Regaining Market Share: Qualcomm's Strategy in the Wake of Apple Revenue Loss

Impact of Apple Revenue Loss on the Industry

Apple's revenue decline has led to a 10% drop in its product revenue, impacting the industry significantly. Qualcomm acknowledges that high customer concentration could pressure pricing and margins, while also emphasizing its diversification strategy to mitigate these effects and enhance growth opportunities.

"Further, while our product and revenue diversification strategies have resulted in an increasing portion of our revenues coming from outside of mobile handsets, e.g., from industries such as automotive and IoT, certain product categories within those industries may in themselves be subject to high levels of customer concentration." --- (QCOM, sec filing, 2024/Q1)

"Products revenue was $66.9 billion, down 10% year-over-year due to the challenging compare on iPhone that Tim described earlier, which was partially offset by strength from Mac." --- (AAPL, earning call, 2024/Q2)

"Further, the concentration of device share among a few companies, and the corresponding purchasing power of these companies, may result in lower prices for our products, which could have an adverse effect on our revenues and margins." --- (QCOM, sec filing, 2024/Q2)

"Reductions in the average selling prices of our chipset products, without a corresponding increase in volumes, would negatively impact our revenues, and without corresponding decreases in average unit costs, would negatively impact our margins." --- (QCOM, sec filing, 2024/Q1)

"Licensing business revenues were $1.3 billion. During the quarter, we also made significant progress on our leading technology and product roadmaps as well as executing on our growth and diversification opportunities." --- (QCOM, earning call, 2024/Q2)

Qualcomm's Strategies and Market Recovery Post-Apple Loss

Qualcomm's strategy for market recovery post-Apple loss focuses on expanding its addressable market and targeting premium segments, particularly in China. The company is confident that its innovations, including on-device AI, will resonate with consumers and drive growth, despite past regulatory challenges.

"We're going to see the market transition over with or without Qualcomm and obviously our assumption and our claim is that it's going to happen because of Qualcomm." --- (QCOM, conference, 2024/08/29)

"That is helping us having a bigger addressable market first. And even if you model like where we have 10% share, it's a significant, I think, upside for Qualcomm." --- (QCOM, conference call, 2024/05/29)

"So Qualcomm, both as I've covered this talk a long time and it's been through an awful lot over the last 5 or 10 years as we all know, China to the EU to the FTC, Apple, Huawei, wave after wave of attacks against the business model, frankly, from regulators and customers, Greg, it made a lot of investors gun shy for a long time on this one as it really wasn't clear what was coming down the pipe." --- (QCOM, conference, 2024/05/29)

"Okay. Great. Moving to the OEM customers that you work with, there's a changing market dynamics in the global smartphone market in terms of market share, right, where we see Apple, Huawei really fighting it out at the premium market in China." --- (QCOM, conference, 2024/05/21)

"So what moves the market for us is it's a premium and high tier and I think what we're seeing in the China market is that the mix it's improving, as the market has stabilized it when in return to some form of normality what we really liked is that within that market premium and high tier as a percentage continue to increase and that's actually what's driving the results and we are seeing the very first instances of on-device AI and GenAI being launched in premium devices and that has been resonating well to consumers, so it's a positive trend that we like." --- (QCOM, earning call, 2024/Q2)

Strategic Partnerships to Enhance Market Position

Qualcomm emphasizes the critical role of strategic partnerships and acquisitions in enhancing its market position. The company is focused on expanding into new product areas and improving its product mix, particularly in high and premium tiers, to drive growth despite a stable market.

"If we do not achieve the anticipated benefits of business acquisitions or other strategic activities, or if we are unable to consummate acquisitions or strategic investments that we consider important to the future of our business, our business and results of operations may be adversely affected, our growth and diversification strategy may not be successful, our stock price may decline and our reputation may be harmed." --- (QCOM, sec filing, 2024/Q2)

"Additionally, we may not be successful in entering or expanding into new sales or distribution channels, business or operational models, geographic regions, industries and applications served by or adjacent to the associated businesses or in addressing potential new opportunities that may arise out of our strategic acquisitions." --- (QCOM, sec filing, 2024/Q2)

