QCOM - QUALCOMM Incorporated

Operator: Ladies and gentlemen, thank you for standing by. Welcome to the Qualcomm Fourth Quarter and Fiscal 2025 Earnings Conference Call. [Operator Instructions] As a reminder, this conference is being recorded, November 5, 2025. Playback number for today's call is (877) 660-6853. International callers, please dial (201) 612-7415. The playback reservation number is 137-56092. I would now like to turn the call over to Mauricio Lopez-Hodoyan, Vice President of Investor Relations. Mr. Lopez-Hodoyan, please go ahead. Mauricio Lopez-Hodoyan: Thank you, and good afternoon, everyone. Today's call will include prepared remarks by Cristiano Amon and Akash Palkhiwala. In addition, Alex Rogers will join the question-and-answer session. You can access our earnings release and a slide presentation that accompany this call on our Investor Relations website. In addition, this call is being webcast on qualcomm.com, and a replay will be available on our website later today. During the call today, we will use non-GAAP financial measures as defined in Regulation G, and you can find the related reconciliations to GAAP on our website. We will also make forward-looking statements, including projections and estimates of future events, business or industry trends or business or financial results. Actual events or results could differ materially from those projected in our forward-looking statements. Please refer to our SEC filings, including our most recent 10-K, which contain important factors that could cause actual results to differ materially from the forward-looking statements. And now to comments from Qualcomm's President and Chief Executive Officer, Cristiano Amon. Cristiano Amon: Thank you, Mauricio, and good afternoon, everyone. Thanks for joining us today. In fiscal Q4, we delivered another strong quarter with revenues of $11.3 billion and non-GAAP earnings per share of $3, both of which exceeded the high end of our guidance range. QCT revenues of $9.8 billion, up 9% sequentially were driven by strong end customer demand for Snapdragon-powered premium tier Android handsets, continued traction for automotive Snapdragon Digital Chassis and strength in IoT across industrial, Wi-Fi 7 access point, 5G fixed wireless and smart glasses. In addition, all 3 QCT revenue streams exceeded our expectations including record automotive quarterly revenues in excess of $1 billion. Licensing business revenues were $1.4 billion. Fiscal '25 non-GAAP revenues of $44 billion were up 13% year-over-year, with record QCT annual revenues of $38.4 billion, up 16% year-over-year, including automotive and IoT revenue growth of 36% and 22% year-over-year, respectively. We delivered 18% year-over-year growth in total QCT non-Apple revenues above our prior estimates. We remain on track to achieve our fiscal '29 long-term revenue commitment as outlined at our 2024 Investor Day. I will now share some key highlights from the business. At Snapdragon Summit in September, we introduced our Snapdragon 8 Elite Gen 5 mobile platform for next-generation flagship AI smartphones. This platform is equipped with our custom-built third-generation Oryon CPU, the fastest mobile CPU ever, along with an upgraded NPU and GPU. With the Snapdragon 8 Elite Gen 5, we continue to set the pace of innovation in mobile processors. This year marked our 10th Snapdragon Summit with simultaneous events held in Maui and Beijing, validating the strength of our Snapdragon ecosystem. Leading China OEMs, including Xiaomi, Honor, Vivo and OnePlus announced their flagship phones at our event. More than 1,100 partners, analysts, tech influencers and press attended in person, and our keynotes capture over 26 million unique views across both events. Together with our announcement, Snapdragon Summit generated over 547 million social media impressions. In addition, our Snapdragon Insiders community of tech enthusiasts, developers and fans has grown to more than 20 million members worldwide. Our highly differentiated technology continues to drive increased brand visibility. And during the quarter, Qualcomm debuted at 39 on the Interbrand Top 100 Global Brands list for 2025, reflecting the strength of Snapdragon. And for the first time ever, Kantar's BrandZ most valuable Global Brands list included Snapdragon, where we ranked #38. Also at Summit, we unveiled our newest platforms for premium laptops, the Snapdragon X2 Elite and X2 Elite Extreme. Once again, our industry-leading processors continue to outperform competitors, surpassing Intel and AMD in both speed and power efficiency. Our latest NPU sets a new benchmark as the world's fastest AI engine for laptops, also exceeding Intel and AMD in performance. And with the new Oryon Gen 3, we have the world's first 5-gigahertz CPU for the ultra-mobile laptop category with extended battery life. We now expect approximately 150 designs to be commercialized through 2026 and remain optimistic about the continued momentum for Snapdragon-powered AI PCs. As AI transforms human computer interactions, intelligent wearables and specifically smart glasses are evolving into personal AI devices that can connect the user directly to an AI agent or model. This emerging category is growing at a remarkable pace and has reached an inflection point fueled by very strong demand for smart glasses from Meta. This quarter alone, Meta introduced several new Snapdragon-powered styles, including the Ray-Ban Meta second-generation glasses, the Oakley Meta Vanguard performance glasses and the Meta Ray-Ban display and neural band. In addition to Meta, our leadership in this space is reflected by the 30 designs in production or development with our global partners. They include Samsung, which recently launched Galaxy XR, a truly multimodal AI headset and the first device for Google's new AI native operating system, Android XR. We achieved a significant milestone in automotive with the launch of Snapdragon Ride Pilot, our first full system solution for L2+ automated driving. Developed in close collaboration with BMW, it debuted in the automakers' BMW iX3 EV SUV. Powered by our advanced self-driving software stack, Snapdragon Ride Pilot sets a new standard in automated driving, is designed for universal compatibility and seamless integration with automakers, unlocking L2+ driver assistant features like hands-free highway driving and urban navigation for vehicles worldwide. Snapdragon Ride Pilot is currently validated in 60 countries and extends to 100 in 2026. The broad interest from leading automakers globally is exceeding our expectations. At IAA Mobility, Qualcomm and Google announced an expanded partnership, including the integration of Google Gemini models to our suite of Snapdragon Digital Chassis solutions. Together, we will enable automakers to build and deploy personalized AI agents that act as an in-vehicle assistance, bringing multimodal edge-to-cloud AI to next-generation software-defined vehicles. In industrial IoT, we completed our acquisition of Arduino, a premier opensource hardware and software company with an IoT development ecosystem of more than 30 million users worldwide. This builds on our acquisitions of Edge Impulse and Foundries.io and accelerate our plans to provide a comprehensive edge AI development platform for a broad set of applications. With these new assets, we're expanding our portfolio to a wide range of customers and verticals, further cementing our position as the leader of AI for the edge. Additionally, we recently released the Arduino UNO Q single-board computer, powered by the Dragonwing processor. This full stack edge AI platform enables the rapid development of solutions for applications ranging from smart home automation to industrial robotics, drones and more. AI data center growth is moving from training to dedicated inference workloads, and this trend is expected to accelerate in the coming years. The mass adoption and continuous use of AI applications is driving the industry to look for competitive alternatives that prioritize power-efficient performance and cost. We announced our entry into this market and recently unveiled our AI inference optimized AI200 and AI250 SoCs and associated accelerator cards and racks. We are very pleased to have HUMAIN as our first customer for these solutions with a target deployment of 200 megawatts starting in 2026. Looking ahead, we're executing on a multi-generation road map with an annual cadence. I would like to share that we're looking forward to providing an update in the first half of 2026 on our data center plans, including our roadmap performance and differentiated memory and compute technology. We'll also highlight our progress in other areas, including advanced robotics, next-generation ADAS, industrial edge AI and 6G devices and AI-powered RAN. As we execute on our strategy and expand our IP and capabilities, we believe we are one of the best positioned companies to lead the expansion of AI to the edge, edge-to-cloud hybrid AI and develop a power-efficient cloud inferencing solution. I will now turn the call over to Akash. Akash Palkhiwala: Thank you, Cristiano, and good afternoon, everyone. Let me begin with our fourth fiscal quarter results. We are pleased with our strong non-GAAP performance with revenues of $11.3 billion and EPS of $3, both of which were above the high end of our guidance. QTL revenues of $1.4 billion and EBT margin of 72% were above the midpoint of our guidance, driven by slightly higher handset units. QCT delivered revenues of $9.8 billion and EBT of $2.9 billion with year-over-year growth of 13% and 17%, respectively. QCT EBT margin of 29% was at the high end of our guidance. QCT handset revenues of $7 billion increased 14% on a year-over-year basis, reflecting increased demand for premium Android handsets powered by our Snapdragon Elite Gen 5 platform. QCT IoT revenues of $1.8 billion grew 7% year-over-year, driven by strength across industrial and networking products and increased demand for AI smart glasses powered by our Snapdragon platform. In QCT Automotive, we surpassed $1 billion quarterly revenue milestone, delivering 17% year-over-year revenue growth as the adoption of our Snapdragon Digital Chassis platform continues to accelerate. With the recent enactment of the One Big Beautiful tax bill, we now expect our non-GAAP tax rate to remain in the 13% to 14% range going forward, and we anticipate lower cash tax payments relative to prior expectations. This new legislation resulted in a noncash charge of $5.7 billion in the fourth fiscal quarter to reduce the value of our deferred tax assets. This charge is excluded from non-GAAP metrics but impacts our GAAP results. Before turning to guidance, I'd like to take a moment to highlight our strong performance in fiscal '25. We are incredibly pleased with our execution with non-GAAP revenues of $44 billion and EPS of $12.03, representing year-over-year growth of 13% and 18%, respectively. In QCT, we achieved 16% year-over-year revenue growth, driven by double-digit increases across all revenue streams, with IoT up 22% and automotive growing 36%. We also delivered QCT operating margins of 30%, in line with our long-term target as we have previously outlined. Over the past 5 years, our non-Apple QCT revenues grew at a 15% compounded annual growth rate. Similarly, over the last 2 years, our non-Apple QCT revenues grew by 17% and 18%, respectively. Lastly, we generated record free cash flow of $12.8 billion. And consistent with our commitment, we returned nearly 100% to stockholders through repurchases and dividends through the year. Now turning to guidance. In the first fiscal quarter, we expect to deliver record results with revenues in the range of $11.8 billion to $12.6 billion and non-GAAP EPS of $3.30 to $3.50. In QTL, we estimate revenues of $1.4 billion to $1.6 billion and EBT margins of 74% to 78%. In QCT, we expect record revenues of $10.3 billion to $10.9 billion and EBT margins of 30% to 32%. We anticipate record QCT handset revenues with low teens percentage growth sequentially, primarily driven by new flagship Android handset launches powered by Snapdragon. Following our outperformance for QCT IoT revenues in the fourth quarter, we expect a sequential decline consistent with last year, driven by seasonality in consumer products. In QCT Automotive, following a record fourth quarter, we estimate revenues in the first fiscal quarter to remain flat to slightly up on a sequential basis. Lastly, we forecast non-GAAP operating expenses to be approximately $2.45 billion in the quarter. In closing, as we approach 1 year since outlining our growth strategy at Investor Day, I'd like to provide an update on the progress towards our $22 billion fiscal '29 revenue target across automotive and IoT. In automotive, we've established ourselves as the most strategic silicon partner for OEMs globally. The accelerating adoption of our Snapdragon Digital Chassis platform and 36% year-over-year revenue growth in fiscal '25 puts us on track to achieve our $8 billion revenue target. Across IoT, the increasing importance of artificial intelligence, high-performance, low-power computing and connectivity validated by our 22% year-over-year revenue growth in fiscal '25 reinforces our confidence in achieving our $14 billion revenue target. In Industrial, increasing customer engagement and growth in design win pipeline, combined with our recent acquisitions to unlock access to 30 million users, underlines our confidence in strong revenue growth through the end of the decade. In XR, we're exceeding prior expectations on strong demand for AI smart glasses, and we remain the platform of choice for smart glasses and mixed reality devices across leading global OEMs and ecosystems. In PCs, we extended our technology leadership with the recent launch of Snapdragon X2 Elite and X2 Elite Extreme platforms, which deliver multigenerational performance increases across CPU, GPU and AI. Given our strong pipeline of approximately 150 design wins, we're optimistic about the growth potential for Snapdragon-powered AI PCs as we expand our presence across global consumer and enterprise channels. In networking, our continued innovation and leadership in WiFi, 5G, edge processing and AI, combined with our integrated platform approach positions us to drive content growth and adoption globally. As Cristiano outlined, beyond our revenue target, we're also pursuing incremental opportunities across data center and robotics. Finally, I want to thank our employees for exceptional execution and continuing to deliver industry-leading technologies and products. This concludes our prepared remarks. Back to you, Mauricio. Mauricio Lopez-Hodoyan: Thank you, Akash. Operator, we are now ready for questions. Operator: [Operator Instructions] First question, which will come from the line of Joshua Buchalter with TD Cowen. Joshua Buchalter: Congrats on a stellar set of results in a bumpy backdrop. I wanted to start with the data center business. I realize you're going to provide more details in the first half of 2026, and my questions might get punted as a result. But maybe you could spend a few minutes talking about what you see as Qualcomm's right to win in the data center space? And any details you can provide on the specs of the AI200 and 250 beyond what you were able to offer in the press release when the HUMAIN engagement was announced. And then lastly, on this topic, last quarter, you called out, I believe, a hyperscale engagement. I assume that's distinct from the HUMAIN engagement and any details on timing there? Cristiano Amon: Josh, thanks for your question and thank you. Yes. Look, we're very excited. I think this is the next chapter of, I think, the process we have been in Qualcomm to changing the company, diversifying the company, expanding our IP. I think that's one of the reasons I think we made acquisitions such as Alphawave. We think there are 2 areas that we outlined that we can participate into the data center. We were incredibly excited about the size of the opportunity in the next phase, I think, of data center build-out where there's going to be real competition. We go from training to inference. We have been focused in 2 areas. One is we believe we have one very strategic asset in the industry, which is very competitive, power-efficient CPU. That is both for the head node of AI clusters as well as general purpose compute. And then we also have been building what we think is a new architecture dedicated for inference. I think the focus has been increased computer density and simplify the architecture for the data center in terms of increase, I think, performance per watt. I think it's all going to be about generating the most amount of tokens with the least amount of power, and that's our right to play. We're excited about what we're doing that has been in development. It's something that we're actually doing in a very disciplined manner. We spend a lot of time, I think, with our early experimentation with AI100 to develop the software. And then we're now building AI200, AI250, both the SoC, the card, direct solutions. And I think we're pleased with what we're seeing. We will provide more details on that as you outlined early next year. Specific to your questions, I think we were in discussion with a hyperscaler. We're very pleased with the outcome of that conversation, and that's going to be part of our update when we provide details on the road map, the performance, the KPI, we'll be able to show details of the solution as well as our customer engagement. We are in conversation with a lot of companies. It's clear the market wants competition for this. But in a typical Qualcomm way, we're just going to be focused on executing and show the products performing. Like I said, this is an exciting new chapter of our expansion. And alongside robotics, those are kind of new opportunities for us. Joshua Buchalter: I appreciate all the color there and looking forward to the updates. For my follow-up, I wanted to ask about the handset market. So you highlighted your ongoing momentum in the Android space as driving growth in the fourth quarter -- excuse me, calendar fourth quarter in your prepared remarks. There's been a lot of noise, I think, about your lead Android customer potentially looking to use an internal modem more than they have in recent years. Could you maybe just talk about your visibility into your share at that customer? And any sort of share that you would expect to -- how that you would expect that over the next year or so? Cristiano Amon: Look, thanks for the question. I'm actually -- I want to spend a little bit of time on this because I sense that there's potential for a lot of noise when noise is actually not required. I think, first of all, there is one thing that is happening with our Snapdragon and our premium tier, Snapdragon Android, which has been very consistent, and this is going to happen over the past few years. The premium tier is expanding. I think if you look at the overall market, we have this trend that is very healthy, and the premium tier is expanding and is adding more compute. That is the reason why our Android business, even on a market that is relatively flat, which is the handset market. We continue to grow our content, ASPs and earnings because we see premium tier expanding. A lot of the upside we have in the handsets is primarily driven by the Android premium tier. Second part is our relationship with Samsung. We have said for a number of years -- a number of reasons, and this has been true in the past, I think, several years that what used to be a normal relationship at a 50% share, the new baseline is about 75% share. And that is always going to be our financial assumption. When we out-execute, sometimes we get more than 75%, on Galaxy S25, we got 100%. Our assumption for any new Galaxy is always going to be 75%. That's our assumption for Galaxy S26. Operator: The next question comes from the line of Samik Chatterjee with JPMorgan. Samik Chatterjee: Cristiano, you mentioned the -- on the data center side, starting with that, you mentioned the price performance for the inferencing performance that you're trying to deliver. I mean most of the training clusters that we've sort of seen the other incumbents sort of talk about the ranges of installation cost is somewhere in the sort of $30 billion, $40 billion per gigawatt that we're hearing of. Can you just right size us in terms of when you're thinking about the deployment on a gigawatt basis, what kind of cost performance or price performance are you thinking of relative to these inferencing workloads that you can support on the AI 200 or AI 250? And I'm also trying to get to sort of what revenue implications are for HUMAIN when you sort of deploy 200 megawatts with them? And I have a follow-up, please. Cristiano Amon: Okay. I'm going to try to give as much color as I can without getting ahead of the update we're going to provide next year. So first, let's just have a broader discussion about revenue. What we said before that we expect data center products to start leading to a revenue ramp beginning in fiscal '28. I think as a result of the HUMAIN engagement and our progress on the AI accelerator, I think we're pulling this forward into fiscal '27. So you should expect now from what we said before, I think data center revenue is going to start to become material in fiscal '27. So I think that's the extent of what I can provide at this moment. It's about a 1-year pulling. The second thing is we are getting interest. You should assume that companies, they are having to deploy as much compute as they need in the data center for inference, especially now that you see the constraints that you have on power, the constraints that you have on the amount of computer density. I think we have a lot of folks interested. We were not having conversations if we didn't have a solution that is competitive. But we will show the KPIs of the platform, I think, when we have a road map update early next year. Samik Chatterjee: Okay. Okay. Got it. And maybe the second one, similar to Josh's question. I think, Akash, if I'm interpreting the market's reaction to your strong numbers, there seems to be that concern about what March looks like with the change in share at the primary Android customer. Typically, on the handset side, your quarter-over-quarter decline into March has been sort of this high single-digit pace. Is that still a good run rate with sort of the lower level of share? Or would you sort of guide us otherwise? Because I think that's really what the market seems to be sort of concerned about at this point. Akash Palkhiwala: Yes, Samik, thanks for the question. We're not guiding beyond first quarter at this point. But when you look at our strong business momentum exiting fiscal '25, you see the benefit of that showed up in our results also showing up in the December quarter guidance. And so that carries forward into the rest of the fiscal year. The only additional thing I'd note is just a reminder that we expect to close our Alphawave acquisition in the first calendar quarter of '26. But otherwise, I think the business momentum is strong and just a couple of factors that you outlined. Operator: The next question comes from the line of Timothy Arcuri with UBS. Timothy Arcuri: Akash, when you talked about September, you said that the beat was driven mostly by premium Android, but it seemed like it came a little more from your top customer because before you were saying to take like 30% of units out, and that was like $500 million