The operator welcomes participants to the Qualcomm First Quarter Fiscal Year 2024 Earnings Conference Call and provides instructions for the call. Mauricio Lopez-Hodoyan, Vice President of Investor Relations, introduces the speakers and provides information on accessing the earnings release and slide presentation. He also mentions that non-GAAP financial measures will be used and forward-looking statements will be made. Cristiano Amon, Qualcomm's President and CEO, thanks everyone for joining and hands over the call to him.

In fiscal Q1, the company exceeded expectations with non-GAAP revenues of $9.9 billion and non-GAAP earnings per share of $2.75. The chipset business saw strong demand from Android and automotive, while the licensing business had revenues of $1.5 billion. The Snapdragon 8 Gen 3 mobile platform is powering flagship Android devices, including the recently launched Samsung Galaxy S24 Ultra. The company also extended a multiyear agreement with Samsung for flagship Galaxy smartphone launches. Additionally, the Snapdragon 7 Gen 3 mobile platform was announced and several key license agreements were renewed, including with Apple and two Chinese smartphone OEMs.

Qualcomm is actively negotiating new agreements and renewals with key licensees and OEMs in the automotive industry. They have launched 75 new models in 2023 and announced a collaboration with Bosch for their Snapdragon Ride Flex SoC. They also demonstrated new capabilities for digital cockpits and advanced driver systems at CES. In the PC market, they are working towards the launch of Snapdragon X Elite in mid-2024 and have expanded their mixed reality solutions with the Snapdragon XR2+ Gen 2 platform. They have partnerships with Samsung and Google to provide leading XR experiences to Galaxy users.

Qualcomm has announced the Snapdragon X35 5G Modern-RF system, the world's first commercial release 17 5G RedCap solution for edge networking. This will enable purpose-built 5G for Internet of Things devices and is expected to launch by the first half of 2024. The company is investing in solutions, ecosystem, and channel enablement to position itself for growth in the industrial edge device market. Qualcomm's diversification strategy is working and they are making progress in various industries such as mobile, automotive, computing, XR, and industrial IoT. They will provide updates on their seller modem and connectivity leadership at the upcoming Mobile World Congress. In the first fiscal quarter, they exceeded expectations with strong non-GAAP results.

In the first quarter, QTL and QCT both exceeded guidance with revenues of $1.5 billion and $8.4 billion respectively. Handset revenues were higher than expected due to increased demand for Snapdragon 8 Gen 3 mobile platform. IoT revenues were affected by industry-wide challenges. Automotive revenues reached a record high of $598 million, with a 12% sequential growth. Non-GAAP operating expenses decreased and $1.7 billion was returned to stockholders. Global handset units are estimated to have declined in 2023 but are expected to be flat or slightly up in 2024, with high-single digit to low double-digit growth in 5G handsets.

The company is forecasting a decrease in revenues and non-GAAP EPS in the next fiscal quarter due to seasonality for a modem only handset customer. They expect strong performance in QTL and QCT, with flat Android revenues and growth in IoT revenues. Non-GAAP operating expenses are expected to be $2.2 billion. The company is pleased with their strong execution and financial performance and has extended key license agreements. They are also well positioned to execute their diversification strategy. The call is now open for questions.

Cristiano Amon, responding to a question about the launch of the Samsung S24 and the adoption of AI devices, stated that it is still early to determine the exact impact, but they are excited about the beginning stages. He mentioned the use cases for AI on the device, such as translation, and noted positive reviews and results following the launch. Amon expects the trend of premium and high tier handsets with more computing power to continue, which will have a favorable impact on mix.

The speaker asks about the performance of Chinese OEMs in the first quarter and if the reemergence of Huawei in the market has affected their volume or market share. Akash Palkhiwala responds that demand was strong due to the launch of Snapdragon 8 Gen 3 and that the premium tier TAM in China has expanded since Huawei's 5G launch. The speaker also asks about the formal announcement of an extension with Samsung.