"While we continue to invest significant resources toward advancements primarily in support of 5G-based technologies, we also invest in new and expanded product areas, and industries and applications beyond mobile handsets, by utilizing our existing technical and business expertise and through acquisitions or other strategic transactions." --- (QCOM, sec filing, 2024/Q2)

"And now I think at this point, I'd say we're one of the leaders in the market and I think getting stronger as we go forward." --- (QCOM, conference, 2024/08/14)

"What we see now is a stable. But there's one thing that is positive. Mix continues to improve and it's been reflected in our numbers, which means in a market that does not grow, we have been growing content and we see a mix improvement, especially towards the high and the premium tier." --- (QCOM, conference, 2024/05/29)

Innovations in Qualcomm's Product Offerings

Qualcomm is enhancing its product offerings through innovative mobile chipsets, particularly the cutting-edge Orion cores in the Snapdragon platform. Recognized as a top innovator in the semiconductor industry, Qualcomm is positioning itself as a leader in compute, with competitors benchmarking against its advancements.

"Yes. Thank you. Hello, everyone. At ASUS, we have been huge admirers of Qualcomm's innovative mobile chipsets, especially the cutting edge Qualcomm Orion cores in the powerful MPUs in the Snapdragon platform. These advancements have resulted in many" --- (QCOM, conference, 2024/06/03)

"is throwing more weight behind this. They've done an exclusivity with a single vendor in Qualcomm and that is up at the end of the year and we fully expect to see other potential ARM suppliers come into the market when that exclusivity is up." --- (INTC, conference, 2024/06/04)

"been huge admirers of Qualcomm's innovative mobile chipsets, especially the cutting edge Qualcomm Orion cores in the powerful MPUs in the Snapdragon platform." --- (QCOM, conference, 2024/06/03)

"It is great. It's great, exactly flattering for Qualcomm to come to this new space and prove ourselves as a leader in compute and see all the competitors now benchmarking themselves against Qualcomm." --- (QCOM, conference, 2024/06/03)

"Qualcomm has been named a top 100 innovator in @LexisNexisIP’s 2024 Innovation Momentum report, recognizing its significant contributions to the semiconductors industry and innovation in #AI." --- (QCOM, Twitter, 2024/06/28)

Market Trends and Industry Impact Post-Apple Loss

Post-Apple revenue loss, Qualcomm acknowledges a broad market trend affecting multiple OEMs, indicating a shift in industry dynamics. Meanwhile, AMD reports improved spending in enterprise and cloud sectors, while Intel faces significant losses, highlighting the competitive landscape Qualcomm must navigate to regain market share.

"And so it's not something that was isolated to one or two OEMs. It was a broad trend that is just representative of the overall market and the mix shift that we discussed in the overall market." --- (QCOM, earning call, 2024/Q2)

"to IFS. Next, on April 2, 2024, according to the Complaint, after the markets closed, Intel issued a press release which disclosed a retrospective revision of the Company's financial results under the new Foundry model reporting structure, revealing that the Foundry segment experienced an operating loss of $7 billion on sales of $18.9 billion in 2023, that Foundry revenue in 2023 was $18.9 billion, down $8.6 billion from 2022, and that the segment's operating loss included a $2.1 million in lower product profit driven by lower internal revenue." --- (INTC, press release, 2024/06/24)

"There are a couple of positives there. We see -- first of all the market looks like it's improving, so we have seen some return to spending in both enterprise and cloud." --- (AMD, earning call, 2024/Q2)

"And, you know, given you're struggling to reduce your net -- your -- reach your net neutral cash position and your margins are sort of near highs, do you see ways to deploy capital more to spur replacement demand in your installed base either with greater device financing, more investment in marketing, more promotions." --- (AAPL, earning call, 2024/02/29)

"Samik Chatterjee: Hi, thanks for the question. And maybe if I can start with Cristiano asking sort of you mentioned the strong performance you're seeing in the China market but maybe any more details in terms of just what you're seeing in the market relative to any specific numbers that you can share because there's been a lot of conflicting data points about the market being strong in 1Q and then maybe taking a breather so curious to understand what you're seeing on the ground there in terms of the China market." --- (QCOM, earning call, 2024/Q2)