Though Qualcomm still gets a large portion of its chip revenue from smartphone processors and modems, it also now has large RF, automotive, Wi-Fi networking and IoT chip businesses, and has also expanded into fields such as processors for notebooks and AR/VR headsets.
Such diversification is a big reason why Qualcomm guided in April for its chip unit -- it’s known as Qualcomm CDMA Technologies, or QCT -- to see annual revenue growth in the June quarter even though the company also forecast global phone shipments would drop about 30% annually due to COVID-19.
Earlier this week, I talked with Alex Katouzian, the general manager of Qualcomm’s Mobile Business Unit, about both near-term demand and Qualcomm’s chip efforts in several fields. The talk came just before Qualcomm officially announced the Snapdragon 865 Plus, an evolutionary upgrade to its flagship mobile processor (the Snapdragon 865) that’s promised to deliver 10% increases in CPU and GPU performance.
Among other things, Katouzian oversees Qualcomm’s offerings for mobile phones, IoT devices, notebooks and head-mounted displays. Here are his comments on several subjects of interest, slightly edited for clarity.
On the extent to which the Snapdragon 865 Plus will coexist with the standard Snapdragon 865 in Android phone lineups during the second half of 2020.
“I think there’s going to be room enough for both of them...I think the previous phones launched on the 865, the OEMs try to prolong that life as much as possible. Because especially nowadays, when you went through [an economic downturn] due to the coronavirus situation where buying got suppressed, and is starting to come back. I think the July-August timeframe is going to see a rise [in demand].
“So I think they’re gonna try to prolong the 865, maybe with more SKUs, and try to compete in an environment where more competitive phones are going to come out as well. And then refresh their old 865 phones. I guess in our business, 6 months, 9 months is old already.
“You try to refresh those phones with even better performance capability, maybe slightly new form factors, things like that. And continue the selling capability of the 865. That chip by itself has really good performance. We pretty much outperform anyone that’s out there on almost every parameter. Obviously [Apple’s] CPU performance would be better because of their customized solution versus standard ARM...but for the most part, it was really, really, a good-performing solution.
“So I think prolonging that with either multiple different SKUs with the regular 865 and an upgraded 865 Plus with better performance for second-half refreshes is a good thing.”
How phone demand has trended since April 29, when Qualcomm forecast global phone sales would be down about 30% annually in calendar Q2.
“The trend is pretty much like we predicted. I think the downturn in China caused disruptions in the market. The downturn in the U.S. certainly caused disruptions in the market. Having such a strong reaction to the virus in the European community [caused] some downturn to the market.
“But for the most part, a lot of the hard-hit areas are looking at improvement. Even in the U.S., where [COVID-19 cases] are spiking up a little bit, not to downplay the corona situation, but I think buying online and looking at some sort of recovery in terms of jobs coming back and things like that are looking better in the second half of the year. But overall, I think [for] the whole year, you’re going to see a downtrend.”
How Qualcomm’s sales are trending in China, and whether (given that Huawei relies heavily on its own mobile processors and modems) Huawei’s recent issues have helped Qualcomm gain share.
“We have extremely strong partnerships in China with both the OEMs and the carriers, as well as with the cloud and Internet companies...But our particular relationships with our China handset OEMs are very strong. We are designed into many, many of their [smartphone] tiers, and our design win relationships are continuing strong with them. And on top of that, I would say their handset recovery plans are going strong as well, and they’re looking to compete against Huawei as they did on a usual basis.
“Now from a Huawei perspective, based on the restrictions that have been placed on them, they have a hard time selling outside of China, because they don’t have Google (GOOG) - Get Free Report or other technology support that they need for the market, and I think [their sales are] on a downtrend outside of China.
“But their strengths inside of China are still at a maximum. Their concentration has now turned from selling to the entire world to selling in China in particular. Each of these OEMs have a large, several hundred million base of users. And in particular, Huawei, in terms of bringing end-to-end solutions from silicon all the way to the handset, including a system that can also work with the infrastructure side, because they also have the infrastructure side...is an added advantage [that they can] put to use in the Chinese market.
“And so their sell-in to the channel and sell-through the channel has been quite strong and on the rise. But in our opinion, it can’t be continuously rising, which means the downfall of the other OEMs. I think there’s going to be pretty good competition with all of those OEMs with Huawei. And I think the strength comes partially from working with Qualcomm in such a tight manner...They have become tier 1-type OEMs in the past few years, so we’re just helping and continuing to support them as they compete globally.”
Qualcomm’s efforts to bring millimeter-wave (mmWave) 5G radios, which are currently only found on high-end phones, to cheaper devices.
“We’re one of the strongest proponents of millimeter-wave, and we continue to strive to put as much millimeter-wave technology across our tiers as possible. As of today, we have our 8-series and 7-series [Snapdragon SoCs] both supporting millimeter-wave. Going forward, we definitely have plans to try to figure out how to proliferate that down.”