roughly. But it seems like nowhere near that much came out from that customer. So -- I mean, it was kind of barely down year-over-year. So can you just square that? And then also as part of that, can you speak to how much that customer is as kind of a baseline assumption for December? I think we've seen that the model that has their modem and it's not really selling very well. So I would assume that that's a tailwind for you also in calendar Q4. And then I had a second question. Akash Palkhiwala: Sure, Tim. So as we had said earlier, we expected to be in 3 of the 4 models of the phone that was launched. And so that is exactly what happened. And share, of course, is based on what sell -- how sell-through plays out. Specifically on the September quarter question, we already had kind of demand from the customer that was factored into the guidance we gave. So the upside we saw was not from Apple. It was really driven by Android customers and primarily the premium tier with the launch of our new Snapdragon chip. When you look at the sequential trend as well, as I mentioned, the -- we are forecasting approximately low teens sequential revenue growth in the handset revenue stream for QCT and primarily driven by Android as well. So there is some benefit from Apple, but the primary driver for the growth quarter-over-quarter is actually Android premium tier shipments. Timothy Arcuri: Okay. And then is there any update on the negotiation with Huawei for a license? It seems like it's kind of dragging on a little bit. Can you just talk about that? Alexander Rogers: Yes. This is Alex. Thanks for the question. No, we actually don't have an update now. Discussions are still underway, really nothing substantive to say beyond that. Operator: The next question comes from the line of Stacy Rasgon with Bernstein Research. Stacy Rasgon: So you noted the non-Apple QCT revenue was up 18% year-over-year. And even if I take out the auto and the IoT, it's clear that the Android piece was up like pretty strong double digits year-over-year. So am I right in assuming that's all content or primarily content given I don't think units grew that much. And is that the right sort of pace of like further content increase that we ought to be thinking about as we go forward? Akash Palkhiwala: Yes. So Stacy, you're doing -- obviously doing the math right. There are 2 primary drivers on this. One is just the mix shift of units up. And so this is a trend that we've seen over the last several years, and it's -- sometimes it's thought of as a developed market trend, but that's not true. It's across all developing regions as well. The devices that are purchased continue to move up, and so that shows up in the benefit to our revenue stream. The second trend is within premium tier. Content continues to grow as we deliver more and more capable chips, and more capable handsets are being delivered as a result of it. And those are the 2 primary drivers of kind of the long-term trend of our handset business. Stacy Rasgon: Got it. And if I could have a quick follow-up. Just the Snapdragon Android strength in September and December, is that primarily China? And are there any concerns there? I mean, is that just the timing of the launches? Like any thoughts on pull forward or anything like that. Anything we ought to be thinking about there? Akash Palkhiwala: Yes. No, there's no pull forward there. I think what we've seen is all of our -- most of our China customers, actually, all the major customers have already launched devices and the initial reception to the devices have been very positive. We'll see a lot of our global customers launch devices as well later this quarter going into early next year. And so it's just a reflection of kind of normal purchase patterns around the launch of these devices and the great initial consumer reaction to the launches. Operator: The next question is from the line of Chris Caso with Wolfe Research. Christopher Caso: And a question again on AI data center. And I realize you're going to provide some details coming up, but there's some specs out there, so -- which is why we ask. But from what we've seen what was in the press release was perhaps a different architecture than what we've seen others attack the market with DDR memory, PCI Express in that. Should we interpret that as sort of a first approach by Qualcomm with more to come? Or is this rather a different sort of philosophy for attacking the market? You talked about being more efficient on power consumption. Is this sort of a different -- attacking the market differently than what's in the market today? Cristiano Amon: I think the answer to the question is yes. For us, I think we're approaching this thinking about what the future architecture should look like. We had said before, and I think that's -- we have thought about this for the edge as well, which means when we think about dedicated inferencing clusters and the goal is to actually have the highest possible computer density at the lowest possible cost and energy consumption to generate tokens, we thought that maybe an architecture that is beyond the GPU and what you've traditionally been doing with GPU and HBM is what we should be doing. That's we're developing and we have to execute, and that's the focus on the company right now. Christopher Caso: Got it. With -- just back on handsets. And you talked about a mix shift towards the premium tier. To what extent has the growth that you've seen in handsets been driven by Snapdragon ASPs? And obviously, wafer prices are going up as you go to finer geometries. Maybe talk about the impact of higher ASPs on handset growth, both now and going forward and how the industry absorbs those higher ASPs? Akash Palkhiwala: Yes. So I think there's a long-term trend that we've seen. This is a conversation that we have every year, but we continue to see just very strong demand for more capable chips, more capable processing in these premium tier chips. And so the competition between the OEMs drives it, the demand for consumers doing more activity on the phone drives it. And we know the next couple of chips that we are making, and we're already in discussions, advanced discussions with our customers. So we feel pretty confident that there are legs to this trend over the next several years. The second factor that I outlined is important to keep in mind as well is this very significant mix shift towards more premium devices. And that's not about content growth within the tier, but it's more about more capable devices being purchased by consumer. And that is a multiyear trend as well that we're continuing to see going forward. Operator: The next question is from the line of Tal Liani with Bank of America. Tal Liani: If I look at this quarter, you grew handsets by 14% and it looks like next quarter, you're guiding again 600 basis points of above market growth or above market expectations for QCT. When you look at next quarter, what are the components of this outperformance? Do you -- can you go over kind of IoT, autos and handsets? Where do you think you can perform better than you initially thought last quarter, et cetera? Can you give us a little bit of a color on how next quarter is behaving of the QCT breakdown? Akash Palkhiwala: Tal, just to confirm, your question is about the December quarter, first fiscal quarter? Tal Liani: Yes, first fiscal quarter, sorry. The question is about the guidance for next quarter. Yes. Akash Palkhiwala: Yes, perfect. So in -- specifically in automotive, we had a record quarter in September, so $1.1 billion -- approximately $1.1 billion, and we are guiding flat to slightly up in automotive. We do think that we're in this very strong position as additional cars get launched with our capabilities in them, we will continue to grow revenue through the year. IoT is similarly positioned, right? We saw significant upside relative to our guidance within the September quarter, and we are positioned to continue to grow revenue starting first quarter going into the rest of the fiscal year as well. Within handsets, the upside that you're seeing in the December quarter is really the success of our launch of our new chip. We've seen all the major OEMs launch devices with it. As I said earlier, strong consumer reaction, and that is reflected in our financial forecast. On a sequential basis, as I mentioned earlier, we are forecasting a low teens sequential revenue growth in the handset stream in QCT. Tal Liani: And my follow-up is on a -- like historical perspective, when you launch a product into China and it's into the New Year's -- the Chinese New Year, et cetera, is first fiscal quarter the strongest quarter? What happens from a seasonality point of view, what happens for the next few quarters from a historical perspective? Akash Palkhiwala: I mean, as you've seen in the past, we expect our first fiscal and second fiscal quarters to be the stronger quarters in the year. And usually, the June quarter, the third fiscal quarter is a lower quarter. So that's -- seasonality should be consistent with what you've seen before in the handset business. Operator: The next questions come from the line of C.J. Muse with Cantor Fitzgerald. Christopher Muse: I wanted to kind of focus on QCT EBT margins and revenues grew 5% year-on-year, yet margins were down 100-plus bps. And I'm curious, is that a function of mix? Or is that a function of higher manufacturing costs? Or is it simply R&D investments for future revenue growth? Akash Palkhiwala: Yes. I think when you look at the year-over-year trend, I think you should think of we are investing in the data center area, which over the last several years, we've been kind of just focusing OpEx on moving from mature businesses into growth areas. Data center is incremental to the investment profile that we have. Christopher Muse: Okay. It's very helpful. And then I guess just to hone in on your non-Android handset business. Is there an update in terms of how we should model that for calendar '26? Akash Palkhiwala: No change to what we've said on share within Apple versus what we've said in the past. Operator: The next question comes from the line of Ben Rises with Melius Research. Benjamin Reitzes: Just wanted to touch back on the data center event, you said you're going to be updating us in the next calendar year. Previously, you had an Analyst Day where you've put out these long-term targets for FY '29. I would assume that the smallest opportunity was in XR at $2 billion. I would assume if we're going to have an event and go through something like this, this has the opportunity to be something pretty material, bigger than the smallest opportunity outlined at the last Analyst Day, that was $2 billion for XR by '29 and more like another multibillion opportunity. Can you just -- can you guys clarify that? Akash Palkhiwala: Yes, Ben, that's a great observation. I think we're seeing this market take off very fast, especially AI smart glasses. And so we definitely feel like we're significantly ahead of the guidance that we had provided and very significant upside opportunity. I mean if you kind of step back and think about the broader opportunity around personal AI, and you could think of it as the glasses form factor or the watch form factor or hearables form factor, this could be a very, very large market. And so if that plays out as we suspect it might, it will create significant upside opportunity. Benjamin Reitzes: Yes. Sorry, just to clarify, though, my question, I appreciate that is that if you're going to outline the data center opportunity and have a special event, should we assume that it's a multibillion opportunity, something that you would call out that's at least as big, if not bigger, than anything you laid out at your last Analyst Day, which is the smaller opportunities are $2 billion to $4 billion. Cristiano Amon: Ben, now -- thanks for the question. I understand it now. Yes, it's upside on that number and success in this area, I think, presents to us a potential multibillion-dollar revenue opportunity in a couple of years, and that's how we're thinking about it right now. Operator: That concludes today's question-and-answer session. Mr. Amon, do you have anything further to add before adjourning the call? Cristiano Amon: I just want to thank all of our partners, our employees, and we are continuing to change Qualcomm into a very diversified company. We're probably one of the few companies among all the semiconductor companies that can go from 5 watts to 500 watts with very flexible and very broad technology capabilities. I think one thing that we take pride of in every industry that we enter, we have a platform that is a leading technology platform, and we're excited about the future of the company, and we're just going to keep executing on this strategy. Thank you very much for supporting our call. Operator: Ladies and gentlemen, this concludes today's conference call. You may now disconnect.

Operator: Ladies and gentlemen, thank you for standing by. Welcome to the Qualcomm Third Quarter Fiscal 2025 Earnings Conference Call. [Operator Instructions] As a reminder, this conference is being recorded July 30, 2025. The playback number for today's call is (877) 660-6853. International callers, please dial (201) 612-7415. Playback reservation number is 13754332. I would now like to turn the call over to Mauricio Lopez-Hodoyan, Vice President of Investor Relations. Mr. Lopez-Hodoyan, please go ahead. Mauricio Lopez-Hodoyan: Thank you, and good afternoon, everyone. Today's call will include prepared remarks by Cristiano Amon and Akash Palkhiwala. In addition, Alex Rogers will join the question-and-answer session. You can access our earnings release and a slide presentation that accompany this call on our Investor Relations website. In addition, this call is being webcast on qualcomm.com, and a replay will be available on our website later today. During the call today, we will use non-GAAP financial measures as defined in Regulation G, and you can find the related reconciliations to GAAP on our website. We will also make forward-looking statements, including projections and estimates of future events, business or industry trends or business or financial results. Actual events or results could differ materially from those projected in our forward-looking statements. Please refer to our SEC filings, including our most recent 10-K, which contain important factors that could cause actual results to differ materially from the forward-looking statements. And now to comments from Qualcomm's President and Chief Executive Officer, Cristiano Amon. Cristiano Renno Amon: Thank you, Mauricio, and good afternoon, everyone. Thanks for joining us today. In fiscal Q3, we delivered revenues of $10.4 billion and non-GAAP earnings per share of $2.77, which was near the high end of our guidance range. Our chipset business delivered revenues of $9 billion, reflecting strength in automotive and IoT and ongoing growth in handsets. Automotive and IoT revenues increased 21% and 24% year-over-year, respectively. Our licensing business revenues were $1.3 billion. Our momentum in automotive and IoT is the result of strong execution of our growth and diversification strategy. We remain on track to meet our fiscal '29 target for combined automotive and IoT revenues of $22 billion. We're forecasting fiscal '25 to be the second consecutive year of greater than 15% year-over-year growth in total QCT non- Apple revenues. I will now share some key highlights from the business. In handsets, we extended our Xiaomi collaboration with a multiyear agreement. Snapdragon 8 Series platforms will power multiple generations of Xiaomi's flagship devices for China and global markets with volume increasing each year of the agreement. The Snapdragon 8 Elite continues to set the pace of innovation in mobile processors and is leading the transition to AI smartphones with 124 designs shipped or announced to date. AI usage in smartphones is increasing. For example, Samsung noted that 70% of Galaxy S25 users are utilizing Galaxy AI and usage of Google Gemini AI has nearly tripled among S25 users compared to the S24. Looking ahead, we expect the range of own device in agentic AI use cases will continue to expand and reshape the mobile industry. We are optimistic about the Android ecosystem's leadership in AI. As we reach the 1-year mark of our entry into AI PCs, we are encouraged by the steady progress we're seeing with our Snapdragon X Series platforms. Multiple new devices launched during the quarter from leading OEMs, such as Acer, Dell, HP, Lenovo, Microsoft and Samsung, and we remain on track for more than 100 designs to be commercialized through 2026. Snapdragon is transforming personal computing experiences and the design traction we're seeing from major customers reflect confidence in our technology road map product portfolio and long-term commitment to PCs. In the second calendar quarter of 2025, according to third-party sources, Snapdragon-based PCs continue to make up approximately 9% of Windows laptops sold above the $600 price tier in retail U.S. and the top 5 European countries. While we are at the beginning of our journey into PCs, we remain excited about the long-term opportunity and continue to work toward our target of achieving $4 billion in revenue by fiscal '29. In XR, Snapdragon continues to be the platform of choice for smart glasses and mixed reality devices. We now have 19 designs from our global partners. Demand for Meta's AI smart glasses continue to exceed expectations, and they recently expanded their portfolio with the launch of the new Meta Oakley smart glasses and introduction of new Ray-Ban styles. Xiaomi's new AI glasses launched in the quarter were also well received. All 3 are powered by the Snapdragon AR1 Gen 1 platform. At the Augmented World Expo USA, we conducted the world's first demonstration of 1 billion parameter model running locally on smart glasses powered by our next-generation Snapdragon AR platform. We also introduced a smart ring controller reference design as a new input device for discrete and intuitive interactions. Our Snapdragon Digital Chassis solutions continue to see strong traction across the automotive ecosystem with 12 new designs during the quarter and a total of 50 vehicle launches this fiscal year. We're incredibly excited about BMW's upcoming Neue Klasse vehicles, which will launch globally with our new ISO safety-certified ADAS stack later this year. This will include our Snapdragon Ride platforms and our jointly developed Driving Stack, which meets safety standards in the U.S. and Europe. More details about the deployment, certifications and capabilities will be shared at the IAA MOBILITY Show in September. Our Snapdragon Ride platforms and Driving Stack are also gaining momentum more broadly with 20 OEMs programmed for various highway and urban Navigate on Autopilot solutions. The majority of these programs will launch in the next 18 months across all global regions. In industrial IoT, we continue to expand our ecosystem of partners, and we're pleased with the traction of our Dragonwing platforms. At COMPUTEX, we announced new collaborations with [ DigiWin ] and Aetina to utilize our AI On-Prem Appliance Solution and AI Inference Suite for enterprise automation. We also expanded our work with IBM on their Maximo AI assistant powered by watsonx AI. Our broad range of OEMs and partners now includes companies such as ASUS IoT, Dell, EverFocus, iBase Lenovo, Deloitte, e&, HUMAIN, Palantir and many others. We're also gaining traction with our industrial grade Dragonwing IQ series with up to 100 tops of AI inference performance as well as the Dragonwing Intelligent Video Suite, a platform designed to extract intelligence from any video frame and create intelligent reasoning workflows for enterprises across many verticals. We've also seen continued strength in edge networking driven by strong demand for Wi-Fi 7 gateway platforms across retail and carrier customers, and for 5G-enabled fixed wireless access platforms for our carrier customers. Now I would like to provide an update on our expansion into the data center. This represents a new growth opportunity for Qualcomm and is a logical extension of our diversification strategy as we continue to demonstrate leadership in CPU performance and NPU efficiency. As inference gains scale, cloud service providers are building dedicated inferencing clusters focused not only on performance but also efficiency, specifically tokens per dollar and tokens per watt. These factors, combined with the shift from merchant x86 CPUs to custom ARM-compatible CPUs for both cloud computing and AI head node create an entry point for Qualcomm. We're currently building NPU-based AI inference accelerator cards as well as custom SoCs for general purpose and AI head node compute solutions utilizing our Oryon CPU. We also reached an agreement to acquire Alphawave IP Group plc, a global leader in high-speed wire connectivity and compute technologies for data centers, AI, data networking and data storage. The acquisition is expected to close during the first calendar quarter of 2026, subject to customary closing conditions. Alphawave's leading IP and data center design capabilities are key assets that will complement our Oryon CPU and Hexagon NPU processors and help accelerate our road map. While we are in the early stages of this expansion, we are engaged with multiple potential customers and are currently in advanced discussions with a leading hyperscaler. If successful, we expect revenues to begin in the fiscal '28 time frame. Additionally, we signed an MOU with HUMAIN to develop AI data centers in Saudi Arabia and deliver highly efficient and scalable cloud-to-edge hybrid AI inferencing solutions for local and international customers. We also announced that our Oryon CPUs can be integrated with NVIDIA GPUs for high-performance NVIDIA AI factories using the NVIDIA NVLink Fusion architecture. We will provide further updates as we make progress. Over the past 12 months, we have continued to see AI and generative AI advance at an accelerated rate, and we're both excited and confident in the opportunities this is creating for Qualcomm across all our businesses. As Gen AI changes the human computer interface and agentic AI experiences continue to evolve, the mobile industry is being redefined and a new generation of personal AI devices are emerging. Smart glasses and wearables, such as smartwatches, earbuds and other form factors are being transformed into personal AI devices as they connect the user directly to the AI agent and model. These devices are quickly transitioning from simply extending smartphone experiences to now provide a new and unique personalized AI and agentic use cases. These devices will evolve independently of the smartphone ecosystem and become a significant opportunity. Given our technology leadership in mobile, XR and wearables and the breadth of our IP and product portfolio, we expect to be the industry preferred solution provider in this new category. Specifically, personal AI devices will require Snapdragon's always-on cloud connectivity, 5G and micro-power Wi-Fi, power-efficient processing, on-device AI, best-in-class imaging, audio, video sensors and context capabilities. Meta AI smart glasses are currently the best example of personal AI. We're very optimistic about the trends we see in this area with major AI players, application developers and device makers investing in this space. Physical AI is another technology that is reshaping industries and