of next year. So no change to the assumption we've laid out. So as you guys know, Alphawave is a licensing company. They've licensed their IP to various folks. And so that's always been an alternative for anyone who's playing in the market, and Qualcomm wouldn't be any different. The key asset for us is -- think about the number of chips we have, our expertise in process, low power, we have an NPU and then the incremental asset would be the connectivity asset. So I think there's a lot of assets that we have independently. And then the CPU is obviously kind of a separate conversation. Of course, it leverages connectivity as well, but the product there is obviously more concentrated on assets we have today.

Okay. One of the questions I had for you is -- and this is my view looking from the outside in is most of the semiconductor companies today playing in the AI space are ones that are proving their compute capability or leadership in training and then looking to extend that into inferencing, whereas Qualcomm strategy being we don't want to really go after the training market, we will intersect the market right at inferencing. Does that not pose certain hurdles in terms of seeing adoption? Or do you not have to prove your leadership in training to get to access to the inferencing market?

Yes. So think about what we do on the edge today, right? A lot of things that are run on the edge, pretty much all the workloads are inferencing. They are trained on NVIDIA silicon, and they are run on our silicon at the edge today for inferencing. And so I don't think that necessarily -- I think in my mind, that carries over to the cloud as well is you're going to have workloads that are trained on NVIDIA silicon and running on other silicon, we'd be one of them. So we don't necessarily think we need to go into training first to be able to go to inference. It's really inference is our strength, and so we're going to play to it.

Okay. Okay. Any other questions before I switch to handsets? Okay. Let me continue here. So let's switch to handsets for the last few minutes. Your guidance for fiscal fourth quarter, that's mid-single-digit year-over-year growth, that did come in better than expected by investors and ahead of what seasonality expectations from investors were when you adjust for the share loss with Apple. Just help us understand the drivers there. What's embedded in sort of the fiscal fourth quarter or September guide? And maybe why isn't there a bigger headwind from the Apple share loss?

So Apple is what it is, what we've already said. So this is really kind of an Android conversation. As we've said in the past, there's like 3 big things that are happening in the Android market that has helped us over the last, I'd say, 2, 3 years. Content growth, we've seen a lot of increase in content, especially at the premium tier, which is where we are strong. Second is mix shift up. People just continue globally to continue to buy more expensive devices when they buy devices. I mean Samsung just launched the fold, very strong traction, initial traction for the device, and it's just an example of what is happening in the market. The third thing is, especially in China, the Android ecosystem has gained share versus Apple, and that's highly accretive for us. We've said in the past that the content opportunity for us in Android is multiple -- several multiples of what it is in Apple.

So those 3 things are strong, and those are showing up in our numbers every quarter, and that's just a reflection of the market that we have. The one other factor that did help us is we are launching our new premium tier phone chip sooner this year versus last year. And OEMs are going to launch phones right away, Xiaomi being the first one right away with our chip. So you're seeing the benefit of that happen within the quarter also.

Okay. Got it. On the Xiaomi front, you have the long-term agreement that you've signed with them. You have a long-term agreement with Samsung as well. So that assures you a leading share position on the premium end. Is that something we should expect become standard practice for you across all OEMs that you engage with is to have a more longer-term contract to have more stability in terms of share?

To be honest, especially at the premium tier, the engagement with OEMs is always long term. On the technology side, it's always been -- you have to plan 2, 3, 4 years out. There are times when we have a contract that I think makes everyone more secure. But even when we don't have a contract, there is -- the engagement is several years out. So I'd love to have contracts, and I'd love to have predictability in the business. But I don't necessarily see it as a required part of how we operate and something that we'll want to actively pursue with every OEM. There's a different conversation with every OEM, and we'll adopt accordingly.

Okay. And then you have the customers like Xiaomi still pursing in-house solutions at the same time while they're assuring you higher revenue year-over-year. Like how do you see that playing out? Do you see them sort of pursuing those in-house solutions more at the premium to you? Or is it more about sort of addressing some part of the low end that you really didn't sort of anyways were not going to be interested in longer term? How do you think about sort of that road map playing out for some of those OEMs?

It's no different than competing with internal solutions in the past, right? Like we've done it with Samsung for several years. And what we've ended up with is a majority of the share in the premium tier and minority has been for their internal platform. The reality is in this market that is so competitive, there's 2 things that are very important for every OEM. First is to keep up with Apple and have the best chip in the market. Second is to not just grow within China, but to export globally. And both those things lead OEMs to Qualcomm. And so we like our position. For us, it's relatively simple. You have to lead in technology and then the rest happens as you want it to happen.

Okay. Let me do a quick check before moving to the final questions here if you have any. Okay. So let me wrap it up with the final question since you have a flight to get to. Margins for QCT going forward, one, how sustainable is this sort of 30% level in QCT, particularly with Apple revenues coming off? And more, if I add one more nuance to it, you have highlighted that once Alphawave comes in, there's an incremental OpEx associated with that. So how should we think about 30% being sustainable in those 2 scenarios?

Yes. So if you look at the scale of Apple revenue and look at the scale of the growth opportunity that we've outlined in IoT and auto, forget handset for a second. We think handset continues to grow very strongly as we have over the last several years. The opportunity for growth is multiples of the revenue we have at Apple. So I think when you kind of step back and look at the next 3-, 4-year horizon, we expect to have strong growth rates even with the ramp down. And in the end, that is what matters for an operating margin target, right? So timing across quarters and across months may move around. But I think when you look at -- when you step back and look at the broader spectrum, I think we have an opportunity to continue to do very well on margins as we have done over the last year.

Okay. And does Alphawave-related cost add any sort of near-term headwinds on that front?

I mean on the cost side, as we've said in the past, our framework is pretty simple. We are reducing investment in our existing mature markets, moving that investment over to diversification areas. And then we're adding people where we have new skills that we need, right? And so Alphawave would be an example of new skills to get into data center. Of course, as we do the data center chips, that increases our OpEx a bit as well. But that's the framework, right? We're not looking to really kind of -- the core technology scale of the company exists regardless. And then it's really these diversification initiatives that add OpEx on top.

I will wrap it up there. Thank you. Thanks for the attending the conference. Thank you, everyone.

Thanks, everyone.

Great. Thanks. Welcome, everybody. Thanks for joining our discussion. I'm Rick Schafer, Oppenheimer's semiconductor analyst. I'm joined today by Nakul Duggal. He's the GM Auto, IoT and cloud at Qualcomm. Nakul has held multiple leadership positions since joining Qualcomm in '95. So I guess, 30 years at Qualcomm and [indiscernible]. Nakul, thanks for joining us. It's great to see you and appreciate you taking the time to chat with us today.

Thank you for having me Rick? .

So maybe I'll just go and kick things off with a little bit of background on you, maybe you could walk us through your journey at Qualcomm and landing the various leadership roles you've had, particularly automotive and IoT any milestones along the way that you'd like to share or highlight?

Yes. I'm a Qualcomm [indiscernible]. I started off, my second job out of school. The company back then was a -- I guess it was a large size start-up, but we were in the very early days of digital communications, which was all the rage. This was back in the CDMA days. And so seen a lot in terms of technology evolutions, how ecosystems are created, how the mobile Internet kind of came to life. And I got involved in automotive over a decade ago. And it was really one of these transition points where I was looking to do something outside of the smartphone business and took on kind of new market development opportunities. And I think it's been a fantastic journey with automotive.

We've actually, in my mind, changed the way that the automotive architecture work, software-defined vehicles, central compute, the role of semiconductor. And we also changed how automakers engage with the ecosystem in terms of how they define the car architecture, who their ecosystem is, who do they lean on, how do they do software development.