“As 5G is a brand-new technology introduction into the wireless world, it takes time for it to settle down and have features proliferate. It’s partially due to standardization methods, it’s partially due to adoption on the OEM, the infrastructure, the carrier and even the consumer side, as to how they absorb everything and allow the consumer to realize there’s an advantage to what comes from 5G and in particular millimeter-wave.”
“We’re actually doing a lot of business development, a lot of support in terms of independent software vendor activity, app developers, service providers, all of those entities that allow services on top of 5G and in particular millimeter-wave to stand out. We’re supporting all of them.”
“And I think we’re going to continue that activity in a very strong way. Both in proliferating it down into our roadmap, as well as making sure the ecosystem is ready to accept new services. The latency improvements, the throughput improvements, the indoor capability of millimeter-wave and how it can cover both home and enterprise, that’s super-important.”
“We are concentrating not only to bring end-user equipment in with millimeter-wave and proliferate that down into our roadmap, but also make sure the infrastructure is in place to support that roadmap, both indoors and outdoors.”
The RF performance advantage that comes from Qualcomm’s unique ability to provide phone OEMs with end-to-end, modem-to-antenna, 5G chip platforms.
“In terms of the RF front-end, that means the power amplifiers, the switches, the filters and maybe antenna modules as well as, for example, envelope tracking and things like that. That’s the entire RF front end. Outside of the transceiver, which matches up with your modem and your power management schemes.
That is like the base case. You have the modem, you have the transmit and receive chip, and then you have some power management unit that allows you to govern the entire solution. Then you have, how you receive and how you transmit these signals out. And which combinations of, and how you switch between them, and how do you filter those things out properly and how you get the cleanest signal coming from a noisy environment in the RF space to get translated into digital and process that properly and send it back out.”
“So if you don’t have that end-to-end solution, you can still figure out how to glue things together. But imagine now that you have, from anything that has to do with digital signal processing in the modem, to transmitting and receiving in an RF environment, to making sure that you filter out the right signals for you to process. Making sure that you amplify it enough so that your base stations can receive that properly and have the cleanest, most robust signal from a reception and a transmission perspective.”
“If you don’t have that end-to-end perspective, for sure you don’t have the full system knowledge of what’s going on and how to process it the best way so that the consumer can benefit or even the carrier can benefit from it. Of course you can piecemeal everything together, but if you have that end-to-end knowledge, and you can optimize that signal processing and transmission and reception of analog signals to digital in such a way that you can track a signal better, you can pre-distort things better, you can expect what’s coming next, you can extrapolate how a signal is going to behave. All of those things are going to be a benefit for both the OEM that’s designing with you, the carrier that is benefiting from that handset, and then the consumer, not even knowing it, is going to get a clearer signal, [fewer] dropped calls, much, much lower noise interruptions, much better capability in sound and transmission and reception.”
“If I had to talk to the carrier, if I had to talk to the OEM, if I had to talk to the infrastructure vendor, they would clearly understand that an end-to-end capable knowledge base of products and system solutions really benefits them in all aspects of design, of test, of production, and then benefits [on] the consumer side. So it’s not impossible to try to piecemeal everything together, but if you had one system house to bring you all of that capability and test ability, and be able to design with you in such a fashion that you can get your designs out faster and test them better, that’s the big advantage.”
Qualcomm’s view on trying to lower RF chip costs by driving greater integration and supporting technologies such as RF CMOS.
“Some parts of the RF solution today are already CMOS-based. We actually had an RF CMOS-based amplifier from way before. We experiment with a lot of different process technologies. And to date, we have put together system solutions with RF CMOS, with HBT transistors...and so I think at the end of the day, we pick the best process technology that allows us to give the best performance at the lowest cost possible. We always do that trade-off. Price, performance and power, PPP. So we do that trade-off all the time.
“From an integration perspective, I think it’s two-fold. What you don’t want to do is mix in digital process technology with concentrated analog process technology, because they don’t track on the same [key performance indicators]. They don’t track on the same parameters. The digital side tracks on the transistor to be the smallest possible with the best performance so you can fit in more functionality...analog doesn’t really scale as the process technology and the transistors get smaller. It actually stays the same size.
“So what you want to do is, you want to do is separate those two out because you can probably put it into a better-fit process technology, an older one to meet your requirements versus the leading-edge process technology which is more expensive and doesn’t allow you to scale the analog piece.
“Mixing in, for example, gallium arsenide with a CMOS transceiver with a CMOS baseband is probably a better way to go than trying to integrate more and more. The worst thing a semiconductor company can do is integrate just for the sake of integration. You only integrate when power, performance or price make sense. You disintegrate when any of those parameters go out of whack.”
“So far, the RF and analog signal processing capability is much better fit into an older, non-CMOS-based technology for the power amplifiers and an older CMOS technology for the transceiver, and a brand-new CMOS technology for the digital processing. And that mix has worked really well for us in all of those three PPP parameters.
We’re going to continue doing that, unless there’s a breakthrough where we can start to combine pieces of it. And on the transceiver, we have actually done that. Pieces of our transceiver technology have mode to the digital side and is scaling with the digital, leading-edge, process technology and some of it is left behind, so that partition has already happened. We’re going to continue looking for partitions on the amplifier side to the transceiver side to see if any of that can be combined. If it can’t, we’re going to continue on our way.”