creating new opportunities, particularly in robotics. Robotics require high-performance computing including powerful on-device AI, extended battery life, reliable connectivity, a higher level of silicon integration and advanced computer vision and sensor fusion to interpret and understand real-world information in real time and make decisions locally. These requirements are perfectly aligned with our strengths in our technology and product portfolio. Our right to play in this new segment is similar to our expansion into automotive. Furthermore, our experience in industrial and safety grade silicon, perception and sensing technologies and ADAS and autonomy provide a very competitive foundation to develop highly differentiated solutions for autonomous robots, next-generation industrial automation and humanoid robotics. We're incredibly excited about this opportunity for which third-party estimates indicate a potential TAM of $1 trillion in the next decade. I would now like to turn the call over to Akash. Akash Palkhiwala: Thank you, Cristiano. Good afternoon, everyone. Let me begin with our third fiscal quarter results. We delivered revenues of $10.4 billion and non-GAAP EPS of $2.77, which was near the high end of our guidance range. QTL revenues of $1.3 billion and EBT margin of 71% were above the midpoint of our guidance. QCT delivered revenues of $9 billion and EBT of $2.7 billion with year- over-year growth of 11% and 22%, respectively. QCT EBT margin of 30% was at the high end of our guidance range. QCT handset revenues increased 7% year-over-year to $6.3 billion, reflecting strong demand for premium tier handsets, enabled by our Snapdragon 8 Elite platform. QCT IoT revenues grew 24% year-over-year to $1.7 billion. The outperformance relative to expectations was driven by increased demand for our Snapdragon AR1 chipset, the clear industry leader in emerging AI smart glasses category. We delivered another record quarter in QCT automotive with revenues of $984 million, an increase of 21% year-over-year, driven by content growth in new vehicle launches with our Snapdragon Digital Chassis platform. Lastly, we returned $3.8 billion to stockholders, including $2.8 billion in stock repurchases and $967 million in dividends, aligned with our commitment to return 100% of our free cash flow in the fiscal year. Before turning to guidance, a quick reminder that our fourth quarter and fiscal '25 includes 13 weeks relative to a 14-week quarter in the year ago period. For the fourth quarter, we are forecasting revenues of $10.3 billion to $11.1 billion and non-GAAP EPS of $2.75 to $2.95. In QTL, we estimate revenues of $1.25 billion to $1.45 billion and EBT margins of 69% to 73%. In QCT, we expect revenues of $9 billion to $9.6 billion and EBT margins of 27% to 29%. We anticipate QCT handset revenues to grow approximately 5% sequentially consistent with typical historical trends despite lower Apple revenues. We estimate QCT IoT revenues to be flat sequentially and QCT automotive revenues to reach $1 billion in the fourth fiscal quarter. Lastly, we estimate non-GAAP operating expenses to be approximately $2.35 billion in the quarter. In closing, we are very pleased with our performance in fiscal '25 as we continue to execute on the financial metrics we outlined at our Investor Day last year. Based on the midpoint of our guidance, we are positioned to deliver revenue and non-GAAP EPS growth of 12% and 16%, respectively, relative to fiscal '24. We are forecasting fiscal '25 to be the second consecutive year of greater than 15% year-over-year growth in total QCT non-Apple revenues. We anticipate QCT IoT and automotive revenues to grow by approximately 20% and 35%, respectively, reinforcing our confidence in achieving our fiscal '29 target of $22 billion in combined automotive and IoT revenues. We are pleased to see our customer relationships strengthening during the time of global trade volatility, including the upcoming global ADAS launch with BMW and the recently signed strategic agreement with Xiaomi. We remain focused on maximizing shareholder returns by executing across a broad range of growth and diversification opportunities while maintaining operating discipline. Lastly, I'd like to invite you to tune into our upcoming Snapdragon Summit event taking place on September 23 to 25 to learn more about our technology leadership and new product launches. This concludes our prepared remarks. Back to you, Mauricio. Mauricio Lopez-Hodoyan: Thank you, Akash. Operator, we are now ready for questions. Operator: [Operator Instructions] Our first question comes from the line of Joshua Buchalter with TD Cowen. Joshua Louis Buchalter: I wanted to start with the handset market. I think you just spoke to 5% growth in the September quarter despite the lower share that you've communicated at Apple. Can you speak to the drivers there? I mean -- I think Xiaomi was up meaningfully in the quarter, which is typical in the June quarter. But I think investors are worried about some level of pull-ins. Are you seeing any evidence of that specifically related to China? Akash Palkhiwala: Josh, it's Akash. We're not seeing any evidence of pull-in. I think the upside that we guided in the September quarter in handset revenue stream is really driven by our new product launch. As I mentioned in my prepared remarks, we're going to announce our new chip at the end of September. And we're already working with several OEMs for launch of new devices based on a tremendous interest in it. And what you're seeing is really people getting ready for launch of new devices. Joshua Louis Buchalter: Got it. And a follow-up, I wanted to ask about the data center business and the hyperscaler engagement you mentioned specifically. Any details you can give us on the scope of that engagement? Is that for an ARM-based CPU? Is it an accelerator? And you mentioned fiscal 2028 as potential if that converts. Is that the right time frame to think about contribution from your data center business more broadly at other customers as well? Congrats on the results. Cristiano Renno Amon: Thank you, Joshua. This is Cristiano. We can't really disclose more other than what we said in the script. We are in advanced discussions. We have been executing on a product. As we said before, we always felt that we had IP. They were very relevant to the data center. I think the Alphawave provides complementary IP, allow us to build custom SoC products. And we're pleased with the way we're developing this. I am sure we'll be able to share more as we probably conclude some of those discussions. Operator: Our next question is from the line of Samik Chatterjee with JPMorgan. Samik Chatterjee: Cristiano, maybe I can follow-up on the data center road map here or the sort of thought process and strategy around it. Less so maybe timing, but in terms of how do you envision sort of Alphawave integrating into the sort of portfolio or the stack capability that you have currently? And in relation to just thinking about sort of how you're going about selecting customers that you want to approach for this, what's typically sort of -- in terms of thinking about customization relative to standardization of the chipsets, how you're sort of thinking about deal sizes that would make sense for you in the longer run for this business? Any thoughts around that? And I have a follow-up. Cristiano Renno Amon: Very good. Thank you for your question. I know there's a lot of topics in that question. I'll try to probably give an overview. As we said before and we said in the script, we have been focused on building 2 products. One is ability to leverage our CPU asset. And that happens in 2 situations. One, of course, is the general purpose CPU. We've been very focused on hyperscalers. They have first-party workloads for ARM-compatible CPU. The other one is the head unit for inferencing clusters as AI start to get scale, and we'll really look of how we're starting to see inference taking over training. There is a new dynamic in the marketplace, which is about ability to be efficient with tokens per dollar as well as energy. That creates an opportunity for us for that. We have been building accelerator cards, and we will be building a rack as well. And those are the 2 areas that we're building product road map. We're very focused on customers, they have the ability to put first-party workloads or inferencing cluster. The Alphawave IP is important. It provides us the ability to scale out and provide connectivity. We believe it's leading connectivity in the industry. And that should inform you the type of customers that we've been focusing on. We think there's a very large TAM. As you know, there is an opportunity for Qualcomm to play if you have leading IP. Of course, as this is a new market for us, and we have been planning for it, we're going to be very careful about making disclosures. We're going to wait until they become factual, and we're excited about the engagement we have today. We are in advanced negotiations with one significant customer. And hopefully, that creates a halo effect that could validate our platform and create other opportunities down the road. Samik Chatterjee: And for my follow-up, in the handset business for the -- or fiscal 3Q here, you had 7% revenue growth year-over-year, which I think did sort of miss modestly, you were guiding to last quarter for about 10% growth, so maybe if you can shed any color in terms of if you did see any parts of the market that were weaker than you expected in the quarter? And then maybe similarly, when you -- when I think about your guidance for fiscal fourth quarter here, it looks like you're guiding to about a high single-digit growth even as Apple -- even with the impact of Apple. So maybe if you can parse that out in terms of this where the strength is because that seems like a pretty robust number for fiscal fourth quarter even with the loss of Apple revenues? Akash Palkhiwala: Yes. Samik, it's Akash. On the third quarter, we had a slightly weaker mix than we had expected. As you know, that this is a quarter that is seasonally weaker for us as there are no flagship launches. And that mix is really -- the weaker mix is more than offset by the strength you're seeing in the September quarter. Whereas I mentioned earlier to Josh's question, we're launching the new chip. We have flagship launches coming in at the end of the quarter, and we are seeing the demand increase because of that reason. Operator: Our next question comes from the line of Stacy Rasgon with Bernstein Research. Stacy Aaron Rasgon: Given the guidance into September, but the dynamics around Apple and everything else. I mean, what would you consider normal seasonal in the December quarter? And how should we think about drivers as you currently see them against that normal -- against that seasonal trend? How should we expect things -- if there's anything else funky going on in December that we should know about that would influence results versus what might be more typical? Akash Palkhiwala: Yes. Stacy, it's Akash. Assuming you're asking about the December quarter, note, we expect normal revenue seasonality for all businesses. Of course, adjusted for the lower share in Apple phone launches that we've previously discussed, but nothing else to highlight in all other businesses. Stacy Aaron Rasgon: I mean what would you consider normal seasonal then? Akash Palkhiwala: Well, we're not specifically guiding the quarter at this point, but I think you've seen a trend in the last several years, and you would expect the same quarterly trend just adjusted for the lower Apple volume for the share we've provided. Operator: Our next question is from the line of Joe Moore with Morgan Stanley. Our next question will be from the line of Chris Caso with Wolfe Research. Christopher Caso: If I could just expand upon some of the commentary with regard to the December quarter. My understanding is last year, the Chinese OEMs started pulling forward the launch a little bit of some of the flagship devices. Also, as we were -- last year, there was an extra week in the quarter. So -- and I guess maybe just some more granularity on the puts and takes on December, taking that into account. How much of a lift is that in the December quarter? And then does that turn into more of a headwind as you go into the March quarter? Akash Palkhiwala: Yes. I think, Chris, the business remains very strong. So whether you look at the Android business, automotive, IoT, all the trends continue with the growth rates that we have previously outlined for the business. So there's nothing significant or unique that I want to point out there. I think we've talked about the Apple share dynamic. So that is a factor. But outside of that, I think you should think of this as a very strong quarter for us. Seasonally, the strongest quarter for us is December, and that will still be true regardless of the lower Apple share. Christopher Caso: Got it. Okay. If I could follow on with the data center business and understand that you can't talk so much about some of the progress and design wins that you hope to have on that until they become factual. What about from a spending side? And moving into a new line of business, what's going to be the impact on spending and then as Alphawave closes, what will be the effect of that on sort of revenue, expenses and EPS? Akash Palkhiwala: Yes. So from a spend perspective, Chris, the way we've managed OpEx over the last several years, you've seen us, a very small growth in OpEx over the last 4 years. And the way we've managed it is really kind of absorbing the salary increases and reallocating existing spend towards diversification and growth. And really, the hiring as we go forward is really going to be focused on new skills that are required to execute on our plan. And so to the extent that there are new skills required to execute on the data center diversification assets, we will invest in that. But outside of that, we plan to be pretty careful managing OpEx going forward. Operator: Our next question comes from the line of Ross Seymore with Deutsche Bank. Ross Clark Seymore: I may ask a couple of questions. Just want to get into the OEM side. Akash, you've been very clear about what's happening on the Apple side of things. But recently, you've seen Samsung launch a couple of models with its own processor. I just wondered, how do you compare and contrast that against the [ x85 ] that you guys are rightly excited about going forward? Do you think you will maintain the 100% share on the Galaxy S generation? Or is that decision not quite made yet? Any color on that would be helpful. Cristiano Renno Amon: Ross, thanks for the question. We have been talking about the framework of our relationship with Samsung. And we have been executing multiyear multi-generation agreement with Samsung. And we have defined the new baseline of our share in the order of 75%, anything above that is upside. So that's our planning assumption. And when we outperform, I think we end up -- you started to see what you saw in Galaxy S25. Competing against the Samsung own platform is nothing new for Qualcomm. We've been doing that for decades. But I think historically, we have seen a relationship with Samsung continue to move up to higher level of share. And that's the baseline assumption. 75% is the baseline. That's the contractor share, everything above that is upside. Ross Clark Seymore: I guess as a follow-up and it probably would align to that also within handsets. You've talked about at least the premium tier, flagship tier of having roughly double-digit ASP or content increases going forward with all the capabilities that you're offering. Does that still hold true? Does it accelerate, decelerate with the x85? Just any update on that would be great. Akash Palkhiwala: Yes. So if you think about our Android business in fiscal '25, it grew over fiscal '24 by approximately 10%. So that is higher than the target we had set at Investor Day. And it's a reflection of the strength of our road map, our competitive positioning and the fact that this is a market where the volume is moving up to higher tiers where Qualcomm has a very strong position. The other thing I just want to highlight is we did give a metric, both in mine and Cristiano's prepared remarks is over the last 2 years, kind of our non-Apple revenue stream in QCT has grown annually at more than 15%. So that should give you a key benchmark as you think about how the company is positioned to grow going forward as well. And this aligns with the fiscal '29 targets we set at Investor Day. Operator: The next question comes from the line of Tal Liani with Bank of America. Tal Liani: [indiscernible] about China handsets. The proportion of China is going up. And if Samsung -- you said you're working with an assumption of 75% for Samsung. So Samsung is going to go down from 100% for the Galaxy to 75%. China would further go up in percentage of QCT revenues. How do you see the China growth trends when it comes to the domestic market and international markets? What's the outlook from your perspective? And what's the risk of competition within the Chinese market. I have just a follow-up question on margins, but I'll keep it separate. Akash Palkhiwala: Tal, our position in China continues to be very strong. I think the evidence of that is the announced -- agreement that we announced with Xiaomi during the quarter. This is a multiyear agreement for premium phones with increasing volumes every year, and they're going to use our chip for launches within China and globally as well. In addition, they will also be the first OEM to launch with our next Snapdragon 8 Elite chip, which comes out over the next couple of months. And the relationship really has expanded over the last couple of years. We've gone from phones to automotive. They introduced smart glasses with our chips, wearables, tablets, so it's a very broad relationship, and it's just an example of relationships we have with other Chinese OEMs as well. So you should consider this as a very well-positioned sustained business for us. Within Samsung, as you can see in fiscal -- in 2026, they launched most of their devices with our chip, but they did launch Flip with their own, and so we're slightly below 100% share. And as we go to next year, I think our agreement, as Cristiano outlined, carries over, and we're in a very good position to maintain our scale there as well. Cristiano Renno Amon: So let me just add -- maybe add a different perspective. Tal, I'm going to agree with Akash, but I'll provide probably a comment of questions that we usually we don't get. Look, we have been doing business in China for 30 years. We actually started down at the 3G. And I think what we learned by doing business in China, we actually learned how to move at China's speed. And I think if you look at the position in Qualcomm in China, they only improved over the years. And as Akash outlined, not only we've been well positioned in the phone business, we're well positioned with some of the fastest- growing OEMs in the auto business. And that is expanding now into industrial, into robotics and other areas. So another way to look into this is Qualcomm has became a very competitive company and learned how to compete in China and have been serving well. I think the market, we expect that to continue to be the case. Tal Liani: Got it. Maybe just a question on margins, a quick one. I see that when I look at gross margin, operating margin, I see that there is kind of you managed to maintain a very healthy operating margin despite the fluctuations in Apple revenues. So I just want to ask you a question I'm getting from investors quite often. What are the implications of the decline in Apple? What are the implications on margins? Are they positive or negative? Akash Palkhiwala: Yes. I think we're very happy with the margin profile of the business. I mean we will be at close to 30% margin this year, which is the target we have set for the long term. As you look forward, the growth opportunity that we have in auto, IoT far exceeds the scale of the Apple revenue. So I think we have the ability to continue to grow revenue and manage the margin profile as a result of it. And so no change to our long-term target margin versus what we've said in the past. Operator: Our last question comes from the line of Ben Reitzes with Melius Research. Benjamin Alexander Reitzes: I wanted to ask about the data center. You're buying Alphawave for $2.4 billion. You have big ambitions there, it sounds like for FY '28. What is -- what are your thoughts on doing -- having more of a tuck-in acquisition strategy there or even going bigger to get big fast and get a hold of customers if you have such great IP. I was just wondering if you could kind of give your -- a little bit more of the strategy. Is it more Alphawaves coming? Or would you ever consider a bigger acquisition? Cristiano Renno Amon: Thanks, Ben, for the question. Look, at this point, we're very focused on actually driving Alphawave to closure and building our product road map. I think we -- we feel that it provides the IP that is complementary to what we have and allow us to build a competitive position. This is a new initiative for Qualcomm, as I outlined. And like we have done for the rest of our business, as opportunity becomes available, we're always going to be looking how to complement the road map. Right now, we're really focused on driving Alphawave to closure. Benjamin Alexander Reitzes: All right. And can I just ask a quick follow-up on your comments around Gemini and Galaxy AI use in the Android area? And just -- can you just draw that out a little more? Obviously, there's a perception that the Apple products are a little behind in AI, and what that means for you over the long term, whether you're really optimistic about that, maybe even past the -- your fiscal first quarter? And just any more color there? Cristiano Renno Amon: Yes. Consistent to what we have been saying, we're starting to see AI use cases on phones to gain traction. And there's also another interesting data point. I think if you look at the overall share of AI models, you see Gemini actually increasing dramatically over other models. We have seen, I think, the advantage of the Android ecosystem in terms of majority of AI as more and more use cases become agentic where you started to see AI as part of the applications. I expect that it creates excitement about the Android ecosystem, expand its SAM and it drives upgrade cycles. Those are all positive things from the mobile business. So I will think that what AI is doing is making connectivity more relevant, again, especially because of voice utilization, is driving more computing, more capable devices and exactly changing the use cases. And the rate of utilization, it's very encouraging. What I said in the call about 3x between Galaxy S24 and Galaxy S25. And I think I expect that to continue to accelerate. Operator: This concludes today's question-and-answer session. Mr. Amon, do you have anything further to add before adjourning the call? Cristiano Renno Amon: Thank you all for attending the call. I would like to thank our employees, our partners, and we appreciate following Qualcomm. We'll continue to execute on our strategy. We feel that the company is on the right trajectory, especially as we look for growth and diversification beyond handsets and AI continue to be a great opportunity for us. Thank you very much. Operator: Ladies and gentlemen, this concludes today's conference call. You may now disconnect.

