On this episode of the Futurum Tech Webcast – Interview Series I am joined by Nakul Duggal, Senior Vice President and General Manager, Automotive for Qualcomm to talk about Qualcomm’s first ever Automotive Investor Day, which was held last week in New York City.
In our conversation we discussed the following:
- An exploration into why Qualcomm decided to host an Automotive specific investor day
- What is driving Qualcomm’s momentum and the opportunities in the automotive space
- A look into Qualcomm’s road map for the future
Qualcomm has made some significant inroads in the automotive space, growing their design pipeline from $19 million to $30 million in two months. And it’s clear that the semiconductor company is not done yet. This is one conversation you don’t want to miss.
If you want to learn more about Qualcomm’s Automotive Investor Day, check out our coverage here.
Watch my interview with Nakul here:
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Disclaimer: The Futurum Tech Webcast is for information and entertainment purposes only. Over the course of this webcast, we may talk about companies that are publicly traded and we may even reference that fact and their equity share price, but please do not take anything that we say as a recommendation about what you should do with your investment dollars. We are not investment advisors and we do not ask that you treat us as such.
Transcript:
Daniel Newman: Hey everyone. Welcome to the Futurum Tech podcast. I’m your host, Daniel Newman, principal analyst, founding partner at Futurum Research, here, live in New York City at the beautiful Ritz Carlton. And I’m here with Nakul Duggal. Nakul, you’ve been on my show a bunch of times before and we were here in town for your Qualcomm Automotive Financial Analyst Day and I got the chance to sit down with you now. How you doing, Nakul?
Nakul Duggal: Good to see you, Dan. Doing great.
Daniel Newman: You look like you’re smiling. And actually, if I were you, I’d be smiling too. It was a tremendous day. And besides the fact that the overall macro environment and the markets are not necessarily being helpful in allowing us to really fully celebrate the success that you were able to announce yesterday, that probably shouldn’t matter as much as some might think because in the real world, companies like Qualcomm have to be thinking three, five, 10 years out into the future and let the markets play how the markets play. But let’s just start there. First annual Qualcomm Automotive Financial Analyst Day. Company’s done financial analyst days for a long time. What was the whole genesis besides doing a focused automotive day? And what were you guys really wanting to zero in on and have those analysts come away from the event with?
Nakul Duggal: Diversification for us has become a very important area of focus for the company. We’ve been in the automotive space now for a number of years and we never really actually came out and shared the story, what we have been doing in automotive, although there is a lot of work that’s been going on. So we thought it was a good time given how important automotive just has become generally in the technology space. Coincident with our focus on diversification, it made sense for us to actually come and share with the broad audience what the story is about. And I’m glad it turned out the way it did.
Daniel Newman: Yeah, it seemed to land really well being there for multiple parts of the Q and A, hearing the questions from the financial analysts, the media, reading some of the coverage that came out today, watching across the internets, seeing both you and Cristiano and Akash all out on different networks and different publications. Everyone’s interested in this and I’d weigh a little bit of the last few years, the pandemic, the supply chain, and of course the rapid proliferation of electrification and autonomy. Vehicles are hot. But I think there’s still a great opportunity, Nakul, and a lot of people don’t fully understand and appreciate how important the semiconductor players are going to be to the future of automotive. I heard 20%, maybe more of the bomb by 2030 is going to be semiconductors for vehicles.
Nakul Duggal: Well, I think the big shift that we see happening every day, and it’s not something that’s happened overnight, it has been creeping up on us, is that the car is a technology platform that is quite different from most others that we are familiar with, especially in the consumer space. But the other major shift that is happening is that automakers have to embrace becoming technology companies, which is obviously something that won’t happen overnight, but it is consistently happening in pretty much every single part of the world. And as you start to make that shift, there are a few things that are critical to making that shift. Semiconductors in software, that’s kind of in the center of that transformation. And the supply chain in automotive is a complex beast. But if you think about how automakers are, if that is a word that I can use, insourcing the responsibility for the platform that they’re building, they need technology partners to be able to go do that.
And the big shift that we are seeing is these partnerships that we announced yesterday, they’re all multi-generational partnerships. So this isn’t something where you announce once and then you go look for a new partner in the next generation. So the relationships with automakers are becoming one where they lean on us for a variety of technology, for software, for joint development, but really they place a bet on who they’re going to partner with for the long run. That’s a big shift that is happening and it plays very well to our strategy of the Snapdragon Digital Chassis.
Daniel Newman: Yeah, I’m going to come back to that in a few because I want to talk a little more about the Mercedes partnership and some of the overall, I call it the crawl chart of how companies are going to adopt various semis and sensor technologies and how Qualcomm can really take a bigger and bigger role. Because the bigger role is becoming somewhat self evident. So yesterday Cristiano got the pleasure of putting the slide up that showed the 30 billion design pipeline. Now, for anyone out there that hasn’t been paying attention, that pipeline was about 19 billion just two months ago.
Nakul Duggal: That’s right.
