Qualcomm CEO Sees Handset Bottom, “Multiple Billions” in Data Center Revenue Ahead

Qualcomm NASDAQ: QCOM President and CEO Cristiano Amon said the company’s diversification strategy is progressing across automotive, IoT and data center markets, while its core handset business remains constrained by elevated memory costs rather than end-market demand.

Speaking with Bernstein Senior Research Analyst Stacy Rasgon, Amon described handsets as a “stable business” for Qualcomm and said the company has focused since 2021 on increasing share of wallet, improving mix and prioritizing premium and high-tier devices. He said Qualcomm is “significantly under-shipping to consumer demand” because of memory-related constraints, giving the company confidence that its own handset business can bottom in the fiscal third quarter and improve sequentially afterward.

Amon said Qualcomm’s share at Samsung, historically around 50%, now has a baseline “north of 70%.” He also said Snapdragon has become more relevant in a smaller market as customers prioritize premium-tier designs.

Data Center Push Includes CPUs, Inference Accelerators and ASICs

Amon said data center is the “next step” in Qualcomm’s expansion and represents a large total addressable market. He outlined three major parts of the strategy: CPUs, XPUs focused on inference acceleration and custom ASICs.

On CPUs, Amon said Qualcomm has designed a processor specifically for data center use and argued that the company’s track record in smartphones, PCs and automotive demonstrates its capabilities in performance, power consumption and total cost of ownership. He said Qualcomm’s CPU architecture is flexible enough to scale from large data centers to on-premises deployments and could also be used as a chiplet in custom designs.

For inference accelerators, Amon said the company is not focused on training but on disaggregated inference workloads. He said Qualcomm’s XPU architecture does not require HBM and that the company is building chips, cards, servers and racks depending on customer deployment needs. Amon said the company’s first publicly discussed HUMAIN contract is tied to accelerators, not CPUs, and that Qualcomm has pulled expected data center revenue from fiscal 2028 into fiscal 2027.

Amon also discussed Qualcomm’s custom ASIC opportunity, saying the company expects shipments to begin in calendar 2026 and that 2027 should become “material” for data center revenue. When Rasgon asked what “material” means at Qualcomm’s scale, Amon said it would have to mean “multiple billions of dollars.” He said these data center efforts are expected to be operating margin accretive, though gross margin will vary depending on whether engagements involve chips, cards, servers or racks.

Regarding the pending acquisition of Alphawave, Amon said the company is buying the business for connectivity IP and customization expertise that complement Qualcomm’s existing data center platform. He said the ASIC engagement discussed on Qualcomm’s earnings call was not acquired through Alphawave.

Automotive Pipeline Continues to Convert

Amon said Qualcomm remains comfortable with its automotive target of $8 billion in revenue by fiscal 2029. He said the company previously disclosed a $45 billion automotive pipeline and indicated that the pipeline has grown since then, though he did not provide an updated figure.

He said the pipeline is roughly split into three categories:

• Connectivity in the car;
• Digital cockpit systems powering in-vehicle screens and computing;
• ADAS processors and related autonomy components.

Amon said current automotive growth is being driven by share gains and new vehicle models launching with Qualcomm silicon. He also cited acceleration in China, where automakers are adopting new chips and premium computing content more quickly, as well as increased demand for Level 2++ driver-assistance capabilities in premium vehicles.

He highlighted Qualcomm’s safety stack developed with BMW, saying it is launching in the BMW iX3 and is drawing interest from other automakers.

IoT Includes PCs, Personal AI Devices, Broadband and Industrial

Amon said Qualcomm is “very happy” with the trajectory of its IoT segment, which he said is approaching a $2 billion quarterly business based on the company’s next-quarter guidance of roughly $1.8 billion and change.

He said IoT includes several businesses: compute products such as tablets and PCs, personal AI devices including XR and wearables, broadband, and industrial applications. Amon acknowledged that “IoT” may not be the best term for the range of businesses inside the segment and said Qualcomm may eventually consider more detailed reporting as those businesses mature.

In PCs, Amon said Qualcomm is tracking toward its goal of about $4 billion in revenue, representing roughly 10% share in the markets where it currently participates. He said the consumer market has matured for Windows on Arm, while commercial PC adoption requires work with enterprises and CIOs. He also said PCs and tablets are facing the same memory constraints affecting smartphones.

Amon expressed particular optimism about “personal AI” devices, saying Qualcomm has more than 40 designs in that category. He said smart glasses are the most likely form factor to scale, with versions that may include processing, connectivity, cameras and possibly displays. He also cited emerging form factors such as pens, pendants and jewelry.

AI at the Edge Could Drive Upgrade Cycles

Amon said Qualcomm now has more clarity on how AI could reshape mobile devices. He described a future in which phones run orchestrators and agents that perform tasks on behalf of users, while working in tandem with the cloud. He argued that the debate over cloud versus edge AI is not useful because the two will operate together.

He said existing phones are not ready for these workloads and that future devices will need faster CPUs and, eventually, accelerators. Amon said this could drive an upgrade cycle, though he said he could not predict the timing.

Asked about Apple, Amon said Qualcomm has been clear about the expected trajectory of its chip business with Apple and that licensing is separate from chips. He said Qualcomm is in conversations on licensing and described the licensing business as being in “one of the most stable times” in its history.

Amon closed by pointing to Qualcomm’s engineering capabilities, patent portfolio and execution across new markets. He said the company plans to provide more detail on its strategy, particularly in data center, at its June 24 analyst day.

About Qualcomm NASDAQ: QCOM

Qualcomm Incorporated is a global semiconductor and telecommunications equipment company headquartered in San Diego, California. Founded in 1985, the company is known for its development of wireless technologies and for playing a central role in the evolution of digital cellular standards, including CDMA and subsequent generations of mobile standards. Qualcomm’s business combines the design and sale of semiconductor products with a patent licensing program for wireless technologies and related intellectual property.

The company’s product portfolio includes system-on-chip (SoC) platforms marketed under the Snapdragon brand, cellular modem and RF front-end components, connectivity solutions for Wi‑Fi and Bluetooth, and processors and platforms aimed at automotive, IoT, networking and edge-computing applications.

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