Operator: Ladies and gentlemen, thank you for standing by. Welcome to the Qualcomm Second Quarter Fiscal 2025 Earnings Conference Call. At this time, all participants are in a listen-only mode. Later, we'll conduct a question-and-answer session. [Operator Instructions] As a reminder, this conference is being recorded April 30, 2025. The playback number for today's call is (877) 660-6853. International callers, please dial (201) 612-7415. The playback reservation number is 13752782. I would now like to turn the call over to Mauricio Lopez-Hodoyan, Vice President of Investor Relations. Mr. Lopez-Hodoyan, please go ahead. Mauricio Lopez-Hodoyan: Thank you and good afternoon, everyone. Today's call will include prepared remarks by Cristiano Amon and Akash Palkhiwala. In addition, Alex Rogers will join the question-and-answer session. You can access our earnings release and a slide presentation that accompany this call on our Investor Relations website. In addition, this call is being webcast on qualcomm.com, and a replay will be available on our website later today. During the call today, we will use non-GAAP financial measures as defined in Regulation G, and you can find the related reconciliations to GAAP on our website. We will also make forward-looking statements, including projections and estimates of future events, business or industry trends, or business or financial results. Actual events or results could differ materially from those projected in our forward-looking statements. Please refer to our SEC filings, including our most recent 10-K, which contain important factors that could cause actual results to differ materially from the forward-looking statements. And now to comments from Qualcomm's President and Chief Executive Officer, Cristiano Amon. Cristiano Amon: Thank you, Mauricio. And good afternoon everyone. Thanks for joining us today. In fiscal Q2, we delivered non-GAAP revenues of $10.8 billion and non-GAAP earnings per share of $2.85. Revenues of $9.5 billion from our chipset business were driven by strength across Handsets, Automotive and IoT, all exceeding revenue expectations. Automotive and IoT revenues increased 59% and 27% year-over-year respectively. Licensing business revenues were $1.3 billion. Demand for our industry leading platforms continues to expand as high performance, connectivity and processing at the edge are increasingly important and AI becomes more pervasive across industries. We have the industry's broadest product and IP portfolio, a strong track record of establishing a technology leadership position in every industry we enter, and a clear vision for the future. As we navigate the current macroeconomic and trade environment we remain focused on driving the next wave of AI smartphones and growing our non-handset revenues to $22 billion by fiscal 29th. We are excited by the ongoing developments in generative AI, including the proliferation of smaller models. In just six months, the AI landscape has been redrawn with a wide array of new consumer and enterprise applications. New players have emerged and AI video models are becoming more dependable, marking a significant expansion in capabilities. Additionally, smaller GenAI models that can run directly on device are also advancing rapidly. It now takes only a few months to match the performance of their larger cloud based counterparts compared to 12 months just a year ago. Several new state of the art small language and multimodal models were recently released including Microsoft Fi, Google Nano, Metalama, Mistral, Ministral, OpenAI Whisper and Alibaba Quen. Some of these models are already running on Snapdragon platforms. As these trends continue, the opportunity for Qualcomm is significant. I will now provide some key highlights from across the business starting with mobile. At Mobile World Congress, we announced our X85 5G platform, the world's most advanced AI powered modem 2 antenna system delivering substantial show improvements in speed, efficiency, coverage and power consumption. The X85 sets new benchmarks and brings connectivity leadership to the Android ecosystem. It also supports 5G advanced capabilities with ultrafast peak download speeds of up to 12.5 gigabits per second and delivers the connectivity required for hybrid and agentic AI experiences. High performance low latent 5G is essential for AI applications, ensuring seamless and timely data transmission and information retrieval for real time processing and decision making. According to Google, the X85 is “designed for mobile AI and is the perfect match for Android and the agentic experiences of the Gemini era. This modem delivers breakthrough 5G speeds, network reliability and intelligent connectivity to Android phones, cementing Android and Qualcomm Technologies leadership in the mobile AI world”. The X85 was also positively received by many of the largest operators in the us, China and Japan who are excited about the superior connectivity X85 brings to 5G smartphones, the improved network performance and reliability, and potential for new AI powered services. The X85 will be shipping in handsets, automotive and IoT products starting in the second half of the year. Within smartphones, we expect this platform to be available exclusively on Android devices. In handsets, we continue to gain design traction with our Snapdragon 8 Elite, the industry's most powerful smartphone platform. To date, we have 90 flagship designs shipped or announced globally across major Android OEMs. During the quarter, subsidies in China had a positive impact on growing the premium tier, which has continued to expand over the last several years. Additionally, we're incredibly excited to see our customers launching innovative new Flip style devices featuring Snapdragon 8 Elite. This is now a flagship smartphone category. As an example, the recently announced Flip style Motorola Razr Ultra 2025 comes with Moto AI, a suite of AI powered features such as Catch Me up, which summarizes notifications and prioritizes urgent messages Remember this, which saves screenshots, photos and notes to recall later, and Magic Canvas, which lets users create AI generated images as wallpapers. It also integrates Perplexity AI, Google Gemini, Microsoft Copilot and Metalama. We remain excited about the PC opportunity for Snapdragon and we're making progress toward achieving $4 billion in revenues by fiscal 2029. We're extremely focused on driving new OEM designs, expanding markets and channels, growing into the enterprise, and increasing the ecosystem of native applications. Since the launch of the first Snapdragon X power devices in mid 2024, we have more than 85 designs in production or development and we're targeting more than 100 designs to be commercialized to 2026. In the first calendar quarter of 2025, according to third party sources, Snapdragon based PCs made up approximately 9% of Windows laptops above the $600 price tier in retail, U.S. and the top five European countries. We now have more than 750 native applications running on Snapdragon X, including over 100 for the enterprise. Additionally, there are over 1400 games running on the platform. Microsoft has continued to add new Copilot plus AI capabilities. This includes the rollout in March and April of Expand Live Captions, which offers real time audio and video translations in English during virtual meetings, podcast or video playback, and new voice access functions that enable users to interact with the AI assistant using natural language voice commands. Consumers can also experience recall, improved Windows search and click to do, making it easier to pick up where you left off, find what you're looking for and do more with less time. We also continue to partner with Microsoft on their signature Surface PCs. In XR, favorable consumer reception for smart glasses continues, particularly as AI enables more compelling use cases. Meta continues to add more capabilities to their Ray Ban smart glasses powered by Snapdragon. These include enhanced AI assistant interactions, video AI support, location recall, live speech translation and more. In addition to Meta and Samsung's upcoming Android XR headset, we're pleased to report that we now have more than 15 designs of smart glasses from our global partners. Smart glasses are now the best example of a new device category gaining scale because of AI. We remain confident in our ability to achieve $2 billion in XR revenues by fiscal 2029. We continue to see strong demand in automotive for the Snapdragon Digital chassis and we are on course to reach our fiscal 2029 revenue target of $8 billion. During the quarter, we secured 30 new designs including five ADAS programs as well as designs from Chinese automakers such as Nio, Zeekr, Great Wall, Dongfeng and more. We also saw 14 commercial vehicle launches from global automakers utilizing our platforms with a total of 29 commercial vehicle launches since the start of the fiscal year. Additionally, last week at the Shanghai Auto show, we announced new collaborations with Visteon and PATEO to create next generation AI intelligent cockpit solutions based on our Snapdragon Cockpit Elite and with Disa SV to jointly deliver a suite of pre integrated ADAV solutions that support L1 and L2 plus functions. Fiscal Q2 was a strong quarter for industrial IoT with notable new partnerships and recently the completion of two strategic acquisitions increasing our confidence in executing on our industrial IoT revenue target of $4 billion by fiscal 2029. In a major step toward advancing industrial intelligence at the edge, we're collaborating with Palantir to integrate their Ontelligent enterprise systems and AI capabilities on our advanced platforms. This collaboration will enhance real time insights and data driven decisions in remote and offline environments, enabling OEMs and enterprises to deploy scalable AI solutions for manufacturing, industrial and automotive applications. We acquired Edge Impulse, one of the industry's leading edge AI development platforms which enables more than 170,000 developers to build solutions for a wide range of applications such as asset tracking and monitoring, manufacturing anomaly detection and predictive maintenance systems using various AI capabilities including computer vision, time series, data, audio events and speech recognition. The development platform includes a comprehensive set of tools and features for data collection and preparation, model training, deployment and monitoring, all with an easy to use user friendly interface requiring little or no code at all. As AI accelerates the next phase of digital transformation, Edge Impulse combined with our AI hub creates a true world class industrial development platform for the age of intelligence. We also acquired FocusAI, a leader in computer vision at the edge, for an intelligent end-to-end edge AI and cloud management solution that enables real time insights and analysis. FocusAI solutions are now part of the new Qualcomm Dragon Wing Intelligent video suite, enhancing our video analytics AI portfolio. Finally, in edge networking we launched the Dragon Wing fixed wireless access gen 4 elite platform based on the X85 and is the world's first 5G advanced FWA platform. It includes an AI co-processor that delivers up to 40 tops of AI processing power to optimize wireless connectivity across 5G broadband and Wi-Fi 7 and unlocks new GenAI capabilities at the network edge. I would now like to turn the call over to Akash. Akash Palkhiwala: Thank you Cristiano and good afternoon everyone. I'll start with our second fiscal quarter earnings. We are pleased to announce non-GAAP revenues of $10.8 billion and non-GAAP EPS of $2.85, both of which are above the midpoint of our guidance. QTL revenues of $1.3 billion and EBT margin of 70% were flat on a year-over-year basis and slightly below the midpoint of our guidance due to lower handset units in emerging regions. QCT delivered revenues of $9.5 billion, an EBT margin of 30% with revenues and at the high end of our guidance due to upside across handsets, IoT and automotive. QCT handset revenues grew 12% year-over-year to $6.9 billion, reflecting the benefit of increased premium tier Android shipments. QCT IoT revenues of $1.6 billion increased 27% versus a year ago period driven by demand for our products with connectivity, processing and AI technologies. We delivered QCT Automotive revenues of $959 million, reflecting 59% year-over-year growth on increased content in new vehicle launches with our Snapdragon digital chassis platforms. Lastly, we returned $2.7 billion to stockholders, including $938 million in dividends and $1.7 billion in stock repurchases. Now turning to guidance, I'll first address the macroeconomic environment, including the impact of tariffs. There's uncertainty around the impact of the global trade landscape on demand across our businesses. Our guidance for the upcoming quarter is based on our current assessment of the financial impact of tariffs as they stand today. As the situation remains dynamic, we'll continue to closely monitor for potential changes. For the third fiscal quarter, we're forecasting revenues of $9.9 million to $10.7 billion and non-GAAP EPS of $2.60 to $2.80. We estimate QTL revenues to be approximately flat on a year-over-year basis, reflecting normal seasonality for handset units with revenues of $1.15 billion to $1.35 billion and EBT margin of 67% to 71%. In QCT, we expect revenues of $8.7 billion to $9.3 billion and EBT margin of 28% to 30%. At the midpoint, this reflects year-over-year revenue growth of approximately 12% led by strength in handsets, IoT and automotive. We expect QCT handset revenues to increase approximately 10% on a year-over-year basis driven by growth in Android. We estimate QCT, IoT and automotive revenues to grow approximately 15% and 20% respectively versus a year ago period driven by the same factors I outlined in our second quarter results. Lastly, we estimate non-GAAP operating expenses to be approximately $2.25 billion. In closing, we are very pleased with our strong results in the first half of fiscal 2025 with revenue and non-GAAP EPS growth of 17% and 21% respectively versus a year ago period. We are increasing our capital return target to 100% of free cash flow in fiscal 2025, reflecting confidence in our strong cash flow generation and financial targets outlined at our recent Investor Day. As the global trade environment continues to evolve, we remain focused on our execution priorities including our relationships with customers and partners globally and investing in our industry leading technology and product roadmap. Despite the near term macro uncertainty, our business strategy remains unchanged and we remain committed to our long-term financial framework. Our disciplined capital allocation and balance sheet flexibility position us for success across varying market scenarios. This concludes our prepared remarks. Back to you Mauricio. Mauricio Lopez-Hodoyan: Thank you Akash. Operator, we are now ready for questions. Operator: Thank you. [Operator Instructions] The first question comes from Joshua Buchalter with TD Cowen. Please proceed with your question. Joshua Buchalter: Hey guys, thanks for taking my question and congrats on the solid results in a difficult backdrop. My first question could you maybe spend a couple minutes talking through what kind of assumptions you're baking into in particular your guidance in the handset market? I mean given there's pretty widespread concerns of tariff related pull ins, are you seeing any signs of that yet? And in particular your largest customer was up pretty meaningfully year-over-year, so was any change in order patterns there? Thank you. Cristiano Amon: Yes, thanks Josh for the question. Our approach on tariffs is really our guidance reflects our current assessment of the financial impact from it. We do not see any material direct impact to us at this point, the landscape obviously is dynamic, so we're closely monitoring, but we're very focused on things we control and very focused on supporting our customers as well. One thing to remember is when you look at our supply chain, we have a very diversified global supply chain. And so that positions us very well to navigate challenges that might happen as a result of tariffs. And then maybe specifically on your question of pull ins, we have not seen any material pull ins from our customers. So this reflects kind of reasonable, consistent ordering patterns from them and that's what's reflected in our guidance. Joshua Buchalter: Understood, thank you. To follow up, I think a quarter ago you expressed some optimism but certainly didn't include any Huawei royalty revenue in the model. Any updates to share on those negotiations, obviously, given the difficult backdrop to be signing deals right now. Thank you. Alex Rogers: Josh. This is Alex. There really aren't any updates. Discussions will be ongoing, but we don't have any updates right now. Operator: The next question is from Samik Chatterjee with JPMorgan. Please proceed with your question. Samik Chatterjee: Hi. Thanks for taking my question. So maybe if I can start on the IoT segment and just in relation to the seems like that is the segment you saw the most upside relative to your own expectations for the quarter. If you can just flesh out what drove that upside and maybe just going back to following up on the last question as well, like is that a segment that you've seen any evidence of pull forward of demand and then have a quick follow up. Thank you. Akash Palkhiwala: Yes, hi Sameet, it's Akash. So in the IoT area we saw tremendous growth in the quarter. We reported results so 27% year-over-year growth and we saw growth across all three areas. So consumer networking and industrial. The largest growth contributor was actually industrial. As we've discussed in the past, we have this premise of where the market is going, which is a transition from microcontrollers to microprocessors and AI. And we're seeing the benefit of our technology portfolio as it applies to that transition. And so we're at the front end of the transition in our minds and some of the upsides in the quarter came through the benefit that came from that transition. Maybe the last thing I'll highlight is when you step back and look at all the different areas in our IoT revenue stream, which is PCXR, industrial networking, our technology is becoming more relevant than ever to each of those areas, so that's what gives us confidence in our long term forecast. Samik Chatterjee: Yes, got it. And then maybe for my follow up, if I can ask you about your M&A pipeline and strategy here. Just when I look at FocusAI and Edge Impulse, obviously I don't know those businesses as closely, but how should we think about some of these acquisitions enhancing the capabilities in the current end markets that you're trying to diversify and enhance your position in relative to maybe some acquisitions, adding to the existing end markets and giving you more growth pillars in terms of additional incremental end markets that you can go into with some acquisitions. Thank you. Cristiano Amon: Hi, Sameet, this is Cristiano. Thanks for the question. Look, this is very consistent to what we said before and I kind of point you back to the plan we outlined on our last investor day. If you look, we had made acquisitions in the past to create our automotive business, which we feel very confident about how complete our roadmap is. We made acquisitions such as NUVIA, which enable us to create an opportunity in compute. And we have been saying that the next focus for the company was to really augment our IoT space and especially in industrial. As a cash outline, we're, we're 100% convinced there's a significant opportunity for advanced computing and AI at the edge in industrial. And what you see us doing with Edge and Pulse with FocusAI is actually building a software platform that we can scale our technology to all those different verticals and we'll probably continue to augment the platform with those types of acquisitions. Operator: Our next question comes from Timothy Arcuri with UBS. Please proceed with your question. Timothy Arcuri: Thanks a lot, Akash. Typically September is like seasonally, it's up kind of mid singles to high singles. I know there's a lot of uncertainty, but is there anything besides just the macro that you would sort of, point us away from thinking of that as like a normal, Q3? Akash Palkhiwala: Yes, Tim, you're right. I mean, as we look at the fourth quarter, obviously the underlying factor there is the macro environment. And so we've reflected the best information we have today and we're going to watch, obviously monitor that closely. In QCT specifically, when you look at Android Automotive and IoT, we expect normal seasonality both from a quarter-over-quarter and year-over-year perspective. And then within the Apple product business, as we've said, we expect our share to go lower in the launches that happen in fall 2025. So we're forecasting approximately 70% share in that launch and the rest of the factors kind of consistent with what you'd expect. Timothy Arcuri: Great. And then just on China, there's a few offsetting factors. I know you did speak about the stimulus helping the market, but there's also tariffs and trade. So how do you handicap your China business? Are you seeing signs of the customers wanting to move away from U.S. suppliers like you and move more to MediaTek? How do you weigh those factors? Thanks. Cristiano Amon: Hey, Tim, thanks for the question. This is Cristiano. Look, at this point, we feel their position is strong because it has to do with how unique our product is and how relevant our product is for the global ambition, for our, of our customers. I think we, we remind everyone that when, when we look at our China exposure, there are the products that stay within China, but there is a significant volume that goes from China to the rest of the world, and I think that's what drives uniqueness. I think of the Snapdragon position there. And, and there are a couple of data points. I think just a couple of weeks ago we had the Shanghai Auto Show we had a number of new partnerships, including an expansion of the pipeline with new design wins in auto. We have seen no signs of a slowdown in design traction on Qualcomm products within our Chinese base. And that includes smartphones, PC, Automotive, XR and we're excited about some traction in industrial as well. Thank you. Operator: Our next question is from the line of Stacy Rasgon with Bernstein. Please proceed with your question. Stacy Rasgon: Hi guys. Thanks for taking my questions. I wanted to first ask about chipset gross margins. It looks like they were down a bit in Q2, maybe 90 dips or so. They seem like they're being guided up a similar amount in Q3. But why were they down in Q3 in Q2, especially given with this within handsets, the presumed mix toward more premium given the weakness in the emerging region smartphones that you talked about, was it just mix between like the different segments or just like what was going on there? Akash Palkhiwala: Yes. So, Stacy, this is Akash. It's really the mix across tiers and segments as well. Right. We saw some upside that came through on lower tiers that kind of made us very small difference in gross margin. But kind of when you step back and think about broader gross margin trend, we're pretty, pretty happy with kind of both our actuals and guidance. And there's no new information versus what we've told you before. It's just how the mix plays out between quarters. Stacy Rasgon: Got it. Thank you. And for my follow up, I know you talked about no direct impact from tariffs, but you said you're baking in what you're seeing. What are you baking in for the indirect effect of tariffs? You talked about Android being seasonal, I guess in the September quarter, which doesn't sound like you're baking in or suggesting any potential for demand destruction if tariffs or anything get put back on this. How should we be thinking about like the actual specific assumptions you're putting on the market in the wake of the current macro and the tariff situation as we go through the year? Akash Palkhiwala: Sure. So Stacy, what I said is we do not see any material direct impact. There is smaller direct impact and some minor changes in demand. We are reflecting that and so it's in our numbers, but nothing that really is significant enough to change the direction of our guidance. So that's the data point I was giving. In terms of indirect impact, that's obviously something that we're watching closely. Difficult for us to predict that at this point. Operator: Our next question is from the line of Joe Moore with Morgan Stanley. Please proceed with your question. Joseph Moore: Great, thank you. You guys are continuing to show really strong results in auto in what's been a tough market for others. And you're talking about a doubling by fiscal 2029 from here. Can you talk about the growth drivers there? When does ADAS start to kick in more as a growth category and just what is it that gives you that confidence in that multi year forecast? Cristiano Amon: Joe, this is Cristiano. There are a couple of drivers, I think if you remember when we outlined and disclosed the pipeline, we said one third of that was ADAS. And we also had Flex is really becoming a reality. We have some interesting designs and some upcoming SOPs with Flex that has both the digital cockpit and ADAS in the same chipset. But the key drivers of the revenue is really the mix improvement with more digital cockpit, more computing content and then in the ADAS coming up. On ADAS alone, I think we just announced in the quarter five new designs of ADAS. Akash Palkhiwala: And Joe, to quickly add a data point to it. When you kind of step back and look at within the auto market, the car is being transformed. We play in the market that is being transformed. So digitization of car is happening, and we play in the area that is actually growing significantly, both in terms of the penetration within established base of the auto market, but then also the silicon content multiplies as you get into the new type of cars. And so we are playing in this tremendous growth area within the car market, and that’s what you’re seeing in our numbers show up. Joseph Moore: Okay, thank you. Operator: Our next question is from Chris Caso with Wolfe Research. Please proceed with your question. Chris Caso: Yes. Thank you. First question is with regard to handsets and you talked about that being up about 10% year-on-year. Could you break out the relative strength of I guess the two buckets that would drive that the China business and then your other large customer? And you also mentioned some impact from some of the subsidies that were happening in China. Could you give some more detail of that? And perhaps is that sustainable demand? Or would perhaps that cause some pull forward as well? Akash Palkhiwala: Yes. From a subsidy perspective in China, what we’ve seen is really the total units for the March came in line with expectations. We are continuing to see a stronger mix play out, and this has been a trend for the last several years. So if you think about premium tier handsets over $400 they have increased from 21% of the installed 21% of new devices sold in 2019 to about 30% now in 2024. And so that part of the market is expanding. Our customers are gaining share. And that is really what is informing the upside for us, both in the results quarter and the guidance quarter and that’s the primary driver of growth for us. Chris Caso: Got it. Thank you. I guess with regard to the PC business and you gave some data points on the in your prepared remarks. I know that your product line has changed a bit, so you can attack some lower price points there. What does that mean for the growth of the PC business within IoT this year? And as you attack some of those lower price points, are the margins on those products similar to what your IoT business is today? Akash Palkhiwala: So if you think about what we’ve done in the PC business, we started at the top of the road map and established ourselves as the performance leader. And since then, we’ve introduced a total of four platforms, which addresses PCs all the way down to $600 And then the next generation of chips will come out later this year as well. So very, very happy with how the road map is playing out. In terms of design wins, we expect 100 devices to be commercialized by in 2026. We have greater than 85 design wins today. And in terms of applications being ported and games being ported, we have now ported 1,400 games onto the platform and seven fifty native applications. So that’s kind of preparing ourselves for ramp in the market. The data point that Cristiano provided in his prepared remarks is for Windows devices greater than 600 in U. S. and the top five EU markets, we have approximately 9% share in the March quarter. So very happy with how the traction is playing out and it positions us to achieve our target. Cristiano Amon: Yes. Just want to maybe as a reminder, when you go back to our Investor Day, we’re kind of projecting 12% share by fiscal 2029. So I think that gives us confidence we’re on the right track. Operator: Our next question is from the line of Christopher Rolland with Susquehanna International. Please proceed with your question. Christopher Rolland: Hey, guys. Thanks for the question. I guess my first one is, if you guys could address maybe competition, whether you guys are seeing either more or less pressure, particularly at the high end. And kind of related, would you say that CSS designs that might provide APs out of the box for handset OEMs, would you ever consider that a threat or probably just a very low level threat to your business? Thank you. Cristiano Amon: Thanks for the question, Chris. I’m assuming you’re asking about the competitive landscape in smartphones. So that’s what I’m going to address. Competitive landscape has not changed for us at all. I think if we break that down by customer group, I think we have on Samsung a relationship that is very stable. We have been competing for decades with their own silicon. We have changed the baseline of that business. It used to be 50% level. Now our baseline share is about 75% level. And we have been executing multiyear agreements with that customer. So I think no changes in the competitive landscape. When you look about the competition for China based customers, the competition is really between two players, us and MediaTek. I think we like the fact that the premium tier has expanded. We always have said it’s a large enough market for two players and that’s the competitive landscape we see going forward. Christopher Rolland: Excellent. And Cristiano, maybe my second one here around AI. You guys have been really successful in AI, adding NPU, adding ASP as a result. But maybe Intel suggested that this isn’t the case in PC. They’re not getting better ASPs for increasing AI capabilities. So I guess my question is, I guess, first kind of philosophical. Why does this work so well in mobile? And then for your future products going forward here, do you think there’s still that link more AI, more NPU, more ASP? Or is this an upgrade cycle that’s really taken place and kind of ASP expansion from here related to AI might be more difficult? Cristiano Amon: This is a great question. Actually, Chris, I love this question. So thank you. I am so I wanted to unpack this and I think they’re two separate conversations. So I’m going to start with the philosophical as you pointed out. It’s interesting. There’s it seems to be a little bit of an impatience I think about what’s happening with AI, especially with mobile and PCs. But what you have to look is really the trend. And I think that’s what’s really important. And I will unpack the difference between phone and PC. In phones, it’s crystal clear, especially when you look at the maturity of AI today, the ability to have an assistant that does things for you, even for productivity, you see now more clarity on use cases being developed for smaller screen. When you have a smaller screen, some of those systems are incredibly useful for you. And where we are in the cycle right now, it’s kind of similar to what we saw in the feature phone to smartphone transition. You’re in the part of the cycle that most of the new features come from the OEM and from the OS provider on AI and then eventually they’re going to start coming from third party developers and that’s where it gets scale. So we like the trend. It’s driving more NPU content into the phone, it’s driving ASP and it’s going to be a game about once this thing is deployed at scale with a number of new use cases about who can deliver more NPU performance without compromising battery life. And I think that’s kind of most of our investment is in this area. We like everything we see. I think there’s impatience people expected everybody like tomorrow to buy an AI smartphone, but the trend is good and again measured by the number of use cases where the beginning of third party developers building use cases. PC is a little different. PC, the first when we enter the PC space, it’s about we can deliver multi day battery life and faster CPU in a better form factor. Now, it’s the same exact trend. It is a little bit different. I think that’s why things like DeepSeek is incredibly helpful understanding a smaller model running on the PC. And four capabilities that you use AI all the time, there is an economic aspect of running that on the devices at the edge. So, think what we’re seeing right now is we’re winning PC designs because we have a better laptop. It’s faster. It is smaller multi day battery life. But the PC AI, it’s just at the beginning as more and more SaaS companies, especially as they get pressure from competition, smaller models make the cloud and the devices of the edge now competing for inference. You’re going to see more of those use cases and then the NPU is going to shine. And I think that you started to see that from the OS vendor, Microsoft talks about it a lot because they’re building the AI use cases as an OS. But next, you’re going to see that third party and it’s going to be the same dynamics that we’re on the phone. So we remain encouraged by it. I think it’s going to create a positive cycle and we are investing to have the best NPU out there. Thank you. Operator: Thank you. Our last question is from Ross Seymore with Deutsche Bank. Please proceed with your question. Ross Seymore: Hi, Thanks for asking a couple of questions. Akash, they’re both going to I think be for you. So the first one is you mentioned about the market share at your U.S. customer going down to about 70% in this generation. I wanted to see what that means on the OpEx front for you. You guys have done a great job of controlling the OpEx dollars. But as that business goes away in the trajectory you’ve said many times before, how does the OpEx change and maybe the margin structure of Qualcomm during that exit from that main customer? Akash Palkhiwala: Yes, Ross. Thanks for the question. I think our strategy around OpEx has been very clear and we put this in place a couple of years ago where the idea was to keep the existing scale of the OpEx investment and transition the investment from handsets while still maintaining leadership in handsets to these new areas that we are focusing on within automotive and then PCXR and industrial within IoT. So that is the framework under which we are operating. We’re continuing to move investment into those areas to create this tremendous growth opportunities for us. And then on the revenue side, as kind of Apple revenue goes down, we’re looking we are very optimistic that the targets we laid out replaces that revenue and puts us in a good place from an overall P&L perspective. So that’s the framework that we outlined at Investor Day as well and that’s what we’re executing on. Ross Seymore: Great. And one more for you quickly. You guys boosted the free cash flow return to 100% return to shareholders. What was the reasoning behind doing that? I think everybody will obviously take it and it’s a positive sign, but just wanted to see what the catalyst was. Akash Palkhiwala: Well, I think we’ve had very strong cash flow for the last couple of years. And so we’ve seen our cash balance grow and so it is an opportunity given where the stock price is, it’s an opportunity for us to leverage that cash balance and increase our buybacks. But we are doing it while, of course, maintaining our strategic flexibility for M&A. And it’s the same framework we laid out at Investor Day, not fundamentally changing how we think about it, but there’s an opportunity and we’re investing as a result. Ross Seymore: Thank you. Operator: That concludes today’s question and answer session. Mr. Amon, do you have anything further to add before adjourning the call? Cristiano Amon: Yes. Just a few comments. Thank you all for listening to our call. I would like to say a big thank you to all of our employees, especially our supply chain teams that have been doing a lot of great work. Thanks for all of our customers. And I just want to leave you with this thought. As navigate those times, this is a company that is not it’s experienced a little of uncertainty. We always ask ourselves, is our technology relevant? And I think this is a time that we actually never feel stronger about their technology roadmap and how the company is positioned to be relevant to a number of different industries. So that’s our Northstar. We’ll continue to execute to that. And I look forward to see you all in the next quarter. Thank you. Operator: Ladies and gentlemen, this concludes today’s conference call. You may now disconnect.