So we've been active for over a decade. And we've been doing it at scale. We've been doing it in every part of the world with every OEM, every Tier 1, understand the market really well. And so I think it's paid up. I think the automotive success is certainly one of the big milestones. Trying to do the same thing with industrial now, and that's just started about a year or so ago. So my history with the company is to really get involved in diversification, new businesses and take the strengths of the company, close out the gaps, build out teams, build out technologies, build new partnerships.

Thanks for that background. So maybe we could dig into Snapdragon Digital Chassis a little bit and what makes it unique within the auto space and maybe talk about the breadth of your IP portfolio, any other attributes that you can think of basically that's driven off your -- that's differentiated, I guess, your approach or your growth.

Yes. I think when we started to think about how should we engage with the automaker, there were a couple of things that became pretty apparent. I think one was the traditional semiconductor ecosystem wasn't really good enough for the automaker to be able to transform itself. You needed to bring in a lot of technology, a lot of innovation from other industries. I think that was kind of point one.

The second thing that was apparent was the car is really this fantastic platform because it is a multiuser platform. It's a platform that has a very high bar for safety and quality. It has a much longer life cycle than a consumer device might. And at the same time, it needs to feel like a consumer device. It needs to be used by a variety of different people. It has a real-time nature to it in that you want -- it's about going from A to B. So it's all about being in motion.

And it is consumed the same way the world over. Everybody has a pretty consistent way in terms of how they want to consume the product that is a car. So we felt that there was a lot of opportunity to actually completely rethink what the car could look like, and we coined the term the digital chassis because we have so much of technology inside the company that we either adapted the technology or we instantiated the technology into different types of products for the automotive ecosystem.

And that's the approach that we took towards building out a portfolio. We did this in partnership with automakers. We did this with our Tier 1 ecosystem partners. We did it with folks that have a tremendous amount of experience with the ecosystem. So we kind of embraced the industry. And I think that approach paid off because it allowed us to shape what we had to do to the company to become very relevant to the automotive industry. And I think that's kind of a good maybe representation of what the journey look like.

Fair enough. And Qualcomm has obviously established a leadership position, at least in digital cockpit and you look at MediaTek and traditional maybe microcontroller or analog peers, they all seem to have aspirations in this large market. I mean it is big and dynamic and growing and all the things. So how do you perceive that competitive threat out there today? And what are you doing to stay sharp and stay ahead?

I think, so clearly, the market has grown significantly. We've been a large part of driving that growth, and it's expected that there will be competitors. It's a very interesting market because it feels like a very exciting market from the outside. It's a tough market. You really have to know what you're doing. There is nothing that you get into that's not going to require you to be there for your customer for 10-plus years. You have to be at scale.

You have to really own every part of the problem from quality to supply to delivery to software to hardware. You have to be part of an ecosystem. There has to be a tremendous amount of trust that you have to build with your customer base. Today, we are fortunate to be -- we've changed the trajectory of our road map and that we are now building safety-grade silicon, and we are going to commercialize our first automotive driving stack with BMW.

We'll talk about that a little bit next month at IAA. We couldn't have imagined being able to do all of this, and it's only possible if you actually have a tremendous amount of trust that you build with the ecosystem. So it's not a market that is -- that has very low barriers to entry. Of course, the ecosystem welcomes a lot of competition, and we are very comfortable in the path that we have picked.

We are very diversely deployed across many, many different types of markets, technologies, use cases, applications, regions. So we have a pretty good sensor within the company in terms of what trends to pay attention to, what to not chase, where to cross-correlate. And that I think has paid us -- I think that's paid off pretty well.

Fair enough. And shifting a little bit to ADAS because I believe it's 1/3 of that massive $45 billion backlog you talked about a design win pipeline there. I think investors, I think, rightly so view that as the next big leg of growth in your auto business, maybe your overall business given the size of that design win pipeline. So I don't know if you could break down that business a little bit between SoC and stack and maybe hit the ADAS SoCs first, if you want to talk about how you win versus the NVIDIA and the Mobileyes in the world. And yes, I'll leave it there, and I've got a follow-on stuff, of course.

Yes. So maybe the way I'll maybe try and split it up is there is the stack part of the conversation and then there is the SoC part of the conversation. The stack part of the conversation has been playing out for the last decade or so. We have gone from driver assistance all the way to robotaxis, and you see pretty much everything has been deployed, has played out. And I think what really comes down to is what does it take for you to deploy these applications safely at scale, where it actually starts to make an impact to you as a consumer, to you as a driver.

Does it make the vehicle safer. And that was the premise under which we started to think about entering the stack business. For us, it was about let's go after a market which will have very high attach rate that's going to make an impact to the driving experience. It will make the car safer. And if you pick something like that, that's going to kind of take a life of its own. Once you build the trust, it will evolve.

The SoC strategy was actually a little bit different. What we decided about 6, 7 years ago was if we have to be in the automotive business, we can't be seen as a smartphone company. We actually have to almost go deep into embracing not just quality but safety. So we decided to actually build a completely different architecture, a different fabric for our automotive compute SoCs that was from the ground up designed for safety. We designed a lot of IP inside the company, and we decided that we will actually build a safety-bid technology IP road map.

And it was a very wise decision, because today, if you think about how workloads are deployed, it's -- there isn't really any difference between whether it's a consumer workload or a safety workload or an AI workload. It's all the same. And because we went down this unique path, it gave us a lot of flexibility in terms of how our products could be used.

So one of the reasons why we've actually accelerated our ADAS win rate is that customers want to develop on a common platform without necessarily worrying too much about what they could run today, what they may not be able to run tomorrow, does the architecture come in the way. And we focused on some really tough customers in the early days to get them on board such that we could through our safety chops.

We did that for both the stack and the SoC. Once we did that, and there was enough trust and enough credibility built in, then it's just become a pretty standard industry platform on top of its customer design. So we are starting our commercialization journey on the ADAS stack next month with BMW. The silicon has been in market for over a year now, actually more than that, probably 2, 3 years now, but it's scaling up. And so I expect the rest of this decade, we're going to see a lot of ADAS business.

On that topic with the BMW, I believe that's a co-developed stack. So I'm always curious in those kind of relationships, how fungible some of that IP is, because I'm sure you're talking to other customers, potential customers on the stack side, we'd like to leverage the learnings elsewhere, right? I mean, so how does that work? I don't know if you can walk us through that at all.

So everything that is computer vision is actually completely wholly-developed by Qualcomm. The rest of the stack, the driving stack, the actuation, the driving behavior, the drive policy, all of that is codeveloped. And you're right, there is definitely adaptation that you have to do to carry that stack over from one OEM to another. But I think what is also starting to happen is that the market is kind of starting to settle down to where OEMs have a pretty good idea as to what they would like to offer at a certain vehicle trim for a certain performance, a certain price point as opposed to everybody was rolling their own a few years ago. There were multiple stacks across multiple tiers, across multiple regions, just a tremendous amount of energy and expense spent on building these.

So we've been very consistent with the strategy. We will roll this out. It will be in 100 countries by next year. And that gives us the confidence that what we are building should have very high applicability for a large number of OEMs because at the end of the day, we are, at some level, subsidizing the cost, the expense involved in customers wanting to have the same type of safety and the same type of capability at a very large footprint. And so that, I think, has worked well. I'm pretty excited about us making a few announcements at IAA, which is coming up in September, where we'll talk about this in more detail.

And you mentioned 100 countries and the biggest, I think, out there maker of cars is China. So I assume they're one of those 100. And is it worth carving that out for a second in this conversation and talking about basically what the stack competition is shaping up or what it already is, what it looks like in China and how you guys compete there, given it's not necessarily a level playing field with all this geopolitical noise that seems to be buzzing around all the time. So again, it just makes the waters probably a little choppier for you to navigate, but just curious how you're approaching that.

