Qualcomm may be at war with one of its biggest smartphone customers, but Cristiano Amon, the president of Qualcomm CDMA Technologies (QCT), doesn't sound fazed.
"Yes, there's one big OEM that we will continue to work hard to supply some of their volume, but in addition to that, we have seen tremendous growth in China, we have seen tremendous growth in the other customers with Samsung, and then we've seen growth outside the phone space. And on top of that, 5G is coming with a lot of new attributes," Amon told PCMag in an interview at Qualcomm's Snapdragon Summit.
The thicket of lawsuits now blooming between Qualcomm and Apple has dragged Qualcomm's stock price down and may have prompted Broadcom's hostile takeover bid. While Apple relied on Qualcomm modem chips from the iPhone 4s through 6s generations, the big phone maker has split its business between Qualcomm and Intel for two cycles now, and may be preparing to go all-Intel in 2018.
"We've been very public in QCT. In early '16 we said, we're modeling our business assuming that a very large OEM is always going to [embrace] multi sourcing, and even multi tiering," Amon said. "It was probably surprising to a lot of people that now that we have a full year of a dual source on that OEM, we saw QCT continue to grow. Just on non-phone business, we probably grew $3 billion."
Samsung and Huawei are also developing chips to compete with Qualcomm's, meaning that all three of the world's top phone makers are trying to find alternatives to the world's largest maker of mobile processors and modems.
Apple, Samsung, and Huawei may now be developing their own processors, but that's a challenge Qualcomm has faced before, Amon pointed out.
"We may have a different scale now given the amount of concentration we have. No question there's a concentration in the industry on the OEM side. But we always had it. In the early days of even 2G, with Qualcomm CDMA, you had companies like Samsung which had their own CDMA chips, you had Motorola with their own CDMA chip. If you have enough scale that you can afford the R&D in the scale of a semiconductor business you do it. Nokia did it, everybody did it, we always had that."
The phone maker landscape is changing, Amon argued. The rise of Xiaomi, Oppo, and Vivo has opened up new markets for Qualcomm where there were none before, he said. Assuming that Apple switching away from Qualcomm will cripple Qualcomm's modem business just assumes that there won't be any change. And betting against change, in the smartphone world, generally hasn't been a good bet.
Qualcomm is also looking far beyond phones. The company's big announcement on the first day of its Snapdragon Summit was a trio of Snapdragon-powered Windows laptops, and the company is currently trying to buy chipmaker NXP to improve its position in cars.
"You can't really predict with any precision that the OEM landscape is going to be like that forever. And when you get to a new generation, like 5G, you may create an entry point for many OEMs in the market. It appears a bigger issue because the market is concentrated, but we will only really be worried if the decision of the market is that there's no more innovation in the phone space. If that's not the case, it's a very dynamic market," Amon said.
Another Big 4G Jump Coming
Apple isn't making the best use of its Qualcomm modems, anyway. Talking to various experts here, I'm more and more convinced that Apple not only crippled its Snapdragon X16 modems by deciding not to turn on 4×4 MIMO, but also tuned the X16 down to match the Intel XMM7480 modem's lesser performance. Our exclusive study of the Qualcomm and Intel iPhone X models found the two devices much closer in modem performance than we saw last year.
"You have to have techniques," Amon shrugged. "Some OEMs will choose to bet on the innovation, some OEMs will choose only when the technology is mature."
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Intel recently announced a 1.6Gbps 4G LTE modem that would outpace anything Qualcomm has on offer but we should expect to hear about another leap in 4G technology from Qualcomm soon, which could put its modems once again safely ahead of competitors, Amon said.
"5G is coming. You will see from us another big jump in 4G before we get to 5G. You should expect that in 2018 … we may have still another big jump coming in 4G. We're just not ready to announce it right now," he said.
Qualcomm's next big press conference is at CES in early January, so we might hear about it then.