Operator: Ladies and gentlemen, thank you for standing by. Welcome to the Qualcomm First Quarter Fiscal 2025 Earnings Conference Call. At this time, all participants are in a listen-only mode. Later, we'll conduct a question-and-answer session. [Operator Instructions] As a reminder, this conference is being recorded February 5, 2025. The playback number for today's call is (877) 660-6853. International callers, please dial (201) 612-7415. The playback reservation number is 13750899. I would now like to turn the call over to Mauricio Lopez-Hodoyan, Vice President of Investor Relations. Mauricio Lopez-Hodoyan, please go ahead. Mauricio Lopez-Hodoyan: Thank you and good afternoon, everyone. Today's call will include prepared remarks by Cristiano Amon and Akash Palkhiwala. In addition, Alex Rogers will join the question-and-answer session. You can access our earnings release and a slide presentation that accompany this call on our Investor Relations website. In addition, this call is being webcast on qualcomm.com, and a replay will be available on our website later today. During the call today, we will use non-GAAP financial measures as defined in Regulation G, and you can find the related reconciliations to GAAP on our website. We will also make forward-looking statements, including projections and estimates of future events, business or industry trends, or business or financial results. Actual events or results could differ materially from those projected in our forward-looking statements. Please refer to our SEC filings, including our most recent 10-K, which contain important factors that could cause actual results to differ materially from the forward-looking statements. And now to comments from Qualcomm's President and Chief Executive Officer, Cristiano Amon. Cristiano Amon: Thank you, Mauricio, and good afternoon, everyone. Thanks for joining us today. In fiscal Q1, we delivered record revenues of $11.7 billion and non-GAAP earnings per share of $3.41. Our chipset business achieved record revenues of $10.1 billion, the first $10 billion quarter for QCT, including record quarterly handset and automotive revenues. Licensing business revenues were $1.5 billion. We're off to a great start in fiscal ‘25. Our mobile roadmap is the strongest in our history with exceptional traction for Snapdragon in premium tier handsets and we are delivering growth across our diversification initiatives. This quarter, automotive and IoT revenues grew 61% year-over-year and 36% year-over-year, respectively. We are committed to achieving $22 billion on non-handset revenues by 2029 as outlined during our 2024 Investor Day. Our advanced connectivity, computing, and edge AI technologies in product portfolio continue to be highly differentiated and increasingly relevant to a broad range of industries. We also remain very optimistic about the growing edge AI opportunity across our business, particularly as we see the next cycle of AI innovation and scale. DeepSeek-R1 and other similar models recently demonstrated the AI models are developing faster, becoming smaller, more capable and efficient, and now able to run directly on device. In fact, DeepSeek-R1 distilled models were running on Snapdragon powered smartphones and PCs within just a few days of its release. As we entered the era of AI inference, we expect that while training will continue in the cloud, inference will run increasingly on-device, making AI more accessible, customizable, and efficient. This will encourage the development of more targeted, purpose-oriented models and applications, which we anticipate will drive increased adoption and in turn demand for Qualcomm platforms across a range of devices. With the industry's most powerful and efficient AI processors for the edge, we're well positioned to drive this transition and benefit from this upcoming inflection point. Let me now share some key highlights from the business. In handsets, we're pleased that the recently launched Samsung Galaxy S25 series of smartphones will be powered by the Snapdragon 8 Elite for Galaxy globally. The Snapdragon 8 Elite for Galaxy delivers the latest AI experiences, showcasing one of the best integrations of Galaxy AI and Google Gemini. We are encouraged by the number of AI features which has nearly doubled in the Galaxy S25 series. We expect this trend to continue as part of the transition to AI smartphones. We're extremely proud of this launch and our long-standing strategic partnerships with Samsung and Google. As a reminder, the Snapdragon 8 Elite is our most powerful mobile platform today, featuring the industry's fastest custom CPU, the most powerful NPU, incredible GPU performance, and the best camera. In addition to Samsung, we're very pleased with the design traction and strong end customer demand for recently launched Snapdragon 8 Elite powered flagship smartphones by Chinese OEMs. Our design win momentum in PCs has also increased, with more than 80 designs in production or development on our category-leading Snapdragon X series platforms, and we're targeting more than 100 designs to be commercialized through 2026. Importantly, we recently announced our newest compute platform, the Snapdragon X, specifically designed to address PCs in the $600 price range, further expanding our addressable opportunity. Snapdragon X features best-in-class performance, multi-day battery life, powerful on-device AI, and Copilot+ experiences. We look forward to PCs powered by Snapdragon X from leading OEMs including Acer, ASUS, Dell, HP, and Lenovo in the coming months. In partnership with Lenovo, we introduced the world's first mini desktop AI PCs powered by the Snapdragon X series. These devices redefine compact computing in a new form factor ideal for developers, consumers, and enterprises. The number of NPU powered on-device AI experiences running natively on Snapdragon has continued to grow with more than 50 AI applications now optimized for Windows 11, including apps for enterprise collaboration, productivity, creativity, and more. Microsoft also announced it is bringing NPU optimized versions of DeepSeek-R1 directly to Copilot+ PCs beginning with the Qualcomm Snapdragon X series. Additionally, the broader app ecosystem continues to expand with Snapdragon native apps now including 20 of the most popular VPNs, 50 of the most popular security and cloud storage apps, as well as new applications for creators. While we're still in the early phase of the transition to Copilot+ PCs, we are pleased with consumer reception for Snapdragon X series, which has exceeded our expectations. According to Circana, in December, Snapdragon X series had more than 10% share of the greater than $800 window laptops in US retail. In XR, we remain the preferred solutions provider for VR, MR, and AR across major OEMs and ecosystems, and our strategic long-term collaborations with Meta and other key partners are playing a key role in growing this area. The Snapdragon-based Ray-Ban Meta glasses continue to exceed expectations as they adopt more AI features. We remain optimistic that we are at the beginning of an inflection point for smart glasses to gain scale as they become wearable AI. Additionally, at the recent XR Unlocked event, Google announced Android XR, and we are pleased that the first device available for purchase later this year will be built by Samsung and powered by the Snapdragon XR platform. We continue to expand our industrial IoT portfolio of products and solutions, and we are encouraged by the positive reception across multiple industry verticals, including energy and utilities, robotics, manufacturing, warehousing and logistics, retail, enterprise, and commercial. At CES, we introduced our AI on-prem appliance and inference suite, which enables Generative AI inference in computer vision workloads to run on dedicated on-premises hardware, allowing sensitive customer data, fine-tuned models, and inference loads to remain within the enterprise. The AI inference suite provides ready-to-use AI applications and agents, tools and libraries to easily operationalize AI and GenAI applications in a variety of deployments on-premise or in the cloud. Our first wave partners for these new platforms include Honeywell, IBM, and others. We also announced the next evolution of Qualcomm Aware, our cloud-based asset visibility platform. As a horizontal enablement platform, Qualcomm Aware allows for a highly integrated way to add cloud-based observability and insights, geolocation, fine indoor positioning, firmware updates and device management services to connected devices. In edge networking, we're pleased with the momentum in Wi-Fi 7 with recent product launches from Cisco, Charter, Eero, Netgear, Nokia, and Ubiquiti. We're also seeing strong traction for 5G fixed wireless access with next-generation design wins at operators in North America and India. We continue to strengthen our position in automotive as the industry's leading technology partner for the software-defined vehicle, AI-powered in-cabin systems, advanced driver assistance, and connected car experiences. At CES, we announced new collaborations with Alps Alpine, Amazon, Google, Leapmotor, Mahindra, and Hyundai Mobis, which will use Snapdragon digital chassis solutions to drive AI-powered in-cabin and advanced driver assistance systems. We also expanded our partnerships with several Tier 1 suppliers to now utilize the Snapdragon Cockpit Elite platform, including with Panasonic Automotive Systems, Garmin, and Desay SV. These collaborations will bring advanced intelligence, including Generative AI, to all levels of software-defined vehicles, enabling automakers to build safe and extraordinary user experiences. We're very pleased with the strong industry reception to Snapdragon Cockpit Elite platform since its launch late last year. Our new collaboration with Hyundai Mobis will combine the Snapdragon Ride Flex system on chip and the Snapdragon Ride automated driving stack with Hyundai Mobis cutting edge software and sensors. This will deliver a comprehensive system solution that powers advanced infotainment and advanced driver assistance systems, bringing a one-of-a-kind user experience to future vehicles. Another significant milestone was the launch of the Snapdragon Digital Chassis Workbench, a cloud-based workflow for developers building the software-defined vehicle. To complement the hardware and software of the Snapdragon Digital Chassis, Workbench provides a complete development and test environment to build and deploy automotive applications. Finally, we remain very pleased with the execution of our QTL business in recent years and were well positioned to maintain fiscal ‘24 revenue scale going forward. Over the past year, we have extended key agreements with major OEMs and were poised to shortly execute new long-term license agreements with two additional large OEMs. We also recently signed Transsion to a long-term 4G license to go along with the 5G license signed in the last fiscal year. Our progress reaffirms QTL as the industry's most extensive licensing program of cellular essential patents. Before I turn the call over to Akash, I would like to provide an update on the Arm vs. Qualcomm trial from December 2024. The jury's verdict vindicated Qualcomm's CPU innovations and affirmed that Qualcomm's contract with Arm provides a license for Qualcomm's products containing our proprietary Oryon CPUs in industries such as smartphones, automotive, next generation PCs, IoT, and data center. In addition, ARM recently notified us that it was withdrawing its October 22nd, 2024 notice of breach and indicated that it has no current plan to terminate the Qualcomm Architecture License Agreement. We're excited to continue to develop performance leading, world-class products that benefit consumers worldwide that include our incredible Oryon custom CPUs. I will now turn the call to Akash. Akash Palkhiwala: Thank you, Cristiano, and good afternoon, everyone. I'll start with a summary of our record performance in the first fiscal quarter. We are pleased to announce revenues of $11.7 billion and non-GAAP EPS of $3.41, both of which were above the high end of our guidance. QTL revenues of $1.5 billion and EBT margin of 75% were in line with expectations. QCT delivered record revenues of $10.1 billion, which was above the high end of our guidance on outperformance across Android handsets, IoT, and automotive. QCT handset revenues were a record $7.6 billion with 13% year-over-year growth, reflecting higher volume and content increase in Android premium tier, driven by industry-leading performance of our newly launched Snapdragon 8 Elite platform. Higher volume in Android premium tier in the quarter was driven by stronger end consumer demand for recently launched flagship smartphones and global share in Samsung Galaxy S25 devices. QCT IoT revenues of $1.5 billion increased 36% year-over-year, driven by new product launches with our industry leading processors and on-device AI capability across consumer networking and industrial. We delivered our sixth consecutive quarter of record QCT automotive revenues of $961 million, representing 61% year-over-year growth on continued content increase in new vehicle launches as automakers deploy our high-performance, low-power computing and connectivity chips to bring next-generation experiences to consumers. QCT EBT margins of 32% exceeded the high end of our guidance, reflecting the benefit of revenue upside and operating leverage. QCT EBT dollars of $3.2 billion increased by 25% versus the year-ago period. Lastly, we returned $2.7 billion to stockholders, including $1.8 billion in stock repurchases and $942 million in dividends. Now, turning to guidance. For the second fiscal quarter, we are forecasting non-GAAP revenues of $10.2 billion to $11 billion and non-GAP EPS of $2.70 to $2.90. In QTL, we estimate revenues of $1.25 billion to $1.45 billion and EBT margins of 69% to 73%, reflecting normal seasonality for headsets units. In QCT, we expect revenues of $8.9 billion to $9.5 billion and EBT margins of 29% to 31%, with strong year-over-year growth across handsets, IoT, and automotive. We expect QCT handset revenues to grow by approximately 10% on a year-over-year basis, including the benefit of increased shipment for Samsung Galaxy S25 smartphones. On a sequential basis, the decline in QCT handset revenues is primarily driven by seasonality and shipments to Apple. We expect IoT and automotive revenues to grow by approximately 15% and 50% respectively versus the year-ago period, driven by the strong product momentum I just outlined. Lastly, we estimate non-GAAP operating expenses to be approximately $2.25 billion. In closing, we are very pleased with our strong first quarter results, with new records across the following metrics, total company revenue, non-GAAP EPS, QCT revenues, QCT handset revenues, and QCT automotive revenues. In QTL, we finalized renewal negotiations for long-term licenses with two key Chinese OEMs and expect to execute those agreements shortly. We also recently signed Transsion to a long-term 4G license in addition to the 5G license signed in the last fiscal year. With these additional long-term agreements, we expect fiscal ‘25 QTL revenues to be consistent with fiscal ‘24. Our recent product announcements at CES across PC, automotive, consumer, and industrial IoT, along with the continued performance leadership in premium tier Android handsets, underscore our position as the connected computing leader across edge devices. Lastly, as AI approaches an inflection point of scaling at the edge, our leadership in high-performance on-device inference solutions positions us to benefit as we lead this transition. This concludes our prepared remarks. Back to you, Mauricio. Mauricio Lopez-Hodoyan: Thank you, Akash. Operator, we are now ready for questions. Operator: [Operator Instructions] First question comes from the line of Joshua Buchalter with TD Cowen. Please proceed with your questions. Joshua Buchalter: Hey, guys. Thanks for taking my question. I guess to start, I wanted to clarify the QTL guidance. You're talking to sort of flat or levels with fiscal 2025 versus 2024. I know you signed the two agreements recently. Could you maybe speak to how we should think about your assumptions on overall unit shipments and the royalty per unit tracking through the year. Thank you. Akash Palkhiwala: Joshua, it's Akash. I think our overall assumption on the market is that it is either flat or gross low single-digits on a year-over-year basis. Now, of course, this doesn't take into account upside opportunities in terms of the China subsidy and the AI replacement rate. But the baseline assumption is what goes into the QTL forecast that we just gave. Operator: Our next question comes from the line of Samik Chatterjee with JPMorgan. Please proceed with your question. Samik Chatterjee: Hi, thank you for taking my questions. And I have a couple of questions, but maybe if I can start off on the PC platform and particularly Snapdragon X. Maybe Cristiano, if you can sort of talk about how you're sort of thinking about 2025 and 2026 playing out in terms of device launches on your Snapdragon platform for PCs, and particularly more interested in hearing how you're now thinking about the adoption curve between enterprises and consumers. What are you hearing from the OEM partners in terms of how to think about the adoption curve relative to enterprise and consumer as we go look for the next couple of years? And I have a quick follow-up after that, thank you. Cristiano Amon: Very good, Samik, thank you for your question. Look, we're very happy with the trajectory that we are on PCs. Maybe I'll start answering the question by providing some bookends, right? We said at the Investor Day last year that we expect to get $4 billion in Windows PC revenue by 2029. We actually said at that time $4 billion out of a $35 billion, if I'm not mistaken, Sam, which if you calculate, you assume a share about 12% of the market we're addressing. I think we started very well with the number of designs. 1 metric that we have is the design traction continue. We have now over 80 design wins, launch or in development, across the X series. And we're targeting commercialization on more than 100 devices as we go to 2025 to 2026. So design traction is good. It continued to increase, which is a good sign. The second data point we actually provided on the script is we look at the United States retail. We started to expand retail in different markets. We look at the United States, which one of the priority markets that we had, and the data show that the sale, within the sale of US retail of Windows laptops above $800, we had more than 10% share, which is actually consistent with the projection we made of how we're going to grow under five years. And we like the metric that's early in the process. We're still starting. As I said, we'll continue to expand new markets. We like the results today. And the design traction is continuing to increase. The first wave was consumer. Now it's being deployed towards commercial. That's why we have emphasis on showing a lot of the commercial applications now native on Snapdragon from VPN, from security, et cetera. And we're excited especially because of that we launched a new product to expand the addressability to now $600 price laptops which we're not compromising AI. And as I mentioned in the call, actually a few days after Microsoft announced DeepSeek-R1 running on Snapdragon X Elite -- X series laptops first. So actually, we're starting, we're happy with the traction consistent with our long-term projections, we're just going to keep executing. Samik Chatterjee: Got it. Got it. No, thank you for that. And maybe for my follow-up, I can sort of take the cue from what Akash mentioned for the last question which is China market for smartphones and the subsidies that you're seeing sort of what are you seeing on the ground in terms of response for the -- from the consumer to the subsidies and what are you sort of thinking in terms of the impact to overall the Chinese smartphone OEM and their sort of growth, sustainability, and I don't know if, Akash, you gave the number in terms of what growth you saw with the Chinese OEMs -- Chinese Android OEMs this quarter, but how are you thinking about the growth trajectory going forward with them, particularly in light of these subsidies? Thank you. Akash Palkhiwala: Sure. So let me address it in parts. So, as it relates to the subsidy, as you know, they just began in January. So we are not that far into the cycle. And so we'll have a better view of it next quarter. In terms of historical reference point, in the past we've seen that when subsidies have come in, it has improved the size of the market. So there is an opportunity that comes with it, but it's not something that is contemplated yet in our second quarter guidance. Now, let me go back to first quarter, because that's where I made the volume comment as well. If you look at the first quarter upside that we had in handsets, very strong performance, record performance, and there were two drivers. First is the content increase year-over-year that we have discussed in detail. As more capability gets added to the chipset, it shows up in our price points. The second was the volume increase that we saw on a year-over-year basis as well. And when you really look at the volume increase and break it down into drivers, we had higher share, of course at Samsung, they're using us globally in the GS25. So that helps, purchases that went into the December quarter before the phone launch. The second is we saw higher end consumer demand in China for premium devices. And if you think about how that happens, it's a long-term trend that we've seen in China that the premium tier continues to grow, and it's a benefit that showed up in the quarter as well. The second is our customers are gaining share in the China market. And so that is a benefit that translates through as well. So, very -- we feel very good about all those drivers. They're all kind of sustained long-term drivers in our business that positions us well as we look at the second half of the fiscal year. Operator: Our next question comes from the line of Stacy Rasgon with Bernstein Research. Please proceed with your questions. Stacy Rasgon: Hi, guys. Thanks for taking my questions. For the first one, I wanted to ask about the QTL guide flat year-over-year. So in the Q, it suggests that you're still negotiating with Huawei, and I'm assuming the QTL guide for Q2, which is a little lighter than the normal, has no Huawei in it because of that. Does the annual guide for flat year-over-year assume you do not settle Huawei and if you do renegotiate and get some money, there would be upside to that number based on your current assumptions? Alex Rogers: Yeah, this is Alex. So thanks for the question, Stacy. So basically what we've managed to accomplish over the last year or so is essentially signing up everybody to extensions. So we've had a really good run of