I think the approach that we took was that we wanted to build a silicon road map that could stand on its own feet that had its differentiation that made sense for the car architecture as it was evolving. And then we wanted to be able to get into the stack business. Now we always knew that the stack business is a very -- the stack business is a complicated business because it is all about physical AI deployed in a specific region in a specific part of the world.

And that means regulation, that means you have to keep up with not just competition, but really who's allowed to really operate at scale, who is going to be able to differentiate in the long run. And so the choices that we made were, let's go focus on markets that are broad-based where we are certainly going to be able to make an impact. And let's build technology that is very horizontal.

So whether it's deployed in China or deployed in any other part of the world, the same technology will scale. And so that approach has worked well. To your point, these 100 countries that we will launch in China is certainly part of that. I think today, there is a tremendous amount of interest in driver assistance, automated driving just because it's a pretty high scale application of applied AI.

And there are many different solutions that are out there. I do feel that doing this at a global scale across every single country with meeting those CfD requirements is a tall order. It's expensive. It's time consuming, it's complicated. And I think in China, while we operate with our stack, we also partner with a variety of local stack companies that are running their stack on our silicon. So it's a market of many different business models, and I think we are part of that ecosystem. That's, I think, a big differentiator for us.

Yes. One size doesn't always fit all. I get it. That's perfect. Thanks for that extra color. Maybe just 1 or 2 last ones on auto, but just to summarize your progress in autos. I mean you pulled in your $4 billion revenue contribution target, I think, by a full year versus original expectation. So I was just curious how comfortable you are with the $8 billion that you put out for fiscal '29. And I know you're not probably going to change your forecast on this call, but I'd just be curious sort of what the moving parts maybe are on that number.

I think there are a lot of moving parts. Macro is always a moving part. I think the automotive industry is going through a pretty significant amount of change, disruption, competition. I think what makes us quite unique is that we have kind of taken the approach of being a very horizontal technology provider, solution provider that is focused on bringing best-of-breed technology and products to every automaker globally. And building silicon, advanced silicon for cars is not an easy feat. It's a complicated business. It requires a lot of experience. It requires a lot of things to kind of come together, and we do it at scale. We are not doing this across half a dozen or a dozen automakers. We support every single automaker globally. So I feel good about the fact that we see the execution of the road map. We see the launches from our OEMs. We see programs being delivered on time. We see the innovation ramping up, and that gives us the confidence that every quarter, we are executing to the plans that we have laid out and our customers have laid out. And as long as that stands out, I think we are on a pretty good trajectory to kind of converting the pipeline into revenue.

And so kind of pivoting because I know we spent some good time on automotive, you wear several hats there, it sounds like. And another one is really on the industrial and embedded side. And so I didn't know if you could talk us through sort of how you're leveraging your experience in autos and all the know-how you developed there and success that you brought there? Like how do you leverage that into industrial and embedded?

I think there are a few similarities, but there are also many stock differences. I think the similarities obviously are -- the life cycles are similar. The focus on reliability and quality is there, especially when you talk about deep industrial companies. A lot of the products overlap quite seamlessly. There's a lot that we've built in automotive that we can reuse.

But I think what has been a big focus for me is how do we think about the industrial and embedded IoT business through a unique Qualcomm lens because we are a company that has been good at many different things. And if we have to be successful in this space, we have to kind of find our stride in terms of how to get to similar scale. And what we have tried to do is to split the market up in a couple of different ways so that we get to view our progress from different lenses. I think one thing that we did was to create distinct product segments that were similar to the chassis strategy that we had in automotive, where we understand very deeply what are the types of problems that customers are trying to solve. And then how do we organize our product portfolio such that it's very easy for customers to understand what we have available that they can deploy.

And now we have 5, 6 different product segments from industrial connectivity, consumer and commercial processors. We have a camera processor business. We have an industrial processor business. We are building out a robotics business. So that, I think, has really helped us get a lot of focus towards a market that is otherwise fragmented and noise. The other approach that we took was to segment by verticals. And there are certain verticals that we have been involved in historically. Retail has been a great vertical for us. We've spent a lot of time both with the end retailer, the Walmarts and the Targets of the world, but then also their supply chain.

And that's allowed us to build multiyear relationships. And that resembles a little bit as to what we have been doing in automotive, where you kind of create a pull for your technology and your product, but you also build an ecosystem. And we are now repeating that across many other similar verticals. Enterprise is one. Public safety is another. Oil and gas is a third. Industrial automation is a fourth. And that allows you to be able to solve problems that are built around digital transformation where we can have an outsized impact.

So we try to pull a lot of our technology and our solutions together. The third thing that we kind of had to do, which we are in the process of implementing, and we'll share more later this year is sizing up customers very differently. There are certain customers that we know and understand really well, because they fit into the Qualcomm way of working. They're high-scale customers, deeply technical, understand our level of complexity.

There is a second set of customers who are much more comfortable at the application layer, where we have had to simplify and abstract our portfolio such that we can offer a solution mindset to the customer as opposed to deep development of the chip. And then finally, there is a massive developer ecosystem, which has traditionally not been a Qualcomm focus. We've never been really a long-tail company. But we realize that with the industrial IoT space, you have to touch developers as well. So we've kind of organized our thinking across these 3 different vectors.

And I think it's actually working quite well, because you get to see the [ SAM ] through many different lenses through lenses that are very traditional, through lenses that are new, through lenses that are at a different plane. And we are in the process of implementing all of this. We should pretty much be done by the end of this calendar year. There are a few announcements coming up, a few acquisitions coming up actually in the remainder of this year. And so that, I think, should kind of lay out the full strategy for the goals that we have to deliver against [indiscernible].

Thanks for the color. And I believe I&E is already $1 billion or better than $1 billion business. But I know you talked about -- again, I know this is not a forecast, it's a target, but you've got $4 billion out there, I believe, for fiscal '29. And really just curious what sort of gives you the confidence in hitting that inflection in the next roughly 4 years or so.

Yes. I think, frankly, it really comes down to the breadth of the technology portfolio. And this is one thing that I think the learnings from automotive helped a lot. There is a tremendous value that exists in our technology portfolio that you can only understand if you perceive it through a lens that is unique to the market that you want to go after.

And that is why I kind of described our different approaches. You really have to have many different lenses through which you can understand the SAM. And once you come up with a recipe, then it's really creating the pool for your technology that is instantiated in different products. The market is large. I talked about at Investor Day, the SAM is probably $50 billion. So we want to make sure that we are capturing every type of end opportunity.

We are flexing in many different ways in terms of how our products are being used. We are creating new product segments. We are creating new use cases for the technology that we are building. And so it requires a pretty good co-creation effort with a wide variety of segments in terms of how to find kind of new pockets of opportunity, and that's what we are trying to consolidate. So far, I feel like it's actually gone pretty well.

Great. Congrats. I wanted to take you just for a minute, just a little deeper on the iQ series because you've had several announcements, right, over the last year on that product line. And I didn't know if you could talk about or give any color as much as you can on initial traction, feedback from customers, things like that, and how it's been...

Yes. I think the iQ Series, for those of you that are not familiar with an industrial processor family that we introduced, we leveraged a lot of this from our automotive portfolio. And one of the things that is obviously lacking in the industrial space is high-performance SoC products that have real-time behavior, that have a lot of camera capability, onboard AI capability, high-performance CPU cores, GPU, display, multimedia, but that are also designed for safety. That can also be used in SIL levels, SIL 2 and 3 levels can be used for robotics.

So this kind of the Swiss knife type of product doesn't really exist in the industrial space. So we recognized that gap last year, and we came up with the IQ 8 and the IQ 9 series. And it's actually done really well, because it's addressing a lot of new types of customers and new types of markets that have traditionally never really had any reason to interact with Qualcomm, because they looked at us mostly as a smartphone provider.

