Qualcomm said it expects to generate more than $1 billion in sales during the current fiscal year by supplying chips to IoT business — smart watches, connected speakers and other devices, Reuters reported.
The development in Qualcomm IoT business revealed by Qualcomm CEO Steve Mollenkopf today assumes significance because some of the analysts believe that Qualcomm may take more time to generate significant revenue from outside its core business of chips for mobile phones.
The US-based mobile technology company has released the data points to prove that it can diversify its revenue sources after its $44 billion deal to buy Netherlands-based chipmaker NXP Semiconductors fell apart last month. Earlier, Qualcomm avoided a hostile takeover bid from Broadcom citing security reasons to US.
The sales of chips for connected objects or IoT is about one fifth of the $5 billion in revenue that Qualcomm CEO Steve Mollenkopf said the San Diego chipmaker believes it will make outside the mobile phone market. But today’s announcement does not cover any deals with automotive companies. NXP dominates the global automotive market.
Qualcomm in IoT
# distribution channels reaches 9,000 plus customers
# aims 4-fold revenue hike in chipsets from Home Entertainment in fiscal 2018
# aims 120% revenue growth in chipsets for connected cameras in fiscal 2018
Qualcomm dominates the market for processor chips for smartphones as well as modem chips that let phones connect to wireless data networks. Samsung and Apple are the major customers of Qualcomm.
Any decline in chipset sales to China-based smartphone companies such as Huawei, Xiaomi, Oppo and Vivo will trigger investor concerns. At present, Qualcomm does not rely on Apple and Samsung for its majority revenues. On top of this, Qualcomm is facing disputes from Huawei and Apple.
The sales of smartphones have almost flattened in recent years and are growing slowly, said IDC. The US-based Qualcomm had sought to purchase NXP, a dominant supplier of chipset to the global automotive market, to reduce risks in the global phone market. China government policies have forced Qualcomm to drop the deal with NXP.
Qualcomm CEO Mollenkopf has been under pressure from investors to show he can expand Qualcomm’s sales without NXP’s help. Some of the Qualcomm shareholders earlier indicated that the company CEO needs to improve performance to compete in the chipset market.
While Qualcomm had disclosed that it expected $5 billion in non-mobile chip sales this year, up from $3 billion last year, it had not given any information about the composition of that $5 billion until Thursday. The rest of the $5 billion beyond IoT chips comes from networking chips, Qualcomm’s own automotive chips and a few other areas.
Qualcomm’s chips for the IoT market typically power small, battery-powered devices that are becoming more common.
Qualcomm in a statement released ahead of a planned briefing with analysts on its progress said its chips are now in more than 200 wearable devices and 1,300 different wireless headsets, earbuds and wireless speakers.
The company also said it expects revenue growth from chips for wireless, internet-connected cameras to increase 120 percent this year versus last year, though it did not give an absolute dollar figure.