execution with bringing in Transsion for 4G, which is a significant development because they've popped up the ranks of OEMs in terms of unit volume, very high up the ranks actually. So, the 4G complements the 5G license that we have been signed up to and they're transitioning to more 5G content in their overall product offering. And then we have these last two significant Chinese OEMs that we've signed up or that we finished negotiations with and the execution is just pending return from the Lunar New Year holiday. The Huawei discussions are still in play, so the numbers don't actually include the potential from a renewal with Huawei. And basically everything else is taken care of. Stacy Rasgon: Got it. So that flat guidance doesn't include any Huawei settlement, just to be clear? Akash Palkhiwala: Correct. Neither the second quarter guidance or the full year comment. Stacy Rasgon: That's great. And for my follow-up, I just want to note you -- we've seen a fair amount of, just in general, personal electronic strength recently and there's some thoughts that maybe some of it might be related to sort of pre-tariff pull forwards. I don't know if you guys would be able to have any view on that, but do you have any comments on what you might see in whether or not the threat of tariffs might be driving some pre-builds or increased demand in the near term? Cristiano Amon: Yeah, absolutely not. I think it's funny, Stacy, we expected everybody to be asking this question. We actually are seeing -- it's pretty simple, right? So number one is higher than expected, I think share of Samsung with the launch of GS25 globally. The second thing is end customer demand in China and we have data on the sell-through is basically Snapdragon 8 Elite has been quite successful. Demand on smartphones [on to actually] (ph) exceed our expectations is built on what Akash said, the trend of premium tier continue to expand. Smartphone is number one consumer electronic device purchase. I think there is a positive launch of AI features. Customers build great devices. They are gaining share in the premium tier. And that is what we're driving demand. And as Akash outlined, all of our smartphone products, products from our customers in China using 8 Elite, the price points that they launch those devices in the market, they're all eligible for the subsidy. So that's not contemplated in the Q2 guide, which it could be an interesting development. We saw they usually further expand the premium tier. But this is no inventory, this is no build-out ahead of tariffs, this is end customer demand. Operator: The next question is from the line of Chris Caso with Wolfe Research. Please proceed with your question. Chris Caso: Yes, thanks. Good evening. I guess following on with those comments, Cristiano, how should we think about June quarter now? Because typically, June quarter, there are no flagship launches in that that has some effect on QCT. Given the share gain at Samsung, does that affect the seasonality for June at all, and how should we be thinking that in general? Akash Palkhiwala: Yeah, I think, Chris, you're right in terms of understanding our seasonality. When you look at the last several years, the kind of the framework across quarters, it is driven by the timing of the flagship launches. And so as a result, we expect kind of first quarter to be the high point from an EPS perspective and third quarter is the low point because you don't have as many flagship launches in it. On your question specifically on Samsung, Samsung is in, kind of the impact of the higher share is included in the first quarter and the second quarter guide as well. And so it will be included in third and fourth quarter as well. So I don't think it fundamentally changes the seasonality across the quarters. Chris Caso: Got it. As a follow up, if you could address some of the higher price points that you're seeing on Snapdragon now, and certainly there are more features in there because of AI, but to some extent, it's also about cost too, because the waiver costs are higher. What's the impact of that on Qualcomm, not just from a quarter basis, but looking a little bit out, should we expect ASP to be a tailwind for you? And then how are your OEM customers dealing with that? Is it a factor of, we're just going to see a mix higher to higher end phones, or is that going to result in higher ASP? Akash Palkhiwala: Chris, the primary driver here is that there is a consumer demand for more capable smartphones. And so as we go from generation to generation, we're adding a lot more capability on the processing side, on AI side and connectivity, and that is showing up in the price points in our chip. So that's the primary driver. Of course, as you're aware, the TSMC price increases for 3 and 4 nanometer did kick in in January. And so, as we've said in the past, our objective there is to reflect the cost increases in ASPs over a period of time. So those are the key drivers. When you step back, I think one of the messages that Cristiano gave earlier is an important one, is that the overall market, it's not just about each tier kind of having a more capable chip, but a mix shift across tiers and a larger market for premium devices. Operator: Thank you. The next question is from the line of Ross Seymore with Deutsche Bank. Please proceed with your questions. Ross Seymore: Hey guys, thanks for letting me ask the question. I just want to ask a more cyclical question, probably most applicable to your IoT segment. That business has been very strong year-over-year, but you've had a couple quarters with negative sequential comps. Is that just normal seasonality, or is there cyclicality involved that some of your broad-based peers are seeing? Just kind of want to judge where we are in that cyclical trend. Akash Palkhiwala: Yeah, Ross, there's definitely -- one of the big drivers on the quarterly profile is because of consumer IoT, and that does have cyclicality involved because you're building for the holiday season, and then when we get into the March quarter, of course, you're past that point. When you look at the other two parts of our IoT business, which is industrial and edge networking, we're consistently seeing strength across the quarters. Ross Seymore: Great to hear that. I guess as a follow-up question, then switching gears to the gross margin, Akash, congratulations again. It looks like you kept that in QCT pretty much flat sequentially despite your thought that it was going to go down the December quarter. Is that something that is just structurally going to be a little higher than that, I guess, kind of implied 48% to 49% range, and if so, what's changed? Akash Palkhiwala: Yeah, the gross margin, both in our December quarter and our March quarter, it benefits from the fact that we have stronger premium tier volume. That improves the mix, overall mix of our portfolio, and that shows up in gross margins. So that's kind of the primary driver of the strength. And so as you see the mix changes, it will flow through the margin numbers. But yeah, we are very happy just like you that the margin's been very strong. Operator: Our next question is from the line of Timothy Arcuri with UBS. Please proceed with your questions. Timothy Arcuri: Thanks a lot. I had two. Cristiano, is there any evolution in the way you're thinking about the modem situation that your large customer? I know there's been some back and forth on that recently. Is there any change there? Are you feeling like maybe you'll be there a little bit longer than you had expected? That's the first question. Cristiano Amon: Yeah, the answer is no. I think we're really operating with the assumptions. I think we've been very clear. I think what those things are. We expect 20% share for the launch that happens in 2026, and the current agreement ends after that. We're assuming no renewal, which means nothing in 2027. For 2025 launches, we expect share to be between 100% and 20%. So we don't know. But I think we've been very clear about how we're modeling the business, and I think that's the assumption going forward. Timothy Arcuri: Thanks a lot. Akash, can you give us an idea of how big the PC business was within IoT? You said you were 10%, I think, of the $800 or sorry, the above $800 laptop market in the US. I'm guessing you did about $100 million, a little bit more than $100 million in December. Is that close? Thanks. Akash Palkhiwala: Yeah, Tim, it's Akash. So from an overall revenue perspective, I think the way we've set it up is we've set targets long-term for ‘29 for each of these areas, and we plan to give an annual update on each of those targets. So we're not breaking it down every quarter by area. To me, what's the most important thing on the PC is the market that we were playing in, which is devices over $800, and our focus on retail to begin with, we're very happy that we were able to get 10% share. I think just as Cristiano said earlier, if we equate that to our long-term target, which is 12% of the overall market, that's a great start towards the number we'd set up. Operator: Thank you. Our last question is from the line of Tal Liani with Bank of America. Please proceed with your questions. Tal Liani: Hi, guys. I want to focus on a 20% growth of smartphones and QCT this quarter. And the question is how long will this continue? The market itself is not growing. There was -- last quarter there was growth in China that was very strong. This quarter, we have the initial Samsung. So, can you talk about longevity of the current trend? How long can it continue? Could you grow even if the market doesn't grow and then just an update on China demand? Thanks. Akash Palkhiwala: Sure, Tal. So let me break it down. If you look at our year-over-year performance in QCT handsets, we were up 13%. And as I said earlier, the drivers of those is really a combination of higher volume and higher ASPs. The ASPs as content increase, which we've talked about, we've seen consistently that continue to increase over the last several years. And as we look forward, we think that's very sustainable, just we're adding a lot more capability to the device and the consumers are looking for that opportunity. In terms of volume, one of the key metrics for us is the fact that the premium tier continues to grow. So if you look at the last three or four years, devices greater than $400 have gone from being 21% of the market to now over 30% of the market. And so that is a trend that's incredibly positive for us because that's the market that we are very strong in. And so we have a combination of the units within that part of the market is growing very quickly and within that our content is growing as well. And those are the two factors that drive the handset growth of 13% on a year-over-year basis. When you look at the March quarter, we're guiding handset growth of 10% on a year-over-year basis, which is again a very strong number. So pretty happy with how we are set up in that business and both in the first half of the year and it positions as well as we look forward. Q - Tal Lian: China update? Akash Palkhiwala: Can you repeat your question on that, Tal, please? Q - Tal Lian: Just China. China was strong the last few quarters. Can you give a idea? Maybe I missed it, but what's the current trends in China? Akash Palkhiwala: Yeah, I think China definitely is strong in the premium tier. We've seen that part of the market grow. We've also seen our customers gain share within that market. And then last thing is, we're going to have subsidies come in, and so there is a potential that that benefits that part of the market as well. So, pretty, I think, positive tailwinds for us there. Operator: Thank you. That concludes today's question-and-answer session. Mr. Amon, do you have anything further to add before adjourning the call? Cristiano Amon: Just would like to [Ends Abruptly]

Operator: Ladies and gentlemen, thank you for standing by. Welcome to the Qualcomm Fourth Quarter and Fiscal 2024 Earnings Conference Call. [Operator Instructions] As a reminder, this conference is being recorded, November 6, 2024. The playback number for today's call is (877) 660-6853. International callers, please dial (201) 612-7415. The playback reservation number is 13749366. I would now like to turn the call over to Mauricio Lopez-Hodoyan, Vice President of Investor Relations. Mr. Lopez-Hodoyan, please go ahead. Mauricio Lopez-Hodoyan: Thank you, and good afternoon, everyone. Today's call will include prepared remarks by Cristiano Amon and Akash Palkhiwala. In addition, Alex Rogers will join the question-and-answer session. You can access our earnings release and a slide presentation that accompany this call on our Investor Relations website. In addition, this call is being webcast on qualcomm.com, and a replay will be available on our website later today. During the call today, we will use non-GAAP financial measures as defined in Regulation G, and you can find the related reconciliations to GAAP on our website. We will also make forward-looking statements, including projections and estimates of future events, business or industry trends or business or financial results. Actual events or results could differ materially from those projected in our forward-looking statements. Please refer to our SEC filings, including our most recent 10-K, which contain important factors that could cause actual results to differ materially from the forward-looking statements. And now the comments from Qualcomm's President and Chief Executive Officer, Cristiano Amon. Cristiano Amon: Thank you, Mauricio, and good afternoon, everyone. Thanks for joining us today. In fiscal Q4, we delivered non-GAAP revenues of $10.2 billion and non-GAAP earnings per share of $2.69. Chipset business revenues were $8.7 billion, and licensing business revenues were $1.5 billion. During Q4 in fiscal '24, we continue to make progress on our growth and diversification strategy, addressing new end markets for Qualcomm's technology. Our differentiated technology and product roadmaps lead in every industry in which we now participate, and we are very optimistic about the edge AI momentum across our business. As such, we will continue to transform Qualcomm from a wireless communications company into a connected computing company for the age of AI. In the current environment, more than ever, we remain extremely focused on executing our strategy and targets while maintaining operating discipline and creating value for our stockholders. I will now share some key highlights from across the business. As the strong pace of AI innovation continues, there is now broad recognition of the opportunity for on-device AI to enable new capabilities and transform the human computer interface. On-device AI provides context, enhances immediacy and reliability and enables personalization while providing privacy and security. Additionally, GenAI-enabled devices and applications are evolving to understand natural language, images, sound and the world around us, driving a new generation of AI-first experiences. This has the potential to create a new cycle of semiconductor innovation and content, and Qualcomm is well positioned to capitalize on this opportunity across devices at the edge. We shared this vision at the recent Snapdragon Summit with the support of key industry leaders, including Microsoft, Meta, Amazon, OpenAI, Mistral AI, IBM and others. Together with our ecosystem partners, we're driving this transition to AI-enabled edge computing to empower consumers and enterprises by enhancing productivity, entertainment, creativity, convenience and more. Notably, we're partnering with Meta to support Llama 3.2, including their multimodal 11 billion, 3 billion and 1 billion parameter models on Snapdragon-powered devices. We're also working with Amazon to create a cloud-to-edge solution that allows developers to customize their models on SageMaker and deploy them to Qualcomm and Snapdragon platforms via the AI Hub. Model availability on the AI Hub has grown by more than 50% since last quarter with both open source and proprietary models. In handsets, we recently unveiled the Snapdragon 8 Elite, our latest flagship mobile platform, which features our second-generation custom Oryon CPU. This CPU delivers up to 30% faster performance with 57% less power, a significant leap over the first generation in less than a year. Snapdragon 8 Elite is the world's fastest mobile processor, restoring performance leadership to the Android ecosystem. In addition, Snapdragon 8 Elite introduces a newly architected Hexagon NPU, delivering a 45% improvement in both performance and power efficiency over Snapdragon 8 Gen 3. Combined with the improved CPU and GPU, Snapdragon 8 Elite can dynamically manage AI workloads and handle the complexities of multimodal GenAI in real time. We are extremely pleased with the Snapdragon 8 Elite design traction with successful launches at Xiaomi, Honor, Oppo and Vivo, and we look forward to additional launches at Samsung, ASUS and more. In a short period of time, our Snapdragon X Series platforms have redefined personal computing. Building on the initial launch momentum, we have expanded our portfolio with the addition of the Snapdragon X Plus 8-core compute platform. The X Plus 8-core maintains leadership in performance and battery life, enabling OEMs to offer thin and light Copilot+ PCs with transformative, uncompromised on-device AI and more affordable price points. This makes next-gen AI PCs accessible to even more users, expanding our addressable market. We are very pleased that leading OEMs, including Dell, HP, Lenovo, Samsung, Acer and ASUS will all have devices powered by our X Plus 8-core platform. We now have a total of 58 platforms launched or in development across the X Series portfolio. Snapdragon X Series power laptops will also be the first to get the new Copilot+ PC features announced on October 1, including Recall, Click To Do, improved search, super resolution in photos, generative fill and erase in Paint. In XR, together with Meta, we continue to enable the future of spatial computing. The recently announced Quest 3S powered by Snapdragon XR2 Gen 2 delivers a more affordable headset, target for users new to mixed reality and immersive experiences. This is an important milestone in increasing the scale of this opportunity. Additionally, the Snapdragon AR1 Gen 1 powered Ray-Ban Meta glasses are receiving new AI features, including location and navigation assistance, real-time speech translation, answering questions about their environment and hands-free access to user digital lives. We're also pleased that Snap recently unveiled their next-generation Spectacles powered by dual Snapdragon processors, which are aimed at creators exploring advanced AR experiences. Industrial IoT is evolving with advanced edge computing and intelligence, driving demand for our technologies and providing a significant future opportunity for Qualcomm. To that end, we recently announced the Qualcomm IQ Series, a new family of industrial-grade solutions specifically designed to meet the needs of next-generation industrial edge applications. With on-device AI performance of up to 100 TOPS, the ability to operate in extreme conditions in a suite of building safety features, the Qualcomm IQ Series of chipsets are purpose-built to power a wide range of solutions, including inspection and automation, robotics, drones, advanced computer vision, edge AI boxes and gateways and more. Additionally, we introduced the Qualcomm IoT Solutions Framework, which helps enterprises build solutions that enable easy development of end-to-end applications, reduce time to implementation and improve operational efficiencies. This all-encompassing framework features recommended chipsets and core software support for multiple operating systems, such as Android, Linux and Windows, tailored reference designs, software libraries, SDKs, supplementary cloud-based services, microservices and access to a growing network of channel partners. In edge networking, we announced the Networking Pro A7 Elite platform, the first commercial platform to revolutionize enterprise and home networking connectivity with edge AI. This platform includes Wi-Fi 7, 5G, 10-gigabit PON, Ethernet and an AI co-processor with 40 TOPS of NPU processing power. The transformative integration of connectivity and computing power into the network unlocks opportunities for operators and enterprises to deploy innovative applications and services in areas such as security and surveillance, energy management and automation, personalized virtual assistance and health monitoring, among others. Edge AI also enhances privacy by processing sensitive information on the gateway while enabling personalization through contextualized understanding of the environment and immediacy to near real-time responses. Finally, in automotive, we recently announced our most powerful platforms to date, the Snapdragon Cockpit Elite and Snapdragon Ride Elite. Both feature our category-leading custom Oryon CPU, now optimized for automotive safety standards and design for 3x faster CPU performance over previous generations. These platforms are also developed for current and future multimodal AI in assisted driving workloads, feature our dedicated Hexagon NPU with up to 12x increased AI performance over previous generation, a substantial upgrade. The Snapdragon Cockpit Elite powers advanced digital experiences, including robust multimedia capabilities, such as gaming and advanced 3D graphics, on-device AI with fully integrated edge orchestrator, optimized safety and security and long-term software support. The Snapdragon Ride Elite platform offers an end-to-end ADAS system with advanced features, such as vision perception, sensor fusion, path planning, localization and complete vehicle control. Additionally, these platforms are built on a unique flexible architecture that gives automakers the option to combine both digital cockpit and automated driving functionalities on the same SoC. We are pleased that leading car manufacturers are adopting Snapdragon Elite automotive platforms for their future software-defined vehicles, including Li Auto and Mercedes-Benz. We are very pleased with the progress we have made this year with significant advancements on our product roadmap and customer engagement across multiple end markets. I look forward to sharing more about our strategy and progress at our upcoming growth and diversification focus Investor Day in New York on November 19. I will now turn the call to Akash. Akash Palkhiwala: Thank you, Cristiano, and good afternoon, everyone. I'll start with our Fourth fiscal quarter earnings. We are pleased to announce strong non-GAAP results with revenues of $10.2 billion and EPS of $2.69, which was above the high end of our guidance. QTL revenues of $1.5 billion and EBT margin of 74% were at the high end of our guidance driven by slightly higher handset units in the quarter. QCT delivered revenues of $8.7 billion and EBT margin of 28% with revenues at the high