As Qualcomm, a leading name in the field of chip and modem manufacturing for Android phones, embarks on its quest to harness the power of generative artificial intelligence, it is targeting a new consumer base – automakers. The company aims to convince car manufacturers to integrate more of their Snapdragon Digital Chassis – a comprehensive package of hardware chips, sensors, and software – into their products. The vision is to utilize these chips to fuel AI-powered features like smart assistants within cars, eliminating the need for a mobile device. These advanced features could aid drivers in tasks ranging from navigation to reservation-making, ultimately enhancing the overall in-car computing experience.

Despite being a giant in the smartphone industry, Qualcomm’s automotive revenue currently constitutes a mere 3% of its total sales, amounting to $1.32 billion in fiscal 2022. However, the company is optimistic about the potential growth in this sector, projecting a whopping $9 billion in sales by 2031. Each car equipped with Qualcomm’s technology brings in between $200 and $3,000, plus an additional $5 for cars connected to 5G through licensing fees. This ambitious venture has the potential to revolutionize the automotive industry, but Qualcomm’s path is not without competition. Giants like Intel, Nvidia, Continental, NXP Semiconductors, and Bosch are all in the race to supply the chips and parts that power the future of automotive technology.

Qualcomm Aims to Expand its Footprint in the Automotive Industry with Generative AI

Qualcomm’s New Direction

Qualcomm, a company famed for its chips and modems in Android phones, has been making strides towards diversifying its product range. In recent years, it has introduced the Snapdragon Digital Chassis, a package of hardware chips, sensors, and software, to automakers like GM, Hyundai, and Volvo. Now, Qualcomm is looking to leverage the excitement around generative artificial intelligence (AI) to convince these manufacturers to utilize more of their chips, envisioning them powering smart assistants in cars that can assist with navigation, reservations, and other daily tasks.

A Growing Market

Despite automotive revenue still being a relatively small segment for Qualcomm, contributing to only about 3% of the company’s overall sales, or $1.32 billion in fiscal 2022, the company has high hopes for this sector. It predicts its chips will be increasingly used in upcoming car models over the next few years, projecting sales over $9 billion in 2031. Qualcomm officials revealed last fall that the company makes between $200 and $3,000 per car using its chips and software, plus an additional $5 per car connected to 5G through licensing fees.

In-Car Experiences Powered by Qualcomm

A prime example of Qualcomm’s presence in the automotive industry is GM’s new electric Cadillac Escalade IQ SUV. This $130,000 vehicle uses Qualcomm chips and software to power a 55-inch dashboard display and assist with lane-keeping and hands-free driving features under GM’s "Ultra Cruise" branding. Interestingly, the SUV does not allow users to mirror their phones to the entertainment system, meaning drivers will interact with GM’s chosen software interface, which enhances the significance of the in-car computer experience.

Facing the Competition

Qualcomm is not without competition in the automotive chip market. Other tech-focused companies like Intel, through its Mobileye subsidiary, and Nvidia, also offer automotive products, alongside traditional auto suppliers such as Continental, NXP Semiconductors, and Bosch. Despite this, Qualcomm recently showcased potential future scenarios enabled by its chips with the assistance of large language models and generative AI, emphasizing its aspiration to be recognized as an AI company.

Future Prospects and Challenges

In the short term, Qualcomm aims to create a smart user guide trained on dense car manuals, targeting driver monitoring and context-aware features as the next frontier. However, the company’s stock growth lags behind AI juggernaut Nvidia, which has seen its stock triple this year, while Qualcomm’s has risen by only 5%. One potential revenue stream could be over-the-air software upgrades that provide new self-driving capabilities, suggesting a promising future for Qualcomm in the automotive industry.

Takeaways

Qualcomm’s venture into the automotive industry marks an interesting shift in its business strategy. Leveraging AI to enhance in-car experiences could lead to a significant revenue increase in the coming years. However, the company needs to address the fierce competition in this sector and demonstrate unique capabilities to secure its place. The potential for over-the-air software upgrades is a promising direction, indicating that Qualcomm’s journey in the automotive industry is just beginning.