Daniel Newman: It was remarkable to me, Nakul, that I have seen nothing like it. I’ve seen competitors that have been in this space much longer that have pipelines that aren’t necessarily bigger than what you’ve been able to add in two months. Massive. What is driving this momentum?
Nakul Duggal: Well, there are quite a few things frankly. I think first of all, we are spending our time focusing on where the scale is. So we want to make sure that we are able to influence key decisions that major automakers. I think the second piece is car architecture is becoming much more complex. There are certain automakers that are embracing the software defined vehicle architecture very rapidly. And that is creating the need for much larger processors, much more complexity in the silicon.
And there is a transition time coming in the next two or three years where a number of automakers will advance over to this newer architecture. That’s increasing the amount of silicon that the vehicle needs, the redundancy that it needs, the software content that it requires. And it really is the attached rate is across the fleet. This is not happening just at the premium tier. It really is kind of an advancement of making the next generation architecture much more ready for the future. So I expect that we will actually see more of these decisions over the coming years because silicon and software is really what the car is going to be about quite significantly in addition to electrification in all of the other aspects.
Daniel Newman: Those things will be symbiotic as well. And by the way, I think for everyone out there that’s hearing design pipeline, I thought your CFO, Akash, did a really nice job of explaining yesterday the connection between pipeline and revenue, because of course a room full of financial analysts, they want to plug numbers into a model and then say, “How does this shift evaluation?” And frankly, I don’t think they’re applying enough value to what you’re doing, but that’s their say, and this is mine as an industry analyst. But this is going to be really large and I think that revenue will follow, but it will happen over a period of time. These designs take time, sometimes years before they pan out. I know yesterday you were able to… By the way, you had a great list of CEOs of automakers. We had GM, you had Honda, you had Mercedes-Benz, BMW all on the stage with you, I mean virtually, but still, top execs backing you guys up.
Very exciting. But one of the things I think we’re all trying to kind of wrap our arms around, is yesterday you announced the super compute and it’s really this digital modular approach system on chip that can do everything for the vehicle, right? I mean, that’s the long run, you take telematics, infotainment, ADAS, the whole shebang, but a lot of your customers are maybe buying one thing right now or another thing. And what are you seeing from those conversations with those CEOs and executives in terms of how they’re going to go from maybe using Qualcomm for one point solution to that whole Snapdragon platform?
Nakul Duggal: Well I think let’s talk about the product first a little bit. The platforms that we are now defining have a fabric that can really support any kind of application. We don’t really differentiate between whether it’s a cockpit application or ADAS application. We need to have enough performance headroom, enough safety hooks in the design fabric that we can essentially run any kind of application software. And that’s how the platform software is designed as well. As far as customers go, look, everybody is on a different trajectory, on a different cadence, different roadmap in terms of how they’re evolving. They’re thinking around these various domains. At many automakers, they have different teams for the cockpit system versus automated driving. At certain automakers, they have decided that at the entry tier they need to be able to find ways to get more features and segments that need affordability.
So there’s interest in taking informational safety and cockpit systems and combining those. There are other automakers who are moving very rapidly towards a software defined vehicle, in which case the architecture really doesn’t differentiate between what is this a cockpit system or is it an automated driving system because you’re really designing the software of the vehicle to keep in mind what is happening inside, what is happening outside, and blend that experience. So what we had to do was to create a roadmap that allows us to be able to build technology, build products that have flexibility to be able to address this time delta that exists across the ecosystem, and yet build a portfolio that allows us to be able to go to the highest tier of performance for automakers that are ready to embrace that. And yet as you start to go to the lower tiers of performance, you have this affordability metric that you have to go meet. The strategy’s working quite well because we actually have lead customers that are embracing both of these trajectories that are actually at place simultaneously within that same time.
Daniel Newman: And obviously I’m going to keep prodding you on this because I do want to get a little bit deeper into how this is happening, but I also understand that there’s a lot of sensitivities of what can and cannot be shared. And I think there was indicators, by the way, in your presentation yesterday of what is to come.
But part of what I’m seeing is that effectively you’re going to be putting a SOC into these vehicles that almost like you said, in a software defined world, you can turn everything on and up. So we’re going to move away from this three and five year design cycles. This has to be an enabler for the company to say, “Hey, we had this SOC that can do these four or five, six other things and we’re only using point solution A or point solution B.” They’re not going to have to come back to you and start over or redesign. They’re going to be to basically take advantage of the system that they’ve bought. I can’t imagine why would any automaker really not. I mean, I guess dollars is that the… What other reason would they not?
Nakul Duggal: Well, if you saw the lineup of CEOs that we had over yesterday, one thing that it should provide you an indication of is to how broad that list of CEOs is in terms of luxury OEMs, broad based OEMs, focus on every tier of the market.
I think the other piece that is really important to keep in mind is software is going to become a more and more important part of the vehicle of the future. And you have to be able to have underlying platforms, underlying portfolios of silicon that have the flexibility, that have the headroom to be able to manage this complexity in software.
