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Qualcomm Was Once Primarily Focused on Manufacturing Phones. Its Revenue Has Now Skyrocketed Thanks to Cars

Amid a major business transformation, the company is experiencing significant revenue growth thanks to its automotive division.

Qualcomm
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Qualcomm, originally known as a mobile chip giant, is evolving into a key player in the connected car and AI industries. In fact, the company’s latest quarterly results show dramatic growth in these new business areas.

Why it matters. As Apple moves towards greater technology independence and the mobile industry faces stagnation, Qualcomm has identified new growth opportunities that are driving its financial results to record highs.

Financial results:

  • Qualcomm’s automotive revenue has surged by 68% year-over-year.
  • It reached $899 million in a single quarter.
  • The company has set records in the automotive segment for five consecutive quarters.
  • Total net income has climbed to $2.92 billion in fiscal 2024.
  • Total revenue has already hit $10.24 billion, exceeding expectations.

The graph below illustrates the impact of the automotive division on Qualcomm’s overall revenues when we compare its performance in 2022 and 2024:

Qualcomm

Context. Under the leadership of CEO Cristiano Amon, Qualcomm is pursuing a clear strategy of diversifying beyond the smartphone market, which has been its primary source of growth for many years.

Historically, the mobile business represented three-quarters of Qualcomm’s revenue. However, this reliance is now decreasing as the company shifts its focus to other areas with greater growth potential.

Behind the scenes. Qualcomm has developed a flexible system that enables car manufacturers to combine functions that previously required separate processors, such as infotainment systems and assisted driving systems.

This innovation has attracted manufacturers like Mercedes-Benz, who want to simplify their vehicles’ electronics.

Qualcomm

A warning sign. Apple currently accounts for 22% of Qualcomm’s revenue but may stop using its 5G chips by 2026. In 2019, Apple acquired Intel’s modem division. Although the transition is proving more costly than expected, it’s likely that Apple will eventually become independent regarding this component, just as it did when migrating from Intel’s x86 architecture to ARM.

Interestingly, Qualcomm is currently involved in a legal battle with ARM over the use of its intellectual property. This situation may have serious implications for Qualcomm.

In detail. “We will continue to transform Qualcomm from a wireless communications company into a connected computing company for the age of AI,” Amon said after presenting the latest financial results.

Qualcomm expects its automotive sales to grow by another 50% in the next quarter, further solidifying its new company identity.

Image | Kārlis Dambrāns

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