The Six Five team dives into Qualcomm’s acquisition of Arriver.
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Transcript:
Daniel Newman: The Qualcomm, Arriver deal, you and I covered it pretty extensively. I had a chance last week to sit down their GM, head of automotive, Nakul Duggal, got him back on the record, “What’s going on in your automotive business?” This Arriver deal is really a critical part of what Cristiano Amon is out telling, when he’s talking about the digital chassis story.
So, speaking of data points, right? 20% of the automobile bomb by the year… That’s a bill of material, in case you’re novice to these acronyms, by the year 2030 is expected to be semiconductors. So, if you’re noticing the race between companies like Intel, Luminar, Qualcomm, NVIDIA, all jumping in heavy to the automotive space, that’s because the opportunity is really significant. Qualcomm, with its snap drag and ride platform, with its portfolio has been doing a tremendous job. I believe, their pipeline has exceeded $13 billion now in the automotive space. And, they’ve been winning some really impressive customers. We saw Mary Barra show up from GM at the company Snapdragon Summit. We’ve seen announcements come out with BMW, with Renault. And Pat, I mentioned this when I talked to Nicole, they also just sponsored F1, which you and I love. And now that they sponsor F1, they sponsored probably the most exciting team this year, which is the Ferrari team.
So, Qualcomm’s really going all in on automotive. What the company lacked going into last fall when they did the deal with Veoneer to acquire Arriver, was they didn’t really have an L2+ or a pathway to 8S which is going to be the last piece. You’ve got the telematics, you’ve got infotainment, but the story seems to be heavily laid and in, can you get to this fully autonomous driving system? And I mean, the first step is getting to a semi-autonomous nature, where the car can do a lot of the safety, lane change identification, it’s got machine vision, computer vision, it’s got radar, it’s got sensors. And that’s what Arriver had. And Arriver sat inside of the Veoneer business. And Veoneer essentially was a tier one supplier in the automotive space.
So, Pat, and if you didn’t know the story, Qualcomm didn’t really want everything Veoneer. They just wanted Arriver. So, they set up a very interesting and complicated deal that allowed them to quickly close here. And then basically, using a private equity partner, I believe it’s called SSW. It’s not in front of me, but they basically used them to then take the Arriver part, put it into Qualcomm’s business, help them complete the digital chassis story, and then basically sell just the parts of Veoneer out through SSW, which is happening separately.
So, it was a big move for the company it’s going to accelerate their digital chassis going forward, Pat. And I think, as a whole, this is what completes their modular approach, their building block approach to being able to go to the OEMs and say, “Hey, you want to build to compete with Tesla, Lucid, Rivian, all these car of the future companies that are building on a native digital chassis. We have the pit parts and pieces here at Qualcomm to do it.” It’s been an impressive run for the company, a lot of work left to do, but it was a good move to get this deal close so quickly.
Patrick Moorhead: That’s some great analysis there, buddy.
Daniel Newman: Nothing left. But we’ve covered it before. So, it’s a rehash, right?
Patrick Moorhead: Yeah. I think, the important thing for the audience to always keep in mind is that, you mentioned the electrification of the auto. And, as much as that’s happening is the software defined nature of the car with this idea of constant updates. And, it’s funny, sometimes people talk about taking on Tesla and they just talk about the electric part. But, what they don’t fully understand is the constant innovation and updates that are done with the software. It used to be a time, Daniel, when you would fire and forget for three years. You wouldn’t change anything on a car, right? But now, very much like software, the software is updated and even some of the mechanical parts here. So, Arriver clearly got Qualcomm into the self-driving, and in the future, the autonomous vehicle space.
And, three years ago, they stealth all of us with the first demonstration of, I’ll call it, an L1+ maybe an L2-. And then, they’re showing off L4 type of technology. And, they have huge customers that are notoriously safe in their precision, like BMW. And in fact, this combination of the digital chassis, which includes the Arriver software, they’re actually doing what I would consider a joint venture, where they can actually offer the platform to other auto manufacturers. I don’t know how successful that will be in the future because essentially it would be having to buy from a competitor. But, it certainly does make you think. It’s a pretty good business model, because there’s only so many companies that have to scale to go and do this. So, I like this. I like what they did. And, they had to split off parts of the business, but that was just a requirement for regulatory purposes.
Daniel Newman: Yeah, it was regulatory. And I don’t think they wanted the other parts of the business. It enabled them to move faster to specialize the move.
Author Information
Daniel is the CEO of The Futurum Group. Living his life at the intersection of people and technology, Daniel works with the world’s largest technology brands exploring Digital Transformation and how it is influencing the enterprise.
From the leading edge of AI to global technology policy, Daniel makes the connections between business, people and tech that are required for companies to benefit most from their technology investments. Daniel is a top 5 globally ranked industry analyst and his ideas are regularly cited or shared in television appearances by CNBC, Bloomberg, Wall Street Journal and hundreds of other sites around the world.
A 7x Best-Selling Author including his most recent book “Human/Machine.” Daniel is also a Forbes and MarketWatch (Dow Jones) contributor.
An MBA and Former Graduate Adjunct Faculty, Daniel is an Austin Texas transplant after 40 years in Chicago. His speaking takes him around the world each year as he shares his vision of the role technology will play in our future.