And especially as automakers are bringing this capability in, they have to be able to act much faster. You can’t afford to wait another three years to go launch a new feature. You have to be able to launch in months. And so a combination of understanding very deeply what it takes to go build these solutions and then build a platform, a provider platform that automakers can then build on, adapt. That makes a very big difference. Most of our customers we actually work with on a continuous basis over their design cycle. So we are actually developing solutions. For example, the Mercedes announcement is a very good example where we have been working with their teams over the last three years to help build their next generation digital cockpit. So these are joint development programs where our teams and their teams are partnering in Europe, in China, in the US to be able to go build these together.
Daniel Newman: Yeah, you’re going to need a lot of intelligence in a vehicle. I mean, there’s no way some of the services that are eventually going to be turned on, heated seat as a service doesn’t work if you don’t have that right compute engine that communicates from the vehicle outbound. And hey, this manufacturer needs to charge this account. And we’ve of course barely touched on services here and I’m not going to lean in on that because I want to lean on one other thing with you before I let you go. And thank you so much for being so gracious with your time.
ADAS, more specifically in the future, the full autonomy, that’s hot. Now last year the company made a very aggressive decision and acquired Arriver, which was very exciting because you already had your own ADAS platform, but this got you over the hurdle of having a well known defined solution in the market. And you’re talking more about ADAS now. It’s a bigger part of your pipeline, it’s a bigger part of your design wins, but that migration to L4 and five is what’s hot. It’s what’s creating a lot of media buzz, notoriety. We hear about it in the news all the time. What’s sort of your thoughts, plans, and what’s the roadmap for Qualcomm really making a big play in that area?
Nakul Duggal: So if I answer the question in the context of the use cases themselves, if I think about L5, and if you think about the robotaxi market as an example, in geofence environments where you have a very specific problem statement to go solve for, makes sense to be able to go deploy this technology to still early days in terms of what the business models are, how much money there is to be made, what is the cost that you have to incur to keep these fleets of taxis updated, mapping, continuously updating software. That is still something that we’ll be looking at. But there are clearly a number of companies globally that are trying to go do this. If I think about L4 in the passenger vehicle segment, there will certainly be parts of your daily drive where you can automate the driving behavior. But there will also be aspects where to completely have the driver disengage and the vehicle is responsible a hundred percent of the time, I think that’s where the complexity starts to set in.
So the way that we think about automated driving for passenger vehicles is it’ll probably be a combination of parts of your drive, if you have a commute, you use the freeway, and then you get back on the surface streets, they’ll be part of the drive that will be assisted where the vehicle is assisting you, then you can turn the control over to the vehicle. The rest of the portion is automated. And then you take control back, say for example, for address to address. Different parts of the world will have different levels of infrastructure in terms of how sophisticated the infrastructure is, how well that works with the vehicle that is deploying the technology. And that’s going to play a role, but it is not going to be a one size fits all where the whole world just moves over to L4 automated driving. That’s probably not going to be the case for quite some time.
Daniel Newman: And there’s a huge opportunity for fill the L2 plus L3 gap.
Nakul Duggal: For us, I think from a product perspective, I think the strategy that we have is that we have to be able to provide solutions for all of these tiers. So whether you are deploying a robotaxi or an L4 platform, we have the silicon solutions for that as a part of, right? If you are building L1 and L2 platform and you need computer vision, that is something we support. If you’re looking to completely build your own stack and just buy the silicon from us, we can certainly support that.
So the approach is to really be able to be very broad based in terms of fulfilling the needs, not only of automakers, but also which parts of the world they’re deploying these products in. And it’s not going to happen overnight, we are not suddenly going to see a face shift across every single market where suddenly things change. It’s going to be gradual. And that is why it has to be a strategy that is an architecture strategy, that’s a long term product strategy, maybe a five to 10 year plan. And that’s why the digital chassis strategy works very well, because making the bet on a technology partner who provides you that visibility of their roadmap, the fact that they’re investing, the fact that we have the engineering capability, we are willing to be patient with how this business evolves. I think those things make a big difference.
Daniel Newman: Absolutely. Well, I’m almost ready to hand over some of the driving. I still enjoy driving, so I’m going to always be a little bit up in the air about that. But it sounds like there’s going to be a last mile challenge in this, just like there is in the idea of having drones or automated trucks deliver. Same thing here.
Nakul Duggal: That’s right.
Daniel Newman: So I just want to say thanks again, Nakul. It was a great day, a very, very promising event. As an analyst that is focused on being objective, it was really hard to find a lot of flaws. Of course, I’m interested in seeing how this all plays out. We’ll be watching and of course we’ll be having you back. So thanks for joining me.
Nakul Duggal: Thank you very much, Dan. Good to see you again.
Daniel Newman: So for everyone out there, hit that subscribe button and keep tuning into the Futurum Tech podcast. We really appreciate having you here. In the show notes, I’ll have links to more of our coverage from the Automotive Financial Analyst Day that Qualcomm did here in New York City. But for this episode, it’s time to say goodbye. Thanks for tuning in. We’ll see you later.
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.