Because we leveraged a lot of our automotive technology, it gave customers the confidence that not only do we have the long-term commitment, but these are high-quality, high reliability parts. They're designed for safety. They're already commercial. So this isn't a new thing that they are using. And then I think now there is just a tremendous amount of market expansion going on to go after a lot of segments that have either used just traditional x86 or some of our other [ AISA ] competitors. I think that's where we are spending a lot of time trying to go differentiate with the IQ Series. And I think so far, traction has been actually really good across a very wide variety of segments, everything from edge AI boxes, surveillance, industrial automation, health care, retail, just very broad.

And that brings up a question on kind of I should asked you earlier, but some of these -- it's becoming more diffuse, your go-to-market. It seems like you're going into new channels, new markets that maybe you haven't been in before. And a lot of times, that means you've got to roll your sleeves up and build channel, right, and build those relationships and get all that stuff going. So as you do that, as you broaden your aperture, right, for lack of a better word, I guess, as that opens up, I mean, how -- what is your go-to-market? How do you build those channels? How much time do you give yourself -- how much time do you give yourself to develop that stuff?

Yes. I think -- maybe the best way to describe it is to think about your portfolio in the context of what type of channel is best suited to carry your portfolio. We are not a company that has a lot of MCU type products. So our products are usually a bit more sophisticated. So we work with a very large number of scaling partners who need to get comfortable and familiar with the products that we build. And once they go do that, then that creates a lot of visibility of options that are available for our end customers. For example, for our application processor portfolio, we've had to build a large number of new form factors that we were unfamiliar with, that we didn't really spend a lot of time on.

And so we've been doing that in Germany, in Japan, in Taiwan, in China. And that's basically making us a pretty straightforward drop and replace option to -- for customers to try out something new. So that, to me, in the scheme of things, is fairly straightforward steps that we had to go take. We have been on this path of getting much closer to developers, and we'll share more with you on that in the coming months.

But that's been a pretty important journey because one thing that we needed to do well was to be able to address the really long tail. And I think there is a plan in place there that I think is now working out quite well. As we roll that out, we'll be able to go get to the long tail of developers that will bring Dragon Wing and Snapdragon products in the hands of really you can download the board from the Internet and kind of scale from there. And then everything else really is either a traditional Qualcomm channel that we are very familiar with and scale up nicely on or what I described earlier, which was our vertical focused strategy, focused on many different verticals that create a lot of digital transformation efforts, create a need for your products to be relevant in that space and then work with the ecosystem for your products to get selected, because we have this very clear and regimented strategy around how to go make happen the revenue numbers that we have to deliver. And it's going to come from a wide variety of market segments, different types of products. And so that's kind of the channel strategy that we may.

Okay. And maybe just one more, if I could. And that's you guys have always been pretty active on the M&A side, and you've picked up a lot of different assets, some big, some small. And I don't know if you maybe could walk us through sort of how you look at your broader acquisition strategy. And maybe I know you're not going to tip your hat on any particular names probably, but the types of tools maybe that are missing from the Qualcomm toolbox.

So I think one area that we've been focused on quite heavily is the developer focus. And so we acquired Edge and Pulse earlier this year, and that gave us access to becoming very capable with model onboarding, with model training and running these models on limited footprint devices. I think that's one effort. There is other work going on in the developer area that we'll share in the coming months. We also have been focused on the camera space quite a bit.

And I think camera has been a differentiator for the company for a long time. Now we see camera really as a big AI sensor for a wide variety of use cases. We've acquired small companies that allow us to get into the solution space with cameras, where we can actually build out end-to-end solutions, SaaS solutions for video security, video surveillance. And so that was an acquisition that we did in the spring. We've also been strategically acquiring companies that have a very small footprint in terms of the silicon footprint that they occupy for many different types of market segments, just to round off the portfolio such that it's broadly applicable to IoT.

We acquired Autotalks a V2X company a couple of months ago, and that's because of the promise that we believe is there in V2X safety applications in automotive and other adjacent transportation verticals. So it's not big companies, but it's companies that kind of round out the overall strategy to allow us to get closer to our goals.

Well, great. That's all the questions I had, and we're right on pretty much on time. So Nakul, I really enjoyed meeting you. I really enjoyed the conversation. And thanks again for carving some time out to chat with us today. Really appreciate it. It's great to see.

Thanks, Rick, and thank you for having us.

Thank you.

Ladies and gentlemen, thank you for standing by. Welcome to the QUALCOMM Third Quarter Fiscal 2025 Earnings Conference Call. [Operator Instructions]. As a reminder, this conference is being recorded, July 30, 2025. The playback number for today's call is (877) 660-6853. International callers, please dial (201) 612-7415 and playback reservation number is 13754-332.

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

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 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. 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. 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.

Thank you, Mauricio, and good afternoon, everyone. Thanks for joining us today. In fiscal Q3, we delivered revenues of $10.4 billion and non-GAAP earnings per share of $2.77, which was near the high end of our guidance range. Our chipset business delivered revenues of $9 billion, reflecting strength in automotive and IoT and ongoing growth in handsets. Automotive and IoT revenues increased 21% and 24% year-over-year, respectively.

Our licensing business revenues were $1.3 billion. Our momentum in automotive and IoT is the result of strong execution of our growth and diversification strategy. We remain on track to meet our fiscal 2019 target for combined automotive and IoT revenues of $22 billion. We're forecasting fiscal '25 to be the second consecutive year of greater than 15% year-over-year growth in total QCT non-Apple revenues.

I will now share some key highlights from the business. In handsets, we extended our Xiaomi collaboration with a multiyear agreement. Snapdragon 8 Series platforms will power multiple generations of Xiaomi's flagship devices for China and global markets with volume increasing each year of the agreement. The Snaptagen8Elite continues to set the pace of innovation in mobile processors and is leading the transition to AI smartphones with 124 designs shipped or announced today.

AI usage in smartphones is increasing. For example, Samsung noted that 70% of GalexF25 users are utilizing Galaxy AI and usage of Google Gemini AI has nearly tripled among S 25 users compared to the S 24. Looking ahead, we expect the range of own device in a Gentech AI use cases will continue to expand and reshape the mobile industry. We are optimistic about the Android ecosystems leadership in AI.

As we reach the 1-year mark of our entry into AI PCs, we are encouraged by the steady progress we're seeing with our Snapdragon X Series platforms. Multiple new devices launched during the quarter from leading OEMs, such as Acer, Dell, HP, Lenovo, Microsoft and Samsung, and we remain on track for more than 100 designs to be commercialized to 2026.

Snapdragon is transforming personal computing experiences and the design traction we're seeing from major customers reflect confidence in our technology road map product portfolio and long-term commitment to PCs.

In the second calendar quarter of 2025, according to third-party sources, Snapdragon-based PCs continue to make up approximately 9% of Windows laptops sold above the $600 price tier in retail U.S. with the top 5 European countries. While we are at the beginning of our journey into PCs, we remain excited about the long-term opportunity and continue to work toward our target of achieving $4 billion in revenue by fiscal '29.

In XR, Snapdragon continues to be the platform of choice for smart glasses and mixed reality devices. We now have 19 designs from our global partners. Demand for Meta AI smart glasses continue to exceed expectations, and they recently expanded the portfolio with the launch of the new Meta Oakley smart glasses and introduction of new Ray-Ban styles.

Xiaomi's new AI glasses launched in the quarter, were also well received. All 3 are powered by the Snapdragon AR1 Gen-1 platform. At the augmented WordExpo USA we conducted the world's first demonstration of 1 billion parameter model running locally on smart glasses powered by our next-generation Snapdragon AI platform. We also introduced a Smart link controller reference design as a new input device for discrete and intuitive interactions.

