The Shift of Qualcomm: AI & Auto Takes Center Stage As Nvidia Outpaces

NNicholas September 5, 2023 3:32 PM

As Nvidia dethrones Qualcomm as the world's biggest fabless chip company, Qualcomm is regearing its efforts towards artificial intelligence (AI) and the automotive industry. The company has announced its new in-vehicle AI capabilities and a newfound partnership with industry leader, Amazon Web Services.

Shifting gears: Qualcomm and Nvidia

Qualcomm, once the world's largest fabless chip company, has seen a shift in the industry with Nvidia securing the top spot. Nvidia's success has largely been due to the hype surrounding generative AI models like ChatGPT, powered by Nvidia's GPUs. As a result, Qualcomm is repositioning itself by expanding its footprint in the AI and automotive sectors. A key part of this shift is the recent introduction of in-vehicle generative AI capabilities and a strategic partnership with Amazon Web Services.

Cristiano Amon, Qualcomm's CEO, has a vision for generative AI that extends beyond cloud-based applications. He believes that these models can be run locally, increasing performance and significantly reducing costs. This approach challenges the current norm where large language models rely heavily on immense amounts of cloud data to generate text and images. This shift towards off-cloud AI could transform how AI models are deployed and implemented.

Qualcomm's uneasy relationship with Apple

One potential catalyst for Qualcomm's strategic shift might be its uncertain future with Apple, one of its biggest customers. Currently, Qualcomm chips are inside all iPhone models, but the future of this partnership remains unclear. With the potential end of this lucrative deal looming, Qualcomm's push to diversify its operations, particularly into the AI and auto industries, could be a proactive measure to mitigate any potential losses.

Despite the uncertainty with Apple, Qualcomm continues to dominate in the Android market. The company remains the leading provider for modems in Android phones, illustrating its enduring presence and influence in the smartphone industry. This stronghold in the Android market could provide a stable base for Qualcomm as it navigates its strategic shift towards AI and auto sectors.

Qualcomm's profitable patent portfolio

While Qualcomm is well known as a chipmaker, it also holds an impressive portfolio of over 140,000 patents. The company's intellectual property plays a significant role in shaping how we communicate and provides additional revenue streams. Even when its chipsets are not being used in a device, Qualcomm can still generate income from licensing its advanced technologies to other companies. However, this aspect of their business model has attracted controversy and resulted in lawsuits in the past.

Diversification strategy: Qualcomm enters the auto industry

As the smartphone market faces a global downturn, Qualcomm's pivot towards AI and the auto industry could be a strategic move to secure new revenue streams and reduce its dependence on smartphone sales. The company's package of hardware chips, sensors, and software, known as the Snapdragon Digital Chassis, is already making its way into various models of smart cars. Additionally, Qualcomm's work on connectivity for devices like VR and AR headsets could open up exciting new opportunities for the company in the future.

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