Qualcomm's Drive into Automotive: Steering BMW and Mercedes to the Future

Infotrading.io - As the automobile industry pivots towards more technology-centric vehicles, Qualcomm (NASDAQ:QCOM) is shifting gears. While previously renowned for dominating the smartphone chip arena, Qualcomm is now redefining its position by aligning itself with luxury automakers like Mercedes and BMW (ETR:BMWG). The company's recent announcement to supply these automobile giants with chips heralds a new chapter, titled "Qualcomm's Drive into Automotive."

1. A New Roadmap

Qualcomm’s foray into automotive comes against the backdrop of a slightly sluggish smartphone market. Even as smartphone revenue saw a slump over the past year, Qualcomm, in an astute pivot, has expanded its collaboration with automakers. The goal? Powering a plethora of car functionalities ranging from infotainment systems to advanced driver assistance systems. This move is already bearing fruit: Qualcomm's automotive revenue witnessed a 13% growth in the last quarter, even as its smartphone projections slightly missed the mark.

2. Charting the Journey with BMW and Mercedes

In its recent commitment, Qualcomm will provide BMW with chips designed to enhance voice command features within the car. Additionally, Mercedes' E class models, set to launch in the U.S. by 2024, will also integrate Qualcomm's chips, promising state-of-the-art infotainment capabilities.

With this collaboration, Qualcomm aims to accelerate its automotive revenue, forecasting $4 billion by 2026, and a whopping $9 billion by the decade's end, as shared by Chief Executive Cristiano Amon at the Munich auto show.

3. Qualcomm's Expansive Automotive Pipeline

The U.S. chip designer's confidence isn't unfounded. In late 2022, Qualcomm revealed a staggering $30 billion "pipeline" in the automotive sector. This is significantly credited to its Snapdragon Digital Chassis product, which is rapidly becoming the choice of car makers and suppliers for its prowess in assisted and autonomous driving technology, alongside in-car infotainment and cloud connectivity.

Amon succinctly put it, stating the company's keen interest in exploring "new areas for growth", with automotive leading that charge.

4. On the Horizon: IPO of Arm Holdings Ltd

When questioned about the imminent IPO of Britain's Arm Holdings Ltd, currently owned by SoftBank (TYO:9984) Group Corp, Amon clarified Qualcomm's stance. He mentioned, "We are not necessarily participating in the IPO", but emphasized Arm's pivotal role in the chip ecosystem and expressed a desire to witness an independent Arm. Qualcomm's transition from primarily a smartphone chip supplier to a key player in the automobile technology realm isn't just an evolution—it's almost poetic. After all, who better to drive the tech revolution in cars than the masters of mobile microchips? While we are still on the humor gear, one could say Qualcomm is "chipping" into the automobile sector in more ways than one. Onward to the future on wheels!