Our Snapdragon digital chassis solutions continue to see strong traction across the automotive ecosystem with 12 new designs during the quarter and a total of 50 vehicle launches this fiscal year. We're incredibly excited about BMW's upcoming NOA class vehicles, which will launch globally with our new ISO safety certified ADAS stack later this year. This will include our Snapdragon Ride platforms and our jointly developed driving stack, which meets safety standards in the U.S. and era. More details about the deployment, certifications and capabilities will be shared at the IAA Mobility Show in September.

Our Snapdragon Ride platforms and driving stack are also gaining momentum more broadly with 20 OEMs programs for various highway and urban Navigate on Autopilot solutions. The majority of these programs will launch in the next 18 months across all global regions.

In Industrial IoT, we continue to expand our ecosystem of partners, and we're pleased with the traction of our drag on wing platforms. At Computex, we announced new collaborations with Digiwin and [ ATINA ] to utilize our AI on-prem appliance solution and AI inference suites for enterprise automation. We also expanded our work with IBM on their Maximo AI assistant powered by Watson X AI. Our broad range of OEMs and partners now includes companies such as ASUS IoT, Dell, ever focused iBase Lenovo, Deloittes, E And, Human, Palantir and many others.

We're also gaining traction with our industrial grade Dragon Wing IQ series with up to 100 top of AI inference performance as well as the Dragon Link intelligent video suite, a platform designed to extract intelligence from any video frame and create intelligent reasoning workflows for enterprises across many verticals.

We've also seen continued strength in edge networking driven by strong demand for WiFi 7 gateway platforms across retail and carrier customers, and for 5G enable fixed wireless access platforms for our carrier customers.

Now I would like to provide an update on our expansion into the data center. This represents a new growth opportunity for QUALCOMM and is a logical extension of our diversification strategy as we continue to demonstrate leadership in CPU performance and NPU efficiency. As inference gain scale, cloud service providers are building dedicated inferencing clusters focused not only on performance, but also efficiency specifically tokens per dollar and tokens per watt. These factors, combined with the shift from merchant x86 CPUs to custom ARM-compatible CPU and for both cloud computing and AI head node create an entry point for QUALCOMM.

We're currently building NPU-based AI inference accelerator cards as well as custom SoCs for general purpose and AI head node compute solutions utilizing our Orion CPU. We also reached an agreement to acquire Alphawave IP Group plc, a global leader in high-speed wire connectivity and compute technologies for data centers AI, data networking and data storage.

The acquisition is expected to close during the first calendar quarter of 2026, subject to customary closing conditions. Alpha Wave's leading IP and data center design capabilities are key assets that will complement our Orion CPU and Hexagon NPU processors and help accelerate our road map. While we are in the early stages of this expansion, we are engaged with multiple potential customers and are currently in advanced discussions with a leading hyperscaler. If successful, we expect revenues to begin in the fiscal '28 time frame.

Additionally, we signed an MOU with Human to develop AI data centers in Saudi Arabia and deliver highly efficient and scalable cloud-to-edge hybrid AI inferencing solutions for local and international customers. We also announced that our Orion CPUs can be integrated with NVIDIA GPUs for high-performance NVIDIA AI factories using the NVIDIA NVLink Fusion architecture. We will provide further updates as we make progress.

Over the past 12 months, we have continued to see AI and generative AI advance at an accelerated rate and we're both excited and confident in the opportunities this is creating for QUALCOMM across all our businesses. As Gen AI changes the human computer interface and Agentic AI experiences continue to evolve, the mobile industry is being redefined in a new generation of personal AI devices are emerging.

Smart glasses and wearables, such as smartwatches, earbuds and other form factors are being transformed into personal AI devices as they connect the user directly to the AI agent and model. These devices are quickly transitioning from simply extending smartphone experiences to now provide a new and unique personalized AI in a genetic use cases. These devices will evolve independently of the smartphone ecosystem and become a significant opportunity.

Given our technology leadership in mobile XR and wearables and the breadth of RP and product portfolio, we expect to be the industry preferred solution provider in this new category. Specifically, personal AI devices will require Snapdragons always-on cloud connectivity, 5G and micro power Wi-Fi power-efficient processing, on-device AI best-in-class imaging, audio, video sensors and contact capabilities.

Meta AI Smart Glasses are currently the best example of personal AI. We're very optimistic about the trends we see in this area with major AI players, application developers and device makers investing in this space. Physical AI is another technology that is reshaping industries and creating new opportunities, particularly in robotics.

Robotics require high-performance computing including powerful on-device AI, extended battery life, reliable connectivity, a higher level of silicon integration and advanced computer vision and sensor fusion to interpret and understand real-world information in real time and make decisions locally. These requirements are perfectly aligned with our strengths in our technology and product portfolio our right to play in this new segment is similar to our expansion into automotive.

Furthermore, our experience in industrial and safety grade silicon, perception and sensing technologies in ADAS and autonomy provide a very competitive foundation to develop highly differentiated solutions for autonomous robots next-generation industrial automation and humanoid robotics. We're incredibly excited about this opportunity which third-party estimates indicate a potential TAM of $1 trillion in the next decade.

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

Thank you, Cristiano. Good afternoon, everyone. Let me begin with our third fiscal quarter results. We delivered revenues of $10.4 billion and non-GAAP EPS of $2.77, which was near the high end of our guidance range. QTL revenues of $1.3 billion and EBT margin of 71% were above the midpoint of our guidance. QCT delivered revenues of $9 billion and EBT of $2.7 billion with year-over-year growth of 11% and 22%, respectively.

QCT EBT margin of 30% was at the high end of our guidance range. QCT handset revenues increased 7% year-over-year to $6.3 billion, reflecting strong demand for premium tier handsets, enabled by our Snapdragon Italy platform. QCT IOT revenues grew 24% year-over-year to $1.7 billion. The outperformance relative to expectations was driven by increased demand for our Snapdragon AR1 chipset, the clear industry leader in emerging AI smart glasses category.

We delivered another record quarter in QCT Automotive with revenues of $984 million, an increase of 21% year-over-year. driven by content growth in new vehicle launches with our Snapdragon digital chassis platform.

Lastly, we returned $3.8 billion to stockholders, including $2.8 billion in stock repurchases and $967 million in dividends, aligned with our commitment to return 100% of our free cash flow in the fiscal year.

Before turning to guidance, a quick reminder that our fourth quarter and fiscal '25 includes 13 weeks relative to a 14-week quarter in the year ago period. For the fourth quarter, we are forecasting revenues of $10.3 billion to $11.1 billion and non-GAAP EPS of $2.75 to $2.95. In QTL, we estimate revenues of $1.25 billion to $1.45 billion and EBT margins of 69% to 73%.

In QCT, we expect revenues of $9 billion to $9.6 billion and EBT margins of 27% to 29%. We anticipate QCT handset revenues to grow approximately 5% sequentially and consistent with typical historical trends despite lower Apple revenues. We estimate QCT IoT revenues to be flat sequentially in duty automotive revenues to reach $1 billion in the fourth fiscal quarter.

Lastly, we estimate non-GAAP operating expenses to be approximately $2.35 billion in the quarter. In closing, we are very pleased with our performance in fiscal '25 and as we continue to execute on the financial metrics we outlined at our Investor Day last year.

Based on the midpoint of our guidance, we are positioned to deliver revenue and non-GAAP EPS growth of 12% and 16%, respectively, relative to fiscal '24. We are forecasting fiscal '25 to be the second consecutive year of greater than 15% year-over-year growth in total QCT non-Apple revenues.

We anticipate QCT IoT and automotive revenues to grow by approximately 20% and 35%, respectively, reinforcing our confidence in achieving our fiscal '29 target of $22 billion in combined automotive and IoT revenues. We are pleased to see our customer relationships strengthening during the time of global trade volatility, including the upcoming global ADAS launch with BMW and the recently signed strategic agreement with Xiaomi.

