According to foreign media reports, chipmakers such as Qualcomm, Nvidia, and Mobileye have become crucial in the automotive industry's transformation of cars into mobile supercomputers. Currently, these three companies are engaged in fierce competition, vying to provide core components and intelligent technologies for the new generation of cars.
In the automotive field, Qualcomm chips have already carved out a vast territory. Many vehicle models take Qualcomm 8295 and 8155 chips as a major selling point, and consumers are also very concerned about whether the vehicle model uses Qualcomm chips. It is worth noting that currently Qualcomm chips can be said to dominate both high-end and low-end fields. From the high-end Zeekr 009 Glory with a price of over 700,000 RMB to the low-end Geely Boyue COOL priced at 89,800 RMB, they are all using Qualcomm chips.
Qualcomm's advantage lies in connectivity
Software-defined cars can receive over-the-air (OTA) software updates and switch computing workloads between onboard systems and the cloud. As software-defined cars become more and more popular, Qualcomm has gained an advantage in the competition. Steve McDowell, chief analyst and founder of NAND Research, said that decades ago, the wireless backbone network developed by Qualcomm for mobile devices made it stand out in the automotive field and enabled crucial connectivity between on-board and off-board systems. Steve McDowell said, "From a technical perspective, Qualcomm's advantage lies in connectivity."
Connectivity has also brought growth to Qualcomm. According to Qualcomm's second-quarter (April to June) financial report, Qualcomm's revenue increased by 11% year-on-year to $9.393 billion; earnings before tax (EBT) surged 30% year-on-year to $2.279 billion; net profit rose 18% year-on-year to $2.129 billion; diluted earnings per share increased 18% year-on-year to $1.88. Among them, Qualcomm's automotive business revenue was $811 million, a sharp increase of 87% year-on-year. In contrast, Qualcomm's competitors reported more modest results in the automotive business.
On August 28, Nvidia, with a market value of up to $3 trillion, announced that in the second quarter of this year (April to June), its revenue increased by 122% year-on-year to $30.004 billion; operating profit increased by 174% year-on-year to $18.642 billion; net profit rose 168% year-on-year to $16.599 billion. Its automotive business revenue was $346 million, a year-on-year increase of 37% (less than half of Qualcomm's growth rate), and a slight increase of 5% quarter-on-quarter.
Mobileye is a leading supplier of automotive chips and driver assistance technologies. In the second quarter of this year, the company's revenue was $439 million, a slight decrease of 3% year-on-year. Based on the performance in the second quarter of this year, Mobileye lowered its earnings expectations for the rest of 2024. A direct comparison of these three companies can be complex. What they have in common is that they all provide chips and software for cars. But they specialize in different aspects of automotive technology, such as infotainment, driver assistance, and digital cockpits, and their products often target different levels of the market.
But according to analysts, Qualcomm's growth curve is expected to rise significantly. Phil Amsrud, associate director of semiconductor research and autonomous driving technology at S&P Global Mobility, said, "Qualcomm claims to have $45 billion in automotive business reserves because it has taken a'very shrewd' approach to building its automotive product portfolio and balancing short-term and long-term plans."
Qualcomm's strategy for the Internet of Everything is correct
As early as 2022, Qualcomm has been very active and making inroads in the automotive field.
For the relatively backward field of autonomous driving, Qualcomm has won key battles in the international market, especially General Motors. In particular, BMW will adopt Qualcomm's Snapdragon Ride platform in 2025, including central computing SoC and vision SoC, as well as Car to Cloud services. In the domestic market, Qualcomm has made a breakthrough with Great Wall Motors. Great Wall Motors has launched the third-generation autonomous driving computing platform ICU3.0 based on the Snapdragon Ride platform. Qualcomm has already taken the number one position in the market for vehicle networking (including 4G/5G, Wifi, C-V2X, lane-level precise positioning, etc.), and in the cockpit field, it has far surpassed its competitors with more than 25 automakers.
In terms of business model, Qualcomm has constructed a model of "Qualcomm + Arriver + Tier1 + automaker self-research". The bottom layer is based on Qualcomm SoC and accelerators. Perception and decision-making software is provided through Arriver and packaged for automakers. The market covers NCAP active safety to L2+ levels, similar to Mobileye.
In addition, Qualcomm has also created a full-stack solution software stack and provided relevant toolchains. It emphasizes expansion, openness, and a business model independent of Qualcomm. The products are provided to partners and automakers, covering L2+ to L4 levels, constructing a model similar to Nvidia.
At the same time, it has also constructed a $13 billion Design-win pipeline (55% for cockpits, 25% for connectivity, and 20% for driving). Because of the expected revenue from this system, Qualcomm has set a revenue target of $3.5 billion for fiscal year 2026 in the automotive business, and a revenue target of $8 billion for fiscal year 2031. It is very confident that it has locked in 70% of its revenue for the next five years. Judging from the current trend, achieving this financial goal is only a matter of time.
In 2022, some people speculated that in the automotive field, Qualcomm's strategic intention is to catch up with Nvidia in autonomous driving ADAS/AD and replace Mobileye while maintaining a leading advantage in the fields of connectivity (Telematic/Connectivity) and cockpit (Cockpit).
SiC Electronic Components thinks this speculation is very reasonable. This can be seen from the following three major strategic initiatives taken by Qualcomm: First, acquire Veoneer and fill the software shortcomings in perception and decision decision-making through Arriver, thus having a complete autonomous driving solution; Second, leverage the advantages of connectivity and cockpit to cut in from L2+ and occupy a good position in the field of intelligent driving; Third, provide a hierarchical, open, and scalable autonomous driving solution, focusing on cost-effectiveness.
The automotive business is divided into three major parts: connectivity (Telematic/Connectivity), digital cockpit (Cockpit), and autonomous driving (ADAS/AD). As early as 2021, Qualcomm had estimated that the size of the three accessible market segments would grow from $3 billion in 2021 to $15 billion in five years (2026). Now it seems that this prediction is completely reasonable.
Conclusion
we can infer that Qualcomm's long-term vision has always been to become a leader from the mobile end to the intelligent connected edge end, its mission is to enable an interconnected world of everything, and the strategic measures it adopts are diversification and a unified technology route. And facts have proved that this idea and strategic measure are completely correct.
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