Qualcomm posted strong Q3 results, with sales up 37 percent year over year. It comes as the company continues to outperform despite the challenging macroeconomic environment. Akash Palkhiwala, CFO, Qualcomm, joined Cheddar's Opening Bell to discuss.


Opening Bell

Qualcomm CFO Talks Strong Q3 Earnings, Digitization

joining us now is akash Pahokee wala. CFO of qualcomm. Qualcomm pulled off pretty solid quarter results, right? Sales soaring past expectations. Let's talk a little bit about how, you know, Qualcomm was able to pull off such strong growth again amid what is a pretty challenging econ economic landscape. Yeah, we're very excited about our performance in the quarter. We just reported, we we grew up earnings by approximately 54% on a year over year basis given the environment we're in that's obviously extremely challenging. Uh our revenue within handsets grew even faster than that. So that's that's just uh we are very very very strong performance and we're excited about it. The part that we're also very excited about is the diversification strategies playing out just as planned. We grew, we had record revenues both in automotive and IOT and and as we look forward, we're continuing to see just tremendous demand for Qualcomm technologies in both of those industries and and that just gives us an incredible like to look forward to and and grow our business as we move forward. I'm glad you brought up handset because I know that makes up the bulk of the business and that number was pretty impressive. I mean Qualcomm's handset business through 59%. This is despite signs of that inflation could potentially slow down growth here amid the transition to five G. And even as we get to six G, How does Qualcomm play a role here? Yeah, we were, we've always been central to the handset industry. If you look at the agreement that we announced with Samsung Samsung is the largest opium in the world? Very good partner for qualcomm. We extended our licensing agreement all the way through 2030 with them. So it's a great recognition of the, the value of the technology we bring to them and this includes six G which is still yet to be defined and this just shows their confidence in what Qualcomm is going to contribute to the industry going forward. In addition, they also agreed to use Qualcomm chip snapdragon globally for their premium tier galaxy devices, which is just going to be another tailwind for us as we look forward into fiscal 23. Speaking of this partnership, as you mentioned with Samsung through 2030 supplying the Cpus for the mobile phones, what are the new revenue opportunities that this poses for the company? Yeah, so in addition to our licensing business, which with this adds a lot of stability to it. It gives us a chance to grow within the handset business. But also the partnership includes other IOT devices, metaphors, devices, XR, which we're very excited about pC devices and tablets as well. So this is, this is a very broad partnership. Samsung is a very large consumer electronics company and we're excited about what we can bring to them. The metaverse has been all the rage over the past year, even with the economic downturn, there's a lot of attention there in terms of the opportunity that it presents to so many companies in terms of qualcomm. How does qualcomm potentially stand to benefit from the metaverse and the digitization of just about every industry. Yeah, that that's a great question Alicia we think of welcome as really the ticket to the matter worse. We have all these technologies that are so critical in making this form factor work. The technologies work both augmented reality and uh, and extended reality. We're going to be a very key player in enabling that industry going forward. If you look at our design mint pipeline, pretty much everyone who's making a matter words device today uses are chip and so very excited about that. If you're gonna step back and look at our broader strategy, we're at the intersection of just so many different trends that are happening in the industry metaverse is one of them. But digitization of industries, overall connecting everything to the cloud electrification and autonomous driving within cars, all these industries require technologies that were, that have been invented in mobile and that's the opportunity for us. We're excited over the better part of the last year and a half, we've talked a lot about the chip shortage globally qualcomm obviously being a key chip maker. Can you talk to us a little bit about how the company was able to navigate the chip shortage, um, and maybe even get ahead of the curve in comparison to some of your other competitors. Sure. So we were one of the first companies to recognize the shortfall and talk about it publicly. The advantage of doing that obviously was we're able to give insight to the investors on what was coming, but also we were able to plan our supply much faster than everyone else and and we've always believed that in the second half of 22, and we consistently said this will see supply and demand more aligned with each other and and that's where we stand today and we're confident that we're in a much better place than we've been in the past. There'll always be pockets of shortfall we'll be dealing with, but it's more business as usual and we're looking forward to being able to meet the demand of our customers. Now, obviously, if you're looking at, you know, D. C. The Senate is is planning on passing a $280 billion bill to boost chip productions. I wonder how you look at that. Do you look at that as a potential tailwind right now for the industry and even for Qualcomm. Yeah, we see it as a very good thing. We'd like to see more more manufacturing happen in the US. We'd love to use that capacity for the chips that we make. So it's generally a very big positive from our perspective, it does take time to build capacity. So the benefit will be recognized over time, but now is as good a time as any to start before I have to let you go here. I do want to touch on qualcomm increasing its investment in the auto industry. You guys are set to host your first ever auto investor day this september, what is this gonna look like exactly and walk us through how the company is redefining kind of automotive technology and how big of a deal that is for qualcomm. Yeah, it's, it's a great opportunity for us. If you look at the auto industry, it's going through a tremendous transformation. So in addition to electrification which is obviously happening, uh, cars are becoming super computers on wheels and and the opportunity that it provides us is to take technology we created for mobile in some ways supersize it for cars and and bring it to the automotive industry. So the first thing is all cars are going to be connected to the cloud, We can supply the chip that does that. The second is the inside of a car becomes like a tablet experience. And so we are, we are one of the largest chip players in the tablet industry. We can bring the technology and the software over to cars. And then the third is autonomous driving. And we've, we've recently done an acquisition of a company called a driver will combine their software with our chips and bring that to bear as well. You've seen a lot of design winds that have happened including recently we announced a design win with the Volkswagen group to use our chips for autonomous driving. So we're excited. Um, it is reflected in our design Mint pipeline. We announced more than $19 billion September Yeah, it certainly seems like no matter how you twist and turn it, we are in the age of digitization, especially when it comes to the automotive space. So it seems like a really smart move and for the most part, a ton of tail winds for the company, akash, really appreciate your time, akash, pocky wala CFO at Qualcomm.