We remain focused on maximizing shareholder returns by executing across a broad range of growth and diversification opportunities while maintaining operating discipline. Lastly, I'd like to invite you to tune into our upcoming Snapdragon Summit event taking place on September 23 to 25 to learn more about our technology leadership and new product launches.

This concludes our prepared remarks. Back to you, Mauricio.

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

[Operator Instructions]. Our first question comes from the line of Joshua Buchalter with TD Cowen.

I wanted to start with the handset market. I think you just spoke to 5% growth in the September quarter despite the lower share that you've communicated at Apple. Can you speak to the drivers there? I mean I think Xiaomi was up meaningfully in the quarter. which is typical in the June quarter. But I think investors are worried about some level of pull-ins. Are you seeing any evidence of that specifically related to China?

Josh, it's Akash. We're not seeing any evidence of Poland. I think the upside that we guided in the September quarter in handset revenue stream, is really driven by our new product launch. As I mentioned in my prepared remarks, we're going to announce our new chip at the end of September. And we're already working with several OEMs for launch of new devices based on a tremendous interest in it. And what you're seeing is really people getting ready for launch of new devices.

Got it. And a follow-up, I wanted to ask about the data center business and the hyperscaler engagement you mentioned specifically. Any details you can give us on the scope of that engagement? Is that for an ARM-based CPU? Is it an accelerator and you mentioned fiscal 2028 as potential if that converts. Is that the right time frame to think about contribution from your data center business more broadly at other customers as well?

Thank you, Josh. This is Cristiano. We can't really disclose more other than what we said in the script. We are in advanced discussions. We have been executing on a product. As we said before, we always felt that we had IP. They were very relevant to the data center. I think the Alpha Wave provides complementary IP, allow us to build custom SoC products. And we're pleased with the way we're developing this I am sure we'll be able to share more as we probably conclude some of those discussions.

Our next question is from the line of [ Samik Chatterjee ] with JPMorgan.

Cristiano, maybe I can follow up on the data center road map here or the sort of thought process and strategy around it. Less so maybe timing, but in terms of how do you envision sort of Alpha Wave integrating into the sort of of the stack capla that you have currently? And in relation to just thinking about sort of how you're going about selecting customers that you want to approach for this, what's typically sort of in terms of thinking about customization relative to standardization of the chipsets, how you're sort of thinking about deal sizes that would make sense for you in the longer run for this business? Any thoughts around that? And I have a follow-up.

Very good. Thank you for your question. I know there's a lot of topics in that question. I'll try to probably give an overview. As we said before and we said in the script, we have been focused on building 2 products. One is ability to leverage our CPU asset. And that happens in 2 situations. One, of course, is the general purpose CPU. We've been very focused on hyperscalers. They have first-party workloads for ARM-compatible CPU.

The other one is the head unit for inferencing clusters. SA start to get scale, and we're really look of how we're starting to see inference taking over training. There is a new dynamic in the marketplace, which is about ability to be efficient with tokens per dollar as well as energy. That creates an opportunity for us for that. We have been building accelerator cards, and we will be building rec as well. And those are the 2 areas that we're building product road map.

We're very focused on customers, they have the ability to put first-party workloads or inferencing cluster. The Alphawave IP is important. It provides us the ability to scale out and provide connectivity, we believe is leading connectivity in the industry. And that should inform you the type of customers that we've been focus on. We think there's a very large TAM. As you know, there is an opportunity for QUALCOMM to play if you have leading IP -- of course, as this is a new market for us, and we have been planning for it, we're going to be very careful about making disclosures, we're going to wait until they become factor, and we're excited about the engagement we have today.

We are in advanced negotiations with 1 significant customer. And hopefully, that creates a halo effect that could validate our platform and create other opportunities down the road.

And for my follow-up, in the handset business for the or fiscal 3Q here, you had 7% revenue growth year-over-year, which I think did sort of miss modestly you're cutting to last quarter for about 10 or -- so maybe if you can shed any color in terms of if you did see any parts of the month that were weaker than you expected in the quarter? And then maybe similarly, when you -- when I think about your guidance for fiscal fourth quarter here, it looks like you're getting to about a high single-digit growth even as Apple even with the impact of Apple. So maybe in part out in terms of this at the strength is because that seems like a pretty robust number for fiscal or even with the loss of apple revenues?

Yes. Samik, it's Akash. On the third quarter, we had a slightly weaker mix than we had expected. As you know, that this is a quarter that is seasonally weaker for us as there are no flagship launches. And that mix is really -- the weaker mix is more than offset by the strength you're seeing in the September quarter. Whereas I mentioned earlier to Josh's question, we're launching the new chip.

We have flagship launches coming in at the end of the quarter, and we are seeing the demand increase because of that reason.

Our next question comes from the line of Stacy Rasgon with Bernstein Research.

Given the guidance into September, but the dynamics around Apple and everything else. I mean, what would you consider normal seasonal in the December quarter? And how should we think about drivers as you currently see them against that normal -- against that seasonal trend? How should we expect things -- if there's anything else funky going on in December that we should know about that would influence results versus what might be more typical.

Yes. Stacy, it's Akash. Assuming you're asking about the December quarter, not -- we expect normal revenue seasonality for all businesses. of course, adjusted for the lower share in Apple phone launches that we've previously discussed, but nothing else to highlight in all other businesses.

I mean what would you consider normal seasonal in.

Well, we're not specifically guiding the quarter at this point, but I think you've seen a trend in the last several years, and you would expect the same, same quarterly trend just adjusted for the lower Apple volume for the share we've provided.

Our next question is from the line of Joe Moore with Morgan Stanley.

Our next question will be from the line of Chris Caso with Wolf Research.

If I could just expand upon some of the commentary with regard to the December quarter. My understanding is last year, the Chinese OEMs started pulling forward the launch a little bit of some of the flagship devices. Also, as we were last year, there was an extra week in the quarter. So -- and I guess maybe just some more granularity on the puts and takes on December, taking that into account. How much of a lift is that in the December quarter? And then does that turn into more of a headwind as you go into the March quarter?

Yes. I think, Chris, the business remains very strong. So whether you look at the Android business automotive, IoT, all the trends continue with the growth rates that we have previously outlined for the business. So there's nothing significant or unique that I want to point out there. I think we've talked about the Apple share dynamic. So that is a factor. But outside of that, I think you should think of this as a very strong quarter for us. seasonally the strongest quarter for us is December, and that will still be true regardless of the lower upper share.

Got it. Okay. If I could follow on with the data center business and you understand that you can't talk so much about some of the progress and design wins that you hope to have on that until they become factual. What about from a spending side? And moving into a new line of business, what's going to be the impact on spending and then as Alphawave closes, what will be the effect of that on sort of revenue expenses and EPS

Yes. So from a spend perspective, Chris, the way we've managed OpEx over the last several years, you've seen us very small growth in OpEx over the last 4 years. And the way we've managed it is really kind of absorbing the salary increases and reallocating existing spend towards diversification and growth.

And really, the hiring as we go forward is really going to be focused on new skills that are required to execute on our plan. And so to the extent that there are new skills required to execute on the data center diversification assets, we will invest in that. But outside of that, we plan to be pretty careful managing OpEx going forward.

Our next question comes from the line of Ross Seymore with Deutsche Bank.

Couple of questions. Just want to get into the OEM side. Akash, you've been very clear about what's happening on the Apple side of things. But recently, you've seen Samsung launch a couple of models with its own processor. I just wondered, how do you compare and contrast that against the X 85 that you guys are rightly excited about going forward. Do you think you will maintain the 100% share on the Galaxy S generation? Or is that decision not quite made yet? Any color on that would be helpful.

