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Qualcomm Continues to Expand in Adjacent Markets without NXP

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Qualcomm’s life beyond NXP

Qualcomm (QCOM) made a bid for NXP Semiconductors (NXPI) to diversify beyond the smartphone market and accelerate its growth in the automotive and IoT (Internet of Things) spaces. While NXP’s acquisition was in progress, Qualcomm continued its strategy of growing organically in adjacent markets.

Qualcomm expects its fiscal 2018 adjacencies revenue to grow to $5 billion, up 70% from fiscal 2016 before it made an acquisition bid for NXP. Let’s see the breakup of this revenue.

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Qualcomm’s progress in adjacent markets

In the automotive space, Qualcomm has been leveraging its technologies in many new use cases for connected cars, especially in telematics and infotainment. It has an auto backlog of $5 billion, of which more than 50% is for infotainment solutions and the top 25 orders are for telematics, an area in which Qualcomm is a leader. This segment will likely grow rapidly as more automakers and Tier 1 suppliers prepare to launch 5G-enabled (fifth-generation) cars in 2021.

In the IoT space, Qualcomm is leveraging its Snapdragon SoC (system on chip) for AR and VR (augmented reality and virtual reality) and AI at the edge devices. In 2017, Qualcomm’s 30 Snapdragon platforms powered 1.5 billion shipped devices, generating over $1 billion in revenue. It expects its industrial IoT addressable market to grow at an average annual rate of 20%.

In the Wi-Fi space, Qualcomm has become a market leader in several segments, including home and enterprise wireless networks, mesh Wi-Fi, and the next-generation 802.11ax.

In the RF (radio frequency) space, Qualcomm has secured flagship design wins from Google (GOOG) and HTC and has committed to spending $2 billion in China on an RF memorandum of understanding. Qualcomm has also secured design wins for its modem-to-antenna solutions for the flagship phones of LG, HTC, Sony, and OnePlus.

In the PC space, Qualcomm has launched always-connected PCs powered by its Snapdragon 835 SoC in partnership with Microsoft (MSFT). Qualcomm has also announced a dedicated PC SoC Snapdragon 850.

Next, we’ll look at Qualcomm’s progress in the 5G space.

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