The Six Five team discusses the latest with Qualcomm Automotive.
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Transcript:
Daniel Newman: You wrote two Forbes articles about coming out party graduation. My God. And you know what? Sometimes I rag on you a little bit about you being sweet on Forbes and you’re very bullish, as I am, but this was absolutely deserved. Wow, what a day for Qualcomm Automotive.
Patrick Moorhead: Kind of funny. I spent so much time working there. I fib, it was only two days, but it felt like a week. I had to sleep the weekend to get over it. I think I caught something in New York. But listen, no, Qualcomm crushed it, and at a corporate level, Qualcomm has been in a multi-year expansion and diversification strategy to get further outside of modems and more into IOT, automotive and RF. Those businesses are absolutely rocking. Inside of automotive we have come to appreciate that every major time they get up on stage or they do earnings, they are updating this magical backlog number, or order backlog number. The company went to 30 billion and that was an increase of 11 billion from 19 billion in two months. And by the way, that 11 billion number is interesting because it happens to be the number NVIDIA gave for their entire backlog. So you can compare it. Qualcomm has 30 and NVIDIA has 11.
Daniel Newman: Yeah, you’re talking about design pipeline, right?
Patrick Moorhead: Design pipeline, yeah. And it’s funny, sometimes a mixed design pipeline backlog has firm orders, design wind pipeline, it’s a little bit soft of that. But that to me was the big announcement there. Mercedes got on and talked about their 2025 models. They won the dash for that. It was a time for the company to reinforce its leverage strategy, which is essentially leveraging each piece, every block, and every piece of IP that it does in smart phones and extending this to the automotive market. I have got to tell you, I was super skeptical that they would be able to do that. There have been companies who’ve tried to extend before, but to their credit, Qualcomm made a ton of investments that put over and above. They spent the money on auto specific types of features like reliability, like failover, and things like this. There was a little hint at the very end where they said, Hey, we think the new architecture in the car is going to be centralized compute.
And oh by the way, we have a new line of products called Snap Drag and Ride Flex SOC. Some people said, Oh, it’s paper. And then Qualcomm turns around and said, Oh, where we have design wins are already designed in it, OEMs. We’ll have more details for you at CES. Now the interesting number, it’s funny, you have a slide with all this information and my eyes just honed in on this number of tops, which is essentially the amount of AI performance, and they hit that 2000 tops, which happens to be the same exact number that NVIDIA brought out for Thor, right? Coincidence? I don’t know. But the game is on at the high end between Qualcomm and NVIDIA. Can’t wait to see details. Qualcomm is not known for the highest performance. They’re known for the best performance per watt, but we will see.
Daniel Newman: Pat, look, the automotive industry’s going to be massive for semiconductor companies. We’re in a bit of a gulley right now for semis. We’ll talk about that when we talk about Micron, which is early earnings in this quarter, we’re going to see some pullback. That’s typical of what we’ve been through in this cycle. By the way, even without the pandemic, semis always have cycles like this, but automotive is a massive opportunity. And look, I want to reiterate what you said, for what? A decade plus and NVIDIA has been working on building ADAS and infotainment systems for automotive. Definitely had some early wins with Tesla. There was a transition there and that shifted the business. But look, 11 billion is their design pipeline, which by the way, that’s a big number. Let’s not mince words here. Qualcomm added 11 billion dollars to its design pipeline in two months. Two months. The number had been growing steadily and had been impressive, but talk about a good day for CEO Cristiano Amon and SVP GM Nakul Duggal.
You wrote a good piece on Forbes. Everybody check it out, about the coming out party. Look, it’s been a bit of a coming out party for a while, but really it’s the list of companies that are employing some of Qualcomm, if not all of Qualcomm’s technology, is unbelievably impressive. You’ve got GM and you’ve got BMW and you’ve got VW and now Mercedes, which again was something that had looked like it had been sort of spoken for over the years. Now the digital chassis, I guess I’ll just make one other point, because we’re just taking two darn long on all these topics. But Pat, I love the building block approach, because the way I see it, and I asked in our Q and A when we had some Face Time with the executive team is, it’s not just about winning at one point, we’ve had a lot of companies with good point solutions.
It’s going to be about winning across the vehicle. To create this really software defined vehicle of the future, it’s going to be about taking all these systems, telematics, infotainment, ADAS, et cetera, building them to all work very ubiquitously together. And as we all know, just ask Apple, when you do a monolithic approach, does tend to create the opportunity to develop a better experience. So Qualcomm is having it both ways. They’re like, well, if you just want to use us for cockpit, fine, we’ll do that. By the way, we’re going to build this new SOC, this super computing SOC that enables you to just add our capabilities as you go. So you could put it in for one thing, right?
The new super compute SOC, which again, I know you had some points about whether that’s an accurate term, super compute versus super computer. But the long game here is put in the core technology and say, okay, now you want to add ADAS, now you want to add telematics, now you want add drive policy. Right? They’re going to basically set themselves up with this monolithic approach that allows you to build out your entire vehicle and make changes faster, which, by the way, if you understand automotive design pipelines, it takes time. This is going to make it more prudent and effective and efficient for people to add more Qualcomm capabilities.
Patrick Moorhead: Yeah, it’s interesting. It’s interesting though, they added the monolithic design, but on the ADAS and FSD they allow the car maker to add their own value and add software. Not everybody does that. There are solutions out there that are 100% a black box that you don’t get to tweak it at all. So somehow they manage to have their cake and eat it too, which is a monolithic design that, like you said, improves the quality of the experience, maybe increases its time to market, but they added the ability for the OEM to pull in their own software.
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.