Ross, thanks for the question. We have been talking about the framework of our relationship with Samsung. And we have been executing multiyear multi-generation agreement with Samsung. And we have defined the new baseline of our share in the order of 75%. anything above that upside. So that's our planning assumption.

And when we outperform, I think we end up -- you started to see what you saw in Galaxy 25. -- competing against the Samsung own platform is nothing new for QUALCOMM. We've been doing that for decades. But I think historically, we have seen a relationship with Samsung continue to move up to higher level of share. And that's the baseline assumption. 75% is the baseline. That's the contract to share everything above that upside.

I guess as a follow-up and it probably would align to that also within handsets. You've talked about at least the premium tier flagship tier of having roughly double-digit ASP or content increases going forward with all the capabilities that you're offering. Does that still hold true? Does it accelerate, decelerate with the X 85? Just any update on that would be great.

Yes. So if you think about our Android business in fiscal '25, it grew over fiscal '24 by approximately 10%. So that is higher than the target we set at Investor Day. And it's a reflection of the strength of our road map, our competitive positioning and the fact that this is a market where the volume is moving up to higher tiers where QUALCOMM has a very strong position.

The other thing I just want to highlight is we did give a metric, both in mine and Cristiano's prepared remarks is over the last 2 years, kind of our non-Apple revenue stream in QCT has grown annually at more than 15%. So that should give you a key benchmark as you think about how the company is positioned to grow going forward as well. And this aligns with the fiscal '29 targets we set at Investor Day.

The next question comes from the line of Tal Liani with Bank of America.

About China handsets. The proportion of China is going up. And if Samsung -- you said you're working with an assumption of 75% for Samsung. So Samsung is going to go down from 100% for the Galaxy75. China would further go up in percentage of QCT revenues. How do you see the China growth trends when it comes to the domestic market and international markets? What's the outlook from your perspective? And what's the risk of competition within the Chinese market. I have just a follow-up question on margins, but I'll keep it separate.

Tal, our position in China continues to be very strong. I think the evidence of that is the announced agreement that we announced with Xiaomi during the quarter. This is a multiyear agreement for premium phones, with increasing volumes every year, and they're going to use our chip for launches within China and globally as well.

In addition, they will also be the first OEM to launch with our next Snapdragon [ Ateli ] chip, which comes out over the next couple of months. And the relationship really has expanded over the last couple of years. We've gone from phones to automotive. They introduced smart glasses with our chips, wearables, tablets, so it's a very broad relationship, and it's just an example of relationships we have with other Chinese OEMs as well. So you should consider this as a very well-positioned sustained business for us.

Within Samsung, as you can see in fiscal -- in 2026, they launched most of their devices with our chip, but they did launch flip with their own, and so we're slightly below 100% share. And as we go to next year, I think our agreement, as Cristiano outline carries over, and we're in a very good position to maintain our scale there as well.

So let me just maybe add a different perspective. Tal, I'm going to agree with Akash, but I'll provide probably a comment of questions that we usually we don't get. Look, we have been doing business in China for 30 years. We actually started down to the 3G. And I think what we learned by doing business in China, we actually learn how to move at China speed. And I think if you look at the position in QUALCOMM in China, they only improve over the years.

And as Akash outline, not only we've been well positioned in the phone business, we're well positioned with some of the fastest-growing OEMs in the auto business. and that is expanding now into industrial, into robotics and other areas. So another way to look into this is QUALCOMM has became a very competitive company and learn how to compete in China and have been serving well. I think the market, we expect that to continue to be the case.

Got it. Maybe just a question on margins, a quick one. I see that when I look at the gross margin, operating margin, I see that there is kind of you managed to maintain a very healthy operating margin despite the fluctuations in Apple revenues. So I just want to ask you a question, I'm getting from investors quite often. What are the implications of the decline in Apple? What are the implications on margins? Are they positive or negative?

Yes. I think we're very happy with the margin profile of the business. I mean we will be at close to 30% margin this year, which is the target we have set for the long term. As you look forward, the growth opportunity that we have in auto IoT far exceeds the scale of the Apple revenue.

So I think we have the ability to continue to grow revenue and manage the margin profile as a result of it. And so no change to our long-term target margin versus what we've said in the past.

Our last question comes from the line of Ben Reitzes with Melius Research.

I appreciate it. I wanted to ask about the data center. You're buying Alphawave for $2.4 billion you have big ambitions there. It sounds like for FY '28. What is -- what are your thoughts on doing -- having more of a tuck-in acquisition strategy there or even going bigger to get big fast and get a hold to customers if you have such great IP. I was just wondering if you kind of give your -- a little bit more of the strategy. Is it more Alpha waves coming? Or would you ever consider a bigger acquisition?

Thanks, Ben, for the question. Look, at this point, we're very focused on actually driving Alpha Wave to closure and building our product road map. I think we -- we feel that it provides the IP that is complementary to what we have and allow us to build a competitive position. This is a new initiative for QUALCOMM, as I outlined. And like we have done for the rest of our business as opportunity becomes available, we're always going to be looking how to complement the road map. Right now, we're really focused on driving Alphawave to closure.

All right. And can I just ask a quick follow-up on your comments around Gemini and Galaxy AI use and in the Android area? And just can you just draw that out a little more? Obviously, there's a perception that the Apple products are a little behind in -- and what that means for you over the long term, whether you're really optimistic about that, maybe even past the -- your fiscal first quarter? And just any more color there?

Yes. Consistent to what we have been saying, we're starting to see AI use cases on phones to gain traction. And there's also another interesting data point. I think if you look at the overall share of AA models, you see Gemini AI actually increasing dramatically over other models. We have seen, I think, the advantage of the Android ecosystem in terms of majority of AI as more and more use cases become agentic where you started to see AI as part of the applications. I expect that it creates excitement about the Android ecosystem, expand its SAM and it drives upgrade cycles. Those are all positive things from the mobile business.

So I will think that what AI is doing is making connectivity more relevant, again, especially because of voice utilization is driving more computing, more capable devices and exactly changing the use cases. And the rate of utilization, it's very encouraging. What I said in the call about between Galaxy S24 and Galaxy S25. And I think I expect that to continue to accelerate.

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

Thank you all for attending the call. I would like to thank our employees, our partners and we appreciate following QUALCOMM, we'll continue to execute on our strategy. We feel that the company is on the right trajectory, especially as we look for growth and diversification beyond handsets and AI continue to be a great opportunity for us. Thank you very much.

Ladies and gentlemen, this concludes today's conference call. You may now disconnect.

All right. Thank you again for joining the second day here, very happy. I'm Blayne Curtis, U.S. semi and semi-cap equipment. Very happy to have with us Qualcomm, from the company, Akash Palkhiwala. He's the CFO, COO. So thank you for joining.

Thank you for having me in.

I thought maybe a way to start off. Obviously, Qualcomm is so well known for handsets. But I think the non-handset story is definitely an area of focus for the company. So maybe from a very high level, can you just talk about where that mix is today, where you'd like to see that mix and what's driving it?

Yes, of course. So first of all, thanks for coming. Since it was an 8 a.m. start, I was wondering if I'm going to be the only one in the room. So I'm happy to see folks here.

So as Blayne mentioned, one of the key priorities for the company is really kind of taking our strong position in smartphones and using the technology that we've created for smartphones and applying it to all these other edge devices that are all being disrupted with technology. So automotive is a great example to look at. It used to be a car that would primarily run on microcontrollers. And you're seeing this tremendous change in the kind of chips and kind of electronics that are needed in automotive, and Qualcomm has been one of the big beneficiaries of that transition.