Qualcomm’s R&D priorities for its Snapdragon XR processor line for VR and AR headsets, and how its sees the VR and AR headset markets evolving.
“VR is catching on big-time, and that’s paving the way for AR as well. Any type of extended reality is a good one. Our view is that the user experience and the form factor is going to change. Getting the headset perfected in such a way that the user experience is very pleasant in terms of resolution and clarity, and what you can experience in different applications...becomes so intuitive and so immersing that you want to use that headset.
But the headset in a VR environment is constraining because you have to sit still, you have to stay in one place. But as that evolves, and that resolution becomes better and better, those use cases become more and more prevalent, then AR starts to come out. And AR is a place where different operating systems are going to come into play, extraction of data and how it interacts with your real world, that’s going to come into play.”
“What’s the highest priority? I think for manufacturers, getting those lenses to be the highest quality [in terms of] resolution to interact with you, that’s super important. For us, processing that data to a headset in combination with what you have in your handset is very, very important for us. A split-compute environment becomes very important, because in order for you to have a comfortable headset around your eyes, one that you can wear for hours, you can’t bog it down with heavy batteries, you can’t bog it down with heavy infrastructure to process this and that.”
“I’m sure that as time goes by, I’m sure we’ll get to autonomous headsets after a while. But [getting] that head-mounted display to come out with a split-compute environment, very important. For us to try to figure out degrees of freedom by which your hands can interact in the user experience and become part of your user experience is very important. Getting those types of algorithms hardened in our chipsets to react fast, to be able to look at gestures, and all those perception algorithms that you have going on, and harden those things to allow that user experience to be super smooth and interactive with what you do on a daily basis, very high priority.
“You have about four things that are smart, distributed, computing environments that you can carry with you. One is the head-mounted display or the glasses. Second is the Bluetooth headset that you can talk to or interact with all of the experiences that you’re doing that can also allow you to find out what environment you’re in….Third is the watch, because the watch is now interacting with both of those things at the same time and it can carry cellular and Wi-Fi connectivity on your wrist.
"And last but not least, you have the handset, or the centerpiece of all of these devices. As you see, year after year, we’re putting in more and more processing technology into these devices....So allowing the handset, and the glasses, and the headset, and the watch to interact together with proper links, and with software that can split the compute environment between all four of them is probably the most important contribution Qualcomm can make into this next generation of user experience change and form factor change. And that’s what we’re striving for.”
Qualcomm’s efforts to move downmarket with its Windows on Snapdragon platform, which (thanks in part to less developer support) has faced an uphill fight against Intel (INTC) - Get Free Report and AMD-powered (AMD) - Get Free Report systems at higher price points, and how it’s more generally looking to differentiate its processors for Windows and Chrome OS notebooks.
“Our solutions both offer Chrome [OS] support and Microsoft Windows support...Current PCs out on the market based on Windows on Snapdragon range anywhere between $600 to $900, $1,000, even more.”
“But there’s also an education piece. The education market is taking off...Those devices start to go anywhere from $300, $250 and below...We have now in our compute lineup, we have now enough SKUs in our [processor lineup], we have the [Snapdragon] 8cx, we have the 8c, we have the 8, we have the 850, we have new devices like the 7c coming up for education. All of them with integrated capabilities, all of them at different price points, all of them allowing multiple SKUs of PCs for any OEM to come out with. So the idea is to try and fill in anywhere between the educational price points all the way up to a $1,000 price point...to fill any of those gaps.”
“My opinion is that a $600 PC to a $400 PC, and then education [are] going to be the highest types of volumes. And when you get to $800 to $1,000 PCs, it’s going to depend on what materials they’re going to use, how thin that form factor is, how light that form factor is, what type of connectivity capability it brings to you, the front camera. The AI capabilities of those devices are going to be a big differentiator.
So if you think about it, today all we’re doing is talking to each other from our homes...Your front camera is 10 times more important to you now than it was before. Because you almost never did videoconferencing or anything like this before. But now you’re depending on it for your business to continue. So your clarity and your voice quality, how I’m now being heard through the microphone and how I’m hearing you back is super important.”
“Home and enterprise are kind of merging right now. And so we see the Windows on Snapdragon capabilities to increase the camera quality, the AI capabilities, videoconferencing environments, how light the PC is, how long does it last, what kind of connectivity do I have, what can I do to correct things in a fashion that a user just gets used to it, capturing screens, all of those things become very, very important.
"And of course, being able to run...on [Chrome OS devices], I can run any Android game on these devices and it’s optimized because of the cellular side, how much we work on the gaming side, on the handsets to transfer it over to the PC side. All of those things become really great added values, and we’re in a very good position to try and take advantage of that.”
Editor's Note: Following the publication of this interview, a Qualcomm spokesperson clarified that the company hasn't yet announced Snapdragon processor support for Chrome OS devices.