end of our guidance range on strength in both IoT and automotive. QCT handset revenues of $6.1 billion were in line with our expectations for the quarter. QCT IoT revenues of $1.7 billion increased 24% from the prior quarter due to the benefit of new product launches and continued normalization of channel inventory. We delivered our fifth consecutive quarter of record QCT automotive revenues of $899 million with sequential growth of 11% and year-over-year growth of 68% on continued content increase in new vehicle launches. Lastly, we returned $2.2 billion to stockholders, including $1.3 billion in stock repurchases and $947 million in dividends. Before turning to guidance, I'll summarize our fiscal '24 results. We are very pleased with our execution and financial performance in fiscal '24. We delivered revenues of $39 billion and non-GAAP EPS of $10.22, a growth of 21% on a year-over-year basis. Our results reflect the benefit of operating leverage as we maintain fiscal discipline and manage non-GAAP operating expenses relatively flat as compared to fiscal '23. In QTL, we made significant progress in our ability to maintain revenue and margin scale as a result of completing a number of licensing renewals during the year. In QCT handsets, we delivered greater than 20% year-over-year growth in Android revenues driven by technology leadership of our premium-tier Snapdragon products and normalization of channel inventory. Consistent with expectations outlined at the beginning of the fiscal year, QCT IoT revenues grew sequentially in each of the following quarters throughout the year. In a challenging industry environment, we delivered full year revenue growth of 55% in QCT automotive, extending our leadership in automotive computing and connectivity platforms. Lastly, our business generated record free cash flow of $11.2 billion, and our balance sheet remains strong with $13.3 billion in cash and marketable securities. Turning to guidance. We now expect global 3G, 4G, 5G handset units to increase by low to mid-single-digit percentage on a year-over-year basis in calendar '24. For the first quarter of fiscal '25, we are forecasting revenues of $10.5 billion to $11.3 billion and non-GAAP EPS of $2.85 to $3.05. In QTL, we estimate revenues of $1.45 billion to $1.65 billion and EBT margins of 73% to 77%, reflecting normal seasonality for handset units when adjusted for the extra week in the fourth quarter of fiscal '24. In QCT, we expect revenues of $9 billion to $9.6 billion and EBT margins of 29% to 31%. We expect QCT handset revenues to grow by a mid-single-digit percentage on a year-over-year basis. This forecast includes greater than 40% sequential revenue growth from Chinese OEMs and the acceleration of flagship Android handset launches powered by our recently announced Snapdragon 8 Elite platform. We anticipate QCT IoT revenues to increase by more than 20% on a year-over-year basis with growth across consumer, industrial and networking. Following our outperformance in the fourth quarter, this forecast reflects a seasonal sequential decline consistent with the last 2 fiscal years. We expect QCT automotive revenues to grow by 50% relative to last year and be approximately flat on a sequential basis. Lastly, we estimate non-GAAP operating expenses to be approximately $2.2 billion. In closing, I want to thank our employees for their hard work and dedication and remaining focused on execution while delivering industry-leading products. The last few weeks have marked a meaningful acceleration in our progress towards our diversification strategy, and I'd like to highlight some significant product announcements. First, we announced our Snapdragon X Plus platform at IFA Conference, which extends our performance leadership to the $700 price-tier for personal computers. Second, at the Embedded World North America, we introduced the most comprehensive chipset and software portfolio for AI-ready industrial IoT solutions. And third, at the Snapdragon Summit, we unveiled the Snapdragon 8 Elite handset platform, featuring the world's fastest mobile CPU; and the Snapdragon Cockpit Elite and Snapdragon Ride Elite automotive platforms, establishing us as a performance leader in digital cockpit and ADAS. Lastly, we look forward to seeing you in New York on November 19, where we will expand on these exciting product announcements with an update on our IoT and automotive diversification strategy. This concludes our prepared remarks. Back to you, Mauricio. Mauricio Lopez-Hodoyan: Thank you, Akash. Operator, we are now ready for questions. Operator: [Operator Instructions] First question comes from Joe Moore with Morgan Stanley. Joseph Moore: Great. Wondering if you could talk about the strength in autos, you've obviously put up great sequential numbers, there are headwinds in that business. I know you have a lot of pipeline momentum, but just kind of give us a picture of how the environment is affecting you and how much visibility you have into that trajectory? Cristiano Amon: Joe, thanks for the question. This is Cristiano. As we said before, I think you should look at our revenue in auto, less sensitive to what happens in the market much more related to new models that are being launching with Qualcomm technology, and it's reflecting a shift in share. So as we gain share and new models get launched, you started to see that show up in our financials. So that's the reason we continue to have growth both sequentially and year-over-year. Joseph Moore: Great. And then I don't think you mentioned it. Anything you could say about the ARM dispute? Because that would help us understand what's the stake there. Akash Palkhiwala: Yes. Joe, on the ARM side, from our perspective, we have a very broad, well-established license rights that cover our custom design CPUs. So we are very confident that those rights will be affirmed. The trial is scheduled for December, and so we're looking forward to addressing ARM's claims at that point. Operator: The next question is from the line of Samik Chatterjee with JPMorgan. Samik Chatterjee: Really strong results, so congratulations on that. Maybe if I can start with IoT. You -- for the first 3 quarters of the year, you had declines on a year-over-year basis. And we're seeing this sort of acceleration in IoT in the fourth quarter and going into first quarter on a year-over-year basis. Can you just sort of parse that out a bit? How much of this is a recovery in sort of the traditional IoT businesses you are in relative to contribution from the PC market and really an acceleration on account of that? Just anything you can parse out between industrial IoT, consumer IoT and new products versus older sort of products you've been on. And I have a follow-up. Akash Palkhiwala: Sure. So Samik, it's Akash. If you look at our performance both in first -- fourth quarter and first quarter in IoT, we saw benefit across all the 3 areas, so consumer, industrial and networking. And within fourth quarter, as some new products were launched in PC, in XR, in other areas as well, we saw the benefit of those launches come through in our numbers. There is a portion of channel inventory normalization as well, but it's really the new product launches kind of coming through for us both in the fourth and the first quarter. And that sets up -- sets us up well for the rest of the year. Samik Chatterjee: Okay, okay. Got it. And I mean, it's -- obviously, as you mentioned, it's been a tough backdrop in terms of the macro, and you're guiding to about a 10% revenue growth in the first quarter, just trying to think about sustainability of that into the March quarter, particularly given that you did mention there's some acceleration of Android launches as well. How should we think about -- with the combination of smartphone and sort of the impressive performance you have on the non-smartphone areas now, how sustainable is this sort of double-digit growth into the March quarter? Akash Palkhiwala: Yes. Samik, so we're pretty happy with the trajectory of the business both in terms of our fourth quarter results and first quarter guidance. We are not guiding beyond the first quarter at this point. But as you know, we have an Investor Day coming up in a couple of weeks, where we're going to talk through our diversification strategy and growth, and we'll provide a financial framework around it. So we'll address some of these topics at that point. Operator: The next question is from the line of Stacy Rasgon with Bernstein Research. Stacy Rasgon: My first question, just on chipset gross margins, they seem to be guided down a bit, I don't know, 100 or 150 bps in Q1. Is that just like increased wafer cost, [ TSM? ] Is there something else going on with mix just given which products are shipping? Any color you can give us on gross margins? And I guess, like is the framework on how to think about them going forward around 48-ish, plus or minus? Is that still the right way to think about chip gross margins? Akash Palkhiwala: Yes. Sure, Stacy, it's Akash. So in fourth quarter, we actually guided lower, and we came in slightly better because of stronger mix. And so what we're guiding in first quarter is really largely in line with fourth quarter, and we think that's kind of a reasonable way to model the business going forward. And I think from a product mix perspective, we feel pretty good about where we are set up both across businesses and within handsets. So that will obviously continue to play a factor as we look forward. Stacy Rasgon: Got it. For my follow-up, I just wanted to ask a little more about on PCs. You'd talked about new product launches in Q4. Can you help us size, like how big was the PC portion in Q4? And given you're guiding IoT down seasonally, sequentially in Q1, is PCs as well as some of the other stuff a function of that? Like how do we think about the contribution that we're seeing early in the launch of those products? Akash Palkhiwala: Yes. So Stacy, as you know, we're pretty excited about the PC roadmap. I think we've kind of established ourselves as a performance leader in Windows devices. And during the quarter, we also launched a new chip, Snapdragon X Plus 8-core chip, which allows us now to access the $700 price tier for the PC market as well. So now we have performance leadership really without compromising on NPU performance across tiers in the PC market. And so initial reaction has been great. We are pleased with it. We will talk about this in a lot more detail at Investor Day, both from traction across OEMs and then targets for the longer term. Cristiano Amon: Stacy, this is Cristiano. I just wanted to add one thing. While I think we are going to make probably financial projections, how we think about the PC business in November 19, I wanted to point out one thing which is very visible. When we launched this, we launched this in May, we are -- so in a short period of time if you think about it, we are now in November. When we launched in May, we have about 20 platforms. One thing we disclosed on this call is now the platforms that we have designed in, they add to about 58. That is almost a 3x increase on the number of platforms that are being designed and under development. I think that is giving us a lot of confidence that our platform to resonate with the market and we're getting traction with the OEMs. Operator: Our next question is from Joshua Buchalter with TD Cowen. Joshua Buchalter: I wanted to follow up on Joe's question from earlier about the auto upside. I mean, in particular, the auto space upside has been driven by China. I guess, maybe you could give us some data points on how much your exposure within the auto market is driven by the China market now? And then also maybe some -- any metrics you can give us on how much is infotainment versus ADAS? And in particular, as you ramp Snapdragon Ride Elite with capabilities of both infotainment and ADAS on one SoC, how is engagement for that? And how do you expect that to ramp over the next couple of years? Akash Palkhiwala: Josh, it's Akash. From a geography diversity perspective, you should think of our portfolio as very diverse. We have a very strong set of design wins globally across OEMs. And so you should not think of this as reliant on a specific geography. And we are planning to give some disclosures on that topic as we go forward. Cristiano Amon: Maybe just kind of add one thing. I think in addition of in design with virtually every single OEM and every region, one of the things we're very excited about it is what we did on both the Snapdragon Ride Elite and Cockpit Elite. One of the things I want to point out is it's one of the biggest upgrades, I think, to date in order of magnitude about 12x on AI. As we said before, I think GenAI use cases on a car and especially a little different approach is about future-proofing that design for software-defined vehicle is getting a lot of traction to a lot of OEMs. We announced two that made public, but I think design traction on that chipset is actually very high. Akash Palkhiwala: And Josh, on your second question on a combination of cockpit and ADAS, a lot of our traction this year is with launches with cars using our cockpit solution. And we see ADAS having some traction, some deployments right now, but it's going to ramp over the next couple of years. And that becomes kind of another inflection point in our revenue growth going forward. Joshua Buchalter: Got it. Thank you for all the color. And then a follow-up, I wanted to ask about the handset market. If we sort of back out your top 2 customers, handsets are up, I think, around 50% year-over-year. Any metrics you can give us on units versus ASPs? I know there was an inventory dynamic last year. So as we think about the sustainability of that growth vector into 2025, in particular, for the China market, would be curious if there's any incremental metrics you can give us outside your top 2 customers. Akash Palkhiwala: Yes. I think, Josh, the -- if you look at the total handset market, and this is sell-through, we are projecting in '24 that the market will be up low to mid-single digits. But the big story for us has been content increase. We've kind of seen the chipsets becoming a lot more capable, and you saw the X Elite -- 8 Elite announcement that we did last month, a lot more content is going into the chip. And as those get -- solutions get adopted, we get to see the benefit on the ASP side. The second factor is the mix across tiers. We're seeing the mix across tiers continue to improve in the handset market as well. So if you kind of look back over the last 3 or 4 years, devices greater than $400 has gone up from being 21% of the market to 30% of the market, and that is definitely beneficial to us. Maybe one last point is, if you think about our guidance quarter, December quarter, we do not have any Huawei product revenue in our guidance. A year ago quarter, we did have Huawei product revenue. So it's actually something that we overcome, and then we have growth on top of it. Operator: Our next question is from Chris Caso with Wolfe Research. Christopher Caso: Just another follow-up question with regard to handset. And if you could kind of characterize because I think for Qualcomm, you saw a rebound or normalization in the premium part of the handset market in the first half of the year. Is what you're seeing now some follow-through on kind of the mid-tier or it's just kind of continuation of what you saw in the first half of the year? And then secondly on that, with regard to some of the accelerated China launches, do you think that's a reflection of the market, of some perhaps improvement in the market in China or at least the China OEMs? Or is it simply a matter of timing? Akash Palkhiwala: Yes. I think, Chris, if you think about our handset business, we're definitely really strong at the top of the roadmap in premium tier. And as we mentioned earlier, we announced our new flagship chipset, and you're seeing OEMs launch with that chipset. So those definitely factor into our numbers. And it's less about other tiers, more about the fact that we launched our new premium-tier chipset, and the OEMs are actively taking advantage of it by accelerating their launches and really increasing the scale of their launches. Christopher Caso: Got it. And just with regard to the licensing business, you see a shallow sequential increase in the December quarter. I imagine that's because of the absence of the extra week for that licensing business. Any changes for just kind of the structure of that market that we shouldn't anticipate going forward? Or is it about what you'd consider to be normal? Akash Palkhiwala: Yes, it's very much normal. It's really the extra week coming out and the normal sequential quarter-over-quarter growth. Operator: The next question is from Tal Liani with Bank of America. Tal Liani: Other companies reported kind of opposite trends of what you're talking about. Some of the companies reported weakness in China migration to lower tier, and then Apple had kind of weaker numbers than expected. How do you connect the comments we get from other vendors to your strengths? And are you concerned that maybe the strength is more inventory build-out or build-out by customers because of your new launches? So can you comment about end-market demand and the composition of end-market demands in -- globally? Cristiano Amon: Look, thanks for the question. I can't really speak of other companies. The only thing I can say is I'm actually very happy with our results. But I'll give you a couple of data points, maybe help you triangulate that. When we look sequentially, we have now quarter-over-quarter greater than 40% handset revenue growth with Chinese OEMs in -- as we look in the 1Q fiscal '25, if you look at the guide. In fiscal '24, our Android revenues, we get 20% year-over-year growth, including the loss of Huawei revenues. And when we compare with our closest competitor, for example, in Android, our premium tier, we get greater than 5x the premium-tier revenue. So I think it shows a couple of things. As Akash outlined, content is increasing. The premium tier is expanding in the market that it kind of normalized. And we don't see much of the inventory dynamics we used to see. So I think it speaks a little bit to the strength of our product roadmap. I think the launch of new products from customers in China, but more important is this trend that the mix are really improving. Operator: The next question is from Timothy Arcuri with UBS. Timothy Arcuri: Akash, I'm just looking at the guidance, and for China Android to be up more than 40%, it implies that your 2 other big customers are both down in the double-digit range. I mean both of them have to be down. So can you speak to that? It's very sort of anti-seasonal for at least one of those guys to be down. And then can you speak to what's driving this? Do you think -- I mean, is any of this pull-forward because of tariffs? Are these customers concerned about potential tariffs with -- given the results of the election? So maybe they are pulling some things forward. Is that plausible? Akash Palkhiwala: Yes. Let me start with the second part of your question. That's not the case. This is not about tariffs or pull-forward because of those reasons. From a customer perspective on the quarterly trend, the way we think about it is what we're guiding is based on customer launch cadences and their demands. You should not think of this as a statement on sell-through. It's really kind of chipset purchases that are happening from us. So I think that's -- those 2 may be disconnected in some cases. But you already know what our share position is across OEMs. And so it's not a share question. It's just the timing of purchases from us. Operator: Our final question will be from C.J. Muse with Cantor Fitzgerald. Christopher Muse: I guess first question, was hoping to revisit IoT business growing nicely for you year-on-year, and pretty much every other company that I've come across is seeing challenges there, particularly parts of consumer and industrial. So would love to hear perhaps on the consumer side, whether you're seeing kind of the uptake that we're hearing in China. And then moreover, I guess, on the industrial side, is that where you're seeing inventory correction? What's the timing of kind of recovery and your thoughts there? Akash Palkhiwala: Yes. Sure. So on the consumer side, as we said, new product launches, both in XR and NPC, definitely a factor in our performance. And then on the industrial side, at Embedded World, we announced a new product portfolio, updated product portfolio that addresses both not just chipsets but software readiness to drive through AI-ready use cases in industrial. We think that, that market is turning. There's an inflection point and there's going to be a lot of demand for solutions that have processing, connectivity, AI readiness. And so we're seeing this early stages of demand come through for our solutions. And this is one of the topics that we'll discuss in detail at our Investor Day. So stay tuned on that one. Christopher Muse: Very helpful. And as a follow-up, in your 10-K, you talked about a large customer potentially going internal as a next several quarter risk. And obviously, this has been discussed for many years. But if it were to happen, how should we think about the moving parts to your overall QCT margins? Akash Palkhiwala: I think no real change, no new information here. I think you -- there's enough data out there for you to be able to size the risk that we've always outlined. As we've said, we have a 3-year agreement, '24, '25 and '26 phone launches, and the framework of that agreement is consistent with the prior one. Our planning assumption has been that the share will ramp down to 20% for the '26 launch, and the agreement ends after that. So no change really to anything we've said in the past, and I think that's how our planning assumption is. Anything better would be upside. Operator: That concludes our question-and-answer session. Mr. Amon, do you have anything further to add before adjourning the call? Cristiano Amon: Yes, just a few statements. Thank you. Thanks, everyone, for joining us on the call today. When we look at Qualcomm, I think we feel pretty good at our position. There are very few companies positioned in so many markets, and the transformations of many industries. We -- there's a lot of distraction out there, but we're not distracted. We're really focused on executing on our growth and diversification. And we're really looking forward, I think, to tell our story on November 19. I'd like to take a moment to thank all of our employees for incredible fiscal year -- Fiscal '24. They're truly the best part of Qualcomm. And we're going to be keep executing and focus on changing the company into a connected computing company for the age of AI. Thank you so much, and I look forward to speaking with you all next quarter. Operator: Ladies and gentlemen, this concludes today's conference call. You may now disconnect.