And so we're seeing similar transitions happening in industrial, happening in augmented virtual reality, in PC and robotics, and we're very well positioned to take advantage of all of that. And so that's been our primary focus as a company, is apply the handset technology to all these new areas. Financially, we have set this target of approximately 50-50 revenue split between handsets and nonhandsets by the end of the decade. And very confident that as the world changes, as AI comes in and becomes so much more relevant to all these devices, our technology portfolio puts us in a great place to take advantage of it.

Perfect. Lots of different businesses within the non-handsets to go into. I wanted to start with data center. You obviously just announced this Alphawave of deals. So maybe you can explain the rationale behind that deal and what are your grander plans in data center.

Yes. So if you kind of maybe step back and think about the belief system that we've always had for AI and for data centers is that there is a lot of core technology that we have in Qualcomm that has relevance to the data center. So we have a CPU core that is a custom-designed, high-performance, low-power CPU core. Very important, I think, in data centers going forward. We have an AI NPU, neural processing unit, that can run neural networks very, very efficiently. It's something that is also very relevant going forward.

We also think that AI, as much as people talk about cloud AI and, of course, there has been tremendous adoption of it, we think AI will eventually settle to a place where it's hybrid between the device and the cloud. It's no different than how computing works today. You see computing happen on the device, you see computing happen on the cloud. The same is going to happen with AI. And we think that those two kind of fundamental beliefs put us in a place where we've been looking for the right opportunity to enter the data center market using those technologies.

When you look at the data center market, a couple transitions happening within data center. First is a lot of the workload used to be training. Inference is what's driving the growth going forward. So that's a pretty significant change. Second is power is becoming a lot more important. You're seeing even power plants being -- driving where the location of the data center is going to be because power is so important. And so Qualcomm comes from a heritage of low power technology, high performance, low power, and so that is relevance to the data center as well. So that's kind of the framing of the starting point before Alphawave.

When we look at Alphawave's technology portfolio, they're really the leader in wired connectivity technology in data center. That's a set of technologies we do not have at Qualcomm. And so what they bring to us is really the missing piece in completing our technology portfolio. So we'd have computing, CPU, we would have AI, and then we would have wired connectivity technologies. And so when you combine those, I think it's an incredibly strong technology portfolio, and it positions us to participate and take advantage of these trends.

Right. And then just a follow-up because I do get this question. I think you've been in the edge area. Obviously, phones can be considered edge, but other areas, drones, robotics, whatever, also is a good fit or even VR, you've talked about, too. Do you need -- what's, I mean, the split between edge and data center, do you expect to also have chips within a data center? And do you feel like you need both [ half ] that equation? Do they work better together?

So I think there are certainly applications where it works better together. And I'll give you an example in ADAS. There is a lot of simulation that gets done for ADAS. And so what you want to do is when you do a simulation for certain scenarios in how your ADAS stack would behave, you want to do it in the cloud and you want to use the same silicon that you're going to eventually use in the device. Because if you do simulation on different silicon, it's not going to give you the same results and you will not be able to predict how the device will behave.

So that's a great example of where you want to have something that is similar on the edge and the cloud. Another example is certain camera workloads. So if you think about industrial applications and cameras being deployed, sometimes you're going to run AI on the device itself. Sometimes you're going to run it on the cloud. And you want the same set of results coming through in a scenario like that.

And then finally, if you think also about hybrid AI, where you might start running something on the device and then you might use the cloud to improve the answer that the device gave you if you need a second tier derivative on the answer as well, you might want the same silicon running on both sides. So there are good reasons why you'd want it. But that necessarily by itself is not the driver of our strategy. The core driver of the strategy is that we have this technology portfolio. It is relevant to the data center. Power -- low power and high performance is becoming important in data center, and so that automatically lends itself to Qualcomm's strengths.

Perfect. I do want to segue to the auto market. We were talking before this. And my kind of personal view is the auto market is not actually that much different than the handset market, where the Chinese took a ton of share by just adding features at a faster pace. Can you maybe just talk about where Qualcomm is today?

I mean, obviously, infotainment has been a big driver, more screens, bigger screens. Where is your penetration? And kind of maybe just address the Chinese opportunity because a lot of people look at it and say they want localization. But when you're talking about maybe infotainment process or ADAS, maybe that's something they can't do.

Yes. So when you look at our position in automotive, let's first talk about the industry and what's happening there. Tremendous transition in the industry. The cars are getting connected. The inside of the car, the experience is becoming like a family room or living room experience with screens and content. And then finally, ADAS becoming a big part of the value proposition as well.

So when you look at those things, the silicon that we participate in is growing north of 15%, 20% every year because just an incredible amount of digitization happening in the car. And so Qualcomm's in a great position to take advantage of that change and really offer the technologies that are required in the car. So we've been very successful. I think we've won, I'd say, a very strong position in wireless connectivity. So whether it's 4G, 5G networks, Wi-Fi, Bluetooth, position location, Qualcomm is the leader in the industry.

Digital cockpit, the experience inside the car, we are by far the leader as well. And it's really a combination of the chips that we make. It's a combination of software environments. You have to support the software environment for the instrument cluster, which is usually Linux or QNX. You have to support the software environment for the infotainment center, which in several cases is Google, Android. And so we've been supporting all those networks and we've done incredibly well.

The third part of this tool is silicon for ADAS. And so we've built the chips, leveraging a lot of what we do in cockpit, extending it to ADAS. A very strong portfolio, and we have traction across global OEMs and Chinese OEMs, and I'll come back to the Chinese OEM in a second. And then the fourth part is just building the ADAS stack that allows you to really implement autonomous driving at scale. And so we're building that as well.

And so we really have a full portfolio. And so if you're an OEM saying, who do I partner with? Who is my technology partner of choice that will bring me all the technologies that I need to deploy at scale? Qualcomm is probably at the top of the list.

What you're seeing in China, as you rightly said, very similar to what happened in the handset industry very quick innovation, more of a consumer electronics mentality being applied to the auto industry. A lot of different OEMs all moving extremely fast. Qualcomm is very, very closely associated with the industry. When you think about these OEMs, just like the handset OEMs in China, they think of not just what they do in China. They think of what they need to do internationally, right? And so they have global ambitions.

Qualcomm is one of the key partners for them for their global ambitions, not just on cockpit but on ADAS as well. So we're very confident. We've laid out a financial target of approximately $8 billion in revenue by fiscal '29. And I think we're in an incredible place to meet and exceed that.

Yes. I want to dig in a little bit more because, obviously, ADAS and autonomous driving is a big driver of your auto growth going forward. You have a deal with BMW to kind of develop a stack. And then I guess once that launches, you can kind of sell it. So maybe just talk about the opportunity for just the silicon and then who wants the stack. And I thought it was interesting, talking to you yesterday, about the competitive landscape in China, where there's a local player, but maybe they can't address the global very much like handsets. Maybe you can elaborate on that.

Yes. So think of two separate parts to the ADAS opportunity. There's a chip opportunity which is independent and, then there's a stack opportunity which is incremental to the chip opportunity. Specifically within China, we're seeing OEMs use China-developed stack for ADAS. But they still need a silicon partner, and we are one of the key players in the industry for that. We're also seeing as these OEMs go internationally, also as other OEMs internationally need a ADAS stack, Qualcomm becomes an alternative for them.

And the BMW relationship for us is extremely interesting because what we have done with them is we brought our assets to the table, they brought their experience and their assets to the table. And so we're developing an ADAS stack together. The cars get launched over the next couple of months. That will be the initial launches of the cars. And I think that a lot of the OEMs are looking at what happens with the launch of those cars because BMW is clearly seen as one of the technology leaders in the industry. As they launch the stack, and assuming the stack has really good performance, it creates an opportunity for us to apply those stacks to other OEMs.

We already have a couple of other OEM wins, but we could scale this very significantly now that we'll have deployed with BMW in a global scale in commercial cars in large quantities. And so very excited about what's in front of us. I think it's just the beginning.