During an earnings call, Qualcomm's CEO Cristiano Amon discussed a new multiyear agreement with Samsung, starting in 2024, which includes their custom CPUs and expanding NPU. The agreement is a sign of a strong long-term relationship between the two companies. Analyst Matt Ramsay asked about the split of share in the flagship at Samsung and what this means for Qualcomm going forward. Akash Palkhiwala, the new COO, addressed the improvement in QCT operating margins, despite a decline in the IoT business.

The speaker, Akash Palkhiwala, thanks a questioner for their well wishes and discusses the strong margins in the first quarter due to a richer mix of products and actions taken on operating expenses. They also mention their commitment to their CFO role and upcoming events. The questioner then asks about the IoT business and the speaker mentions that the consumer segment is weaker, but there has been progress in reducing inventory.

The executives of Qualcomm discuss the recovery of IoT and the potential impact of the X Elite ramp on the market. They mention stabilization in the consumer side of IoT and expect growth in the second quarter. They also mention the launch of X Elite in mid-2024 and the increasing design traction for the product. They are optimistic about the opportunities in the PC market for on-device AI.

Cristiano Amon, CEO of Qualcomm, discusses the company's performance in the auto business and its plans for the future. He mentions the record revenues and strong growth in 2023, along with the launch of 75 models with Qualcomm silicon. Amon also confirms that the company is on track to meet its target of $4 billion and $9 billion in 2026. In response to a question about June seasonality, Akash Palkhiwala, CFO of Qualcomm, states that there is no change to the company's previous comments and that the third quarter is expected to be the lowest due to the lack of flagship launches.

In the paragraph, the speaker discusses the expected decline in third quarter and subsequent growth in the fourth quarter due to a trend consistent with the previous two years. They also mention the benefit of an acceleration of Android launches in the first half and their strong roadmap for content growth. When asked about Huawei, they confirm that they have a 4G license to ship to the company, but Huawei's priority is their own 5G device with their own chip. The speaker also expresses optimism for the 5G market and expects QTL revenue to be in line with the overall handset market.

The speaker confirms that there will be no significant change in the licensing revenue run rate as a result of the license extension. They also discuss the decision to reengage in custom cores with Orion and the potential benefits in terms of market share and content.

In this paragraph, Timothy Arcuri asks a question about restocking in China and the impact on Qualcomm's business. Akash Palkhiwala responds by stating that they were largely at normalized inventory for Android entering the fiscal year, and that they expect normal bill bleed cycles as devices launch. Arcuri then asks about the potential for leveraging their modem business into new RF content, to which Palkhiwala responds that it is a conversation they will have with the customer. The next question is from Ross Seymore, who congratulates Palkhiwala on his new role and asks about OpEx.

The speaker congratulates Akash on a job well done in the fourth quarter and asks about the company's plans for the first and second fiscal quarters. Akash responds that they will be selective in hiring and focus on acquiring new skills for diversification. He also mentions a new 10% customer, which may reflect strong demand in China. The next question is about the average selling price for Android, and Akash says it is expected to be flat in March, bottom out in June, and then improve. He also mentions strong mix in the beginning of the fiscal year and expects similar strength in the back half.

The speaker discusses the timing of premium flagship launches for OEMs, which typically occur before the holiday season and Chinese New Year. They confirm that these launches are for the premium tier of products, but also mention the significant presence and revenue from the high tier. The speaker then moves on to discuss Qualcomm's automotive business, which is primarily driven by share gains and revenue from telematics and fully immersive digital cockpits. They also mention that some revenue is coming from ADAS processing, with examples of cars in China and the United States using Qualcomm's processor.

The speaker discusses the growth of the company and its various components, including revenue targets and healthy elements. They also mention a new contract with Samsung and expectations for revenues and share losses in 2024. In addition, they discuss the strength of the company's auto business and potential factors contributing to its success.

The speaker discusses the automotive business and its connection to the launch of new cars. They mention the industry's transformation and the company's position at the intersection of this change. They also mention the increase in content within cars and their excitement for the future. The speaker concludes by highlighting the company's stability and growth opportunities in other segments such as IoT, PC, and XR.

The speaker expects that the growth of IoT, particularly in the industrial sector, will continue in the future. They are focusing on the growth and diversification of their company and express gratitude to their partners and employees for their help. The call has now ended.

This summary was generated with AI and may contain some inaccuracies.