Operator: Ladies and gentlemen, thank you for standing by. Welcome to the Qualcomm Third Quarter Fiscal 2024 Earnings Conference Call. [Operator Instructions] As a reminder, this conference is being recorded, July 31, 2024. The playback number for today's call is (877) 660-6853, International callers, please dial (201) 612-7415. The playback reservation number is 13747430. I would now like to turn the call over to Mauricio Lopez-Hodoyan, Vice President of Investor Relations. Mr. Lopez-Hodoyan, please go ahead. Mauricio Lopez-Hodoyan: Thank you, and good afternoon, everyone. Today's call will include prepared remarks by Cristiano Amon and Akash Palkhiwala. In addition, Alex Rogers will join the question-and-answer session. You can access our earnings release and a slide presentation that accompany this call on our Investor Relations website. In addition, this call is being webcast on qualcomm.com, and a replay will be available on our website later today. During the call today, we will use non-GAAP financial measures as defined in Regulation G, and you can find the related reconciliations to GAAP on our website. We will also make forward-looking statements, including projections and estimates of future events, business or industry trends or business or financial results. Actual events or results could differ materially from those projected in our forward-looking statements. Please refer to our SEC filings, including our most recent 10-K, which contain important factors that could cause actual results to differ materially from the forward-looking statements. And now to comments from Qualcomm's President and Chief Executive Officer, Cristiano Amon. Cristiano Amon: Thank you, Mauricio, and good afternoon, everyone. Thanks for joining us today. In fiscal Q3, we delivered non-GAAP revenues of $9.4 billion and non-GAAP earnings per share of $2.33, which was above the midpoint of our guidance range. Revenues from our chipset business of $8.1 billion reflect a sequential growth in automotive and IoT and continued traction of our Snapdragon mobile platforms across leading smartphones. Our automotive and IoT revenues were the result of ongoing execution of our diversification strategy. Licensing business revenues were $1.3 billion. Now I would like to share some key highlights from the business. In automotive, we secured more than 10 new design wins with global automakers during the quarter. These include next-generation digital cockpit connectivity and/or ADAS and autonomy. Our Snapdragon Digital Chassis continue to scale across virtually all OEMs and is now a key asset for the automotive industry. As we look forward, we're focused on extending our industry-leading on-device AI solutions to the Snapdragon Digital Chassis to enable automotive-centric Gen AI use cases and applications. It's important to note that our architecture with capabilities across all domains is uniquely positioned to enable sensor data to be utilized simultaneously for ADAS autonomy workloads and user-centric Gen AI experiences in the digital cockpit. A great example is our Snapdragon Ride Flex solution, which combines digital cockpit and ADAS on a single SoC. Future drivers for automotive growth include Gen AI experiences the software-defined vehicle transition, central computing replacing microcontrollers, expansion into 2-wheelers and core to cloud services. In handsets, we are pleased that all Galaxy Z Fold6 and Flip6 are powered by the Snapdragon 803 for Galaxy, delivering extraordinary AI capabilities premium level performance and power efficiency for foldable devices. Together with Samsung and our other partners, we continue to push the boundaries of own device Gen AI on mobile devices. To that end, we're pleased with the growth and trajectory of AI use cases on smartphones. This continued expansion of AI features is a precursor to next-generation smartphones which we believe will become AI-centric with pervasive on-device AI working across applications in the cloud. Qualcomm is very well-positioned to help drive this transformation across the industry in the coming years. At our upcoming Snapdragon Summit in October, we will reveal details of our next-generation Snapdragon 8 flagship mobile platform, the first to be powered by our custom Oryon CPU. This platform, combined with new and unparalleled NPU AI capabilities is already exceeding both our and our customers' performance expectations. In compute, we're very pleased that Copilot+ PCs powered exclusively by Snapdragon X Series platforms became available for purchase on June 18. This marks the start of one of the most significant transitions in personal computing since the launch of Windows 95 and is restoring performance leadership back to the Windows ecosystem. 20 Copilot+ PCs from Microsoft, Dell, HP, Lenovo, Acer, ASUS and Samsung are now available across 20 countries and 47 retailers. It's important to highlight the unique Copilot+ and Snapdragon ex-elite dedicated retail spaces in Best Buy, Costco, Curies, Harvey Norman and many more. We are very pleased with the initial response with several models sold out at retailers and online. Our retail presence is expected to expand to more than 60 retailers across 25 countries in the coming months. We're also working closely with more than 50 global commercial customers to drive Snapdragon readiness in their respective environments. Additionally, we added the Snapdragon X Series platforms to the Qualcomm AI hub, allowing developers to easily take advantage of optimized AI models to create responsive power-efficient and compelling on-device generative AI applications for Copilot+ PCs. As we look forward to 2025, we are already working with OEMs on the next wave of Copilot+ PCs. In addition to new design wins, our X Series product road map will expand to address PCs with retail prices as low as $700 without compromising NPU performance. Longer term, we believe the benefits of Snapdragon X Series platforms make it clear that the PC ecosystem has begun the transition to an ARM-compatible architecture. As we look forward, we're forecasting that at least of PCs will be AI capable by 2027. Given our clear technology leadership and competitive road map we expect to be positioned as one of the top silicon suppliers for these devices. We also remain excited about the continued positive momentum in XR, particularly the success of Meta's Ray-Ban smart glasses. Sales are exceeding our expectations due in part to the integration of Llama into the experience. We foresee an acceleration in demand for extended and mixed reality devices as new use cases enabled by Gen AI gain scale. Snapdragon XR remains the industry platform of choice, and we are engaged with major ecosystem players, including Meta, Google, Microsoft, and others. Most recently, at the Augmented World Expo will showcase 2 of the latest XR devices, NTT's augmented reality glasses and Sony's upcoming head-mounted mixed reality device. In industrial IoT, we're pleased to report that we're now collaborating with Aramco on connectivity, AI and advanced computing solutions for industrial and enterprise use cases in Saudi Arabia. This also includes accelerating development of the industrial 4G, 5G and non-terrestrial networks ecosystem, including the first significant wide area private cellular network for IoT. As the industrial sector is transformed by AI, we expect an increase in demand for more complex on-device processing. This trend aligns well with our core capabilities, especially the computing and AI road map we have built for Auto and PC. As high-performance processing and intelligence at the edge becomes critical for the next phase of enterprise digital transformation, we see a unique opportunity to build a leadership position in this space. In the next few months, we will announce our new dedicated product road map for industrial IoT and including support for multiple operating systems, ability to run multibillion parameter AI models in a comprehensive development platform. Finally, we're very pleased to share that we recently signed a key long-term licensing agreement with Honor, a leading Chinese smartphone OEM. We continue to be pleased with the company's diversification beyond mobile, and we're particularly proud of what we have accomplished to date in automotive and PC. We will provide additional updates on our diversification strategy at our Investor Day in New York on November 19. I would now like to turn the call over to Akash. Akash Palkhiwala: Thank you, Cristiano, and good afternoon, everyone. I'll start with our third fiscal quarter earnings. We are pleased to announce strong non-GAAP results with revenue of $9.4 billion and EPS of $2.33, both of which were above the midpoint of our guidance. QTL revenues of $1.3 billion and EBT margin of 70% were in line with our expectations. QCT delivered revenues of $8.1 billion and EBITDA margin of 27%, which was at the high end of our guidance range, driven by upside in both IoT and automotive. QCT handset revenues of $5.9 billion were in line with expectations, reflecting our scale in premium Android handsets and greater than 50% year-over-year growth in revenues from Chinese OEMs. QCT IoT revenues increased 9% sequentially to $1.4 billion as we continue to see a gradual recovery in the industry environment. We delivered our fourth consecutive quarter of record QCT automotive revenues of $811 million, with sequential growth of 34%. Our revenue acceleration reflects content growth in new vehicle launches as we become the leading supplier of advanced computing and connectivity solutions to the automotive industry. Lastly, we returned $2.3 billion to stockholders during the quarter, including $1.3 billion in stock repurchases and $949 million in dividends. Before turning to guidance, I would like to outline 3 factors included in our forecast. First, Consistent with our long-term financial planning assumption of largely flat handset units, we continue to estimate global 3G/4G 5G units in calendar '24 to be flat to slightly up on a year-over-year basis. Second, our license to export products to Huawei, which was set to expire in late calendar '24 was revoked on May 7. This change will impact our revenues in both the current quarter and the first quarter of fiscal '25. Lastly, our fourth fiscal quarter includes an additional week as we align our fiscal reporting period with the calendar quarter end every 5 to 6 years. Now turning to fourth fiscal quarter guidance. We are forecasting revenues of $9.5 billion to $10.3 billion and non-GAAP EPS of $2.45 to $2.65. In QTL, we estimate revenues of $1.35 billion to $1.55 billion and EBT margins of 70% to 74%, reflecting normal seasonality for handset units. In QCT, we expect revenues of $8.1 billion to $8.7 billion and EBT margins of 27% to 29%. We expect QCT handset revenues to grow by low single-digit percentage sequentially. This forecast reflects an increase in purchases from a modem-only handset customer partially offset by seasonally lower Android revenue ahead of our new Snapdragon premium chipset launch in the first quarter of fiscal '25. We expect QCT IoT revenues will increase by low double-digit percentage sequentially, driven by growth across consumer, networking and industrial. Following our outperformance in the third quarter, we expect QCT automotive revenues to remain flat in the fourth fiscal quarter. We are on track to deliver approximately 50% year-over-year revenue growth in fiscal '24, providing confidence in our ability to execute to our long-term targets. Lastly, we expect non-GAAP operating expenses to be approximately $2.2 billion. In closing, we are pleased with our execution and financial performance in fiscal '24. Based on the midpoint of our guidance, we are on track to deliver strong non-GAAP EPS growth of approximately 20% relative to fiscal '23. Over the last quarter, industry support for our vision for on-device AI has accelerated and been validated by several key players. Beyond handsets and PCs, we expect on-device AI to drive competitive differentiation for us in industrial, networking, automotive and XR. Our leading technology and product portfolio has positioned us to continue to execute on our diversification strategy. And in the months ahead, we look forward to introducing new industry-leading products across all our end markets. Finally, as Cristiano outlined, we'll be hosting our Investor Day on November 19, where we'll provide an update on our IoT and automotive diversification strategy. This concludes our prepared remarks. Back to you, Mauricio. Mauricio Lopez-Hodoyan: Thank you, Akash. Operator, we are now ready for questions. Operator: [Operator Instructions] First question will come from the line of Matt Ramsay with TD Cowen. Matt Ramsay: I have a couple of questions, guys, really highlighting some of the diversification the company is now starting to deliver on in the revenue. I guess the first one is in the automotive business, some pretty big upside there. And maybe you could talk a little bit about like the -- you're seeing some of this revenue come through now in OEM programs that no doubt you won 2 or 3 years ago. Do you think that continues as we roll through the next several quarters? I mean what kind of momentum could we see as some of these units start to roll out from, I guess, the programs you won a long time back? And then Cristiano on the second one, people keep asking lots of questions about AI PCs. As you know, you're getting really close here to when the holiday ramp period would start for you to sell in units. So maybe you could give us your current take on your expectations of what the PC market could bring in terms of units or revenue for your company as we look forward into the next fiscal year. Cristiano Amon: Very good. Thank you, Matt. Thanks for asking the questions. Let me start with automotive. Look, we're very pleased with automotive performance. And I want to start by saying this is you continue to see signs of the pipeline translating into revenue. There are a couple of things we really like it. The first one is -- our automotive revenue is all about share of new cars being launched with our content, also is independent whether the industry is about internal combustion or EV because it's all about digital, would be the Snapdragon Digital Chassis really became a key asset for the automotive industry. And just within the quarter, we have not only the launch of 10 new models with our technology, but also we actually have 10 new design wins, which continue to add to the pipeline. So we're very excited about that. We will continue to see as new cars get launched with our technology from the pipeline, the revenue to grow. And as Akash said in the script, we're actually on track to the metric we provided for $4 billion in 2026. One side comment on your question. An upside is what Gen AI is doing in automotive. Gen AI use cases, especially using large language models for audio. It was a great user interface for were behind the wheel. We're starting to see a lot of interesting use case being developed. That upside to our model, it could be an upgrade of content in the digital cockpits that we have in. The second comment which is about PCs. I will start by saying we're very pleased is exceeding our expectations. We -- it's a new version of Windows, the Copilot+ is a new architecture with an ARM compatible. We expect that, that will ramp over a period of time. But what we have seen in the market right now with the 20 models that can launch is exceeding our internal targets. Some models, as I mentioned in my prepared remarks, had sold out. And I think we should expect that, that will continue to be a crescendo, slow and steady as the market transition. We will have new product announcements coming up at EFA, and you're going to continue to see more Copilot+ features coming from Microsoft we're very happy about that as the same thing we did with auto, we expect PC to be the next biggest driver of diversification for the company, and we'll continue to track every quarter. Operator: Our next question is from the line of Samik Chatterjee with JPMorgan. Samik Chatterjee: Congrats on the strong print here. I guess, Cristiano, if I start you off with those smartphone question here related to VI smartphones. One, can you share if you're seeing any depreciable difference in the demand for smartphones with AI features in them from consumers already. And as you look to the pipeline in terms of design wins for next year, how are you thinking about proliferation of the AI features and capabilities into more mid-tier or outside of the flagship to your phones that you work with, with your customers? And I have a follow-up. Cristiano Amon: Thank you for your question, Samik. So on smartphones, I would start by saying one thing that we really like. And I think it was reflected by some of the metrics provided by Akash he talks about in his remarks, 50% growth within China with Chinese OEMs. So I has expanded the size of the premium tier. So even in a market which it's kind of flattish to low single-digits in growth. The premium tier is actually growing faster. And we've seen that. We're seeing a larger premium tier enabled by AI. And to your specific question, we are happy with the trajectory of AI features. We used to have a few. Now we have tens of AI features. And eventually, when they get to 100, we're going to start to see a change that -- a smartphone with AI feature will become an AI smartphone. We don't have any heroic assumptions in our model, but we actually like the direction this is going that could create an interesting upside if we have an AI-driven upgrade cycle. It's still early in the process, but the use cases are becoming more interesting. I pointed to the increase of use cases in the Galaxy Flip6 and Fold6. China has a number of use cases. They're going to be launched in the next flagship. And I know you asked about bringing AI to the master. We intend to do that. The same thing we're doing with the PC which is as we expand the road map, we're not compromising on AI capabilities. We're going to see us doing that within our mobile road map. But on the premium tier, I'm actually very excited given the upcoming launch of our next Snapdragon that has our custom CPU. And you're going to see the same shift in performance that we have done in the PC ecosystem restoring the performance back to the Windows ecosystem, you're going to see doing us something similar in phones. And AI is going to be a big part of the story. Samik Chatterjee: Got it. And a quick one for Akash. Akash, the guide for September revenues, that looks pretty similar to what you were sort of soft guiding us to back sort of 90 days ago, although you now have incremental headwinds with the license to export to Huawei. How should we think about sort of where you're finding the offsets? Where is the upside to help you offset that incremental headwind? Akash Palkhiwala: Yes. Thanks, Samik. Samik, we're pretty happy with the way the quarter has played out, right? If you look at our handset business, we are growing. We are -- we're guiding that will grow low single-digit percentage on a quarter-over-quarter basis. IoT, we're guiding low double-digit growth, and we're seeing strength across industrial edge networking and consumer. And then auto coming off of an extremely strong quarter in June, we're guiding flat revenue in the September quarter. And so all of these, both IoT and automotive are incremental to our previous expectations, and you're seeing that benefit show up in our guidance. Operator: Our next question is from the line of Chris Caso with Wolfe Research. Chris Caso: I guess first question is just a clarification on the extra week in the quarter that you referred to. Can you speak about what impact you might expect it to have on both revenue and cost? And if there's any implications on that the absence of the extra week, as you go into the following quarter, which is obviously a seasonally strong quarter. Akash Palkhiwala: Yes. Sure, Chris. If you think about the 2 factors I outlined for the guidance, which is the extra week on one hand and then offset by the Huawei reduction, revenue reduction on the other side. Those 2 largely offset each other. And so the net impact on our overall guidance is pretty limited when you consider the impact of both factors. Specifically on the extra week, as you know, not all weeks are created equal as you think about the different parts of our business. So what we've factored in is incremental revenue on the QCT side, incremental OpEx on the OpEx side. And then within -- sorry, incremental revenue on the QTL side. And then within QCT, revenue forecast and the benefit that we have from a flagship phone launch that doesn't really change based on the number of weeks. So that remains largely consistent and these factors are already included in. But kind of the big message is when you step back and look at the 2 key factors I outlined, they're pretty much canceled out against each other. Chris Caso: Okay. Understood. And then moving over to QTL. The guidance for the fourth quarter is -- it's outside of the range that you have been talking about before. You haven't changed your expectation for global handset units. So can you speak to the reason for the QTL guidance and if that's sustainable going forward because typically, the first quarter is a stronger quarter for that segment. Akash Palkhiwala: Yes, sure. So the QTL guidance is relatively straightforward. If you look at June to September, we typically see very small growth on a quarter-over-quarter basis. So we factored that in. And then we have the extra week on top of it as well, which is also factored into our numbers. So that's how we got to the number we're guiding for QTL. Operator: Our next question is from the line of Stacy Rasgon with Bernstein Research. Stacy Rasgon: I want to ask the second half of Chris' question again that you didn't quite get to. The extra week, I should think about the implication for December quarter seasonality coming off of that. What are you guys thinking for December? If you could help us shape that a little bit? Akash Palkhiwala: Sure, Stacy. So as you know, well, we typically grow into the first quarter into the December quarter, and we're expecting that it's a seasonally strongest quarter of the year going forward. And as we think about the quarter, there couple of factors we consider. First is the launch of our new Android premium tier chip, which is going to be a tailwind for us. We do go back from the 16 weeks -- 14 weeks back to 13 weeks within the quarter. And then relative to last year, we'll not have Huawei product revenue going forward, which we did have last year. So net of all of this, when you look at a year-over-year basis, we expect revenue to be largely -- revenue growth to be largely consistent with the year-over-year growth we saw in December quarter last year. Stacy Rasgon: Got it. That's helpful. If you could also just give us any sort of incremental color. How much of the guide actually includes how much of the guide is PC revenue at this point for next quarter? I know you said the consumer piece sounds like it's growing in IoT, that's where it is, but how much of it actually is PCs? Akash Palkhiwala: Yes. I mean Stacy and all candor, we're a few weeks into our launch. And so it's too early to kind of have either a bullish assumption or a specific assumption on PC. We do have indications from our customers and we've tried our best to factor it in as we usually do. But as Cristiano said, to us, this is about kind of the longer-term growth opportunity and being very specific on sell-through in the short term is not really something that we have insight into. But we will, as we get to Investor Day, we're going to give a lot more disclosure on our specific plans on revenue ramp. Operator: Our next question comes from the line of Joe Moore with Morgan Stanley. Joe Moore: I wanted to come back to the 50% growth in China handset. And it sounds like you talked about growth in the premium tier there. Can you kind of give us a sense of how much of that is price versus units? And is that -- is the market expanding? And then maybe market share commentary because your numbers seem better than your competitor. Akash Palkhiwala: Yes. So if you look at the total handset market, our general assumption is that from '23 to '24, it's flat to slightly up. So the market is not growing. But within that, the premium tier, the trend has been very positive. We've gone from greater than $400 representing 21% of the market now to representing 31% of the market. And so that's very significant growth that we are benefiting from. And as you know, we are very strong at the premium tier. And as that market expands, we get to participate in that, not just from a revenue perspective, but content increase perspective as well. Operator: Our next question is from the line of Christopher Rolland with Susquehanna. Christopher Rolland: I guess in your latest Q, you talked about a bunch of new licenses coming up. I think they expire early fiscal '25, including Huawei. I guess, first of all, the 4G at Huawei would this might affect these negotiations? Do you expect everyone else to sign in those negotiations as well? And then lastly, do we think about Huawei that impact is roughly $150 million a quarter. Is that a fair number on the 4G stuff from Huawei? Alex Rogers: Chris, this is Alex. Thanks for the question. So if you look at the licensing progress basically over the last year or so, we set out to execute on a number of renewals and extensions. And we've done actually a really good job doing that. The most recent was getting on or signed up to a long-term agreement. And then, as you know, Apple extended through '27. But we also noted recently that we have 2 major Chinese OEM signed long term. Well, we haven't named them, but they are significant handset manufacturers. And then we're working through negotiations with others that we still have optimistic expectations in terms of getting them signed up. We also recently announced that we signed up tranching to a 5G license, and we're still negotiating with them. There's some litigation ongoing, but I think the important thing is to focus on the 5G license with that company and the ongoing negotiations. So Huawei is a company that we've been engaged with, just like the others in terms of trying to move negotiations forward. We expect that to continue. We don't really have any news on that just yet. Akash Palkhiwala: And then from a revenue breakdown perspective, as you know, we don't break down our QTL revenue by OEM, but a reasonable way of thinking about it is look at the scale of the market the number of units, any specific OEM contributes to the scale of the market and apply that to our overall revenue stream. Operator: Our next question is from the line of Ross Seymore with Deutsche Bank. Ross Seymore: One question, one follow-up. First one, probably more for Cristiano. I just wanted to see how you feel with your leadership position on both the modem and the apps processor side in your handset business. How do you feel about the relative market share that you'll have in the penetration at given customers? There's kind of perpetual debate about what you're doing with your lead Korean customer, year-to-year, gen-to-gen same thing with your modem only customer. So as you look forward over the next year or 2, how are you feeling about the penetration that Qualcomm can have at the major customers? Cristiano Amon: All right. Thanks for your question, Ross, loaded question. So I'm going to have to unpack one by one. I think the first part of the question, how do we think about modem technology. We feel pretty good about our modem technology. I think this is one of the core competencies of the company. We continue to be the number 1 company in the country in a number of wireless patents and extended essential patents and continue to be the company pushing for the road map. As it relates to our business with Apple, we still operate with the framework that we provided to you all. I think when we extended the chipset agreement, and we expect to be operating within that. We have no new update to provide it everything above what we said before is an upside. So we don't have that in our financial planning assumptions above what we had disclosure. When we think about the application processor, I think the conversation is a little bit more interesting because we have always said the leadership in AI performance, we always had the leadership and sustained peak and sustained performance in mobile gaming in other applications with our Adreno GPU. And now for the first time in a while, we're going to have our own custom CPU, which will be announced at the Snapdragon Summit and will be in the flagship devices launching towards the end of the year, beginning of 2025. So I will argue that our application processor advantage is accelerating. And as I said in this earnings, I think the launch of the Copilot+ PC was really a graduation for Qualcomm as it used to be perceived as a communications company isn't really a computing company. To the point that now we become the benchmark for others to follow within the PC industry. And I think that is going to be reflected in -- in the handset as well as we have our own custom CPU. As it relates to relationship with Samsung, we have executed agreements with them. It's largely consistent to what you have seen with the launch of the GS24, how is that going to continue. We're pretty happy with the relationship. And I think we both have a lot of opportunity with the AI coming into premium smartphones. Ross Seymore: I guess as my follow-up for Akash. One, in the answer to your prior question, you said that your year-over-year growth in December would be about the same as it was last December. Just a clarification. Was that just for QCT? And then I guess my bigger picture question, how should we think about gross margins in QCT going forward? Looks like you're implying them down a bit in the September quarter, but still flat year-over-year. Has the diversification process happens, automotive, PCs, et cetera? How should we think about that line in your income statement? Akash Palkhiwala: Sure, Ross. So that comment was really focused on overall company, so not just QCT, but the overall Qualcomm metrics. From a gross margin perspective, we did slightly better than we expected. We had guided in the third quarter. And what we're doing is we're guiding fourth quarter in line with the guidance we had provided for third quarter. I think as you look forward beyond fourth quarter into fiscal '25 using fourth quarter as a way to model the going-forward path is a reasonable way of thinking about it. Operator: Our next question is from the line of Tal Liani with Bank of America. Tal Liani: Can you hear me? Cristiano Amon: Yes, we can. Tal Liani: Okay. Perfect. Sorry. So I need help to define your addressable market in compute, meaning. Is it mostly about consumer laptops, enterprise? How do you envision your addressable market in the compute segment? And the second thing is you talked a lot about AI, AI inclusion in handsets. When we talk to carriers, they seem to be far away from it in the sense that they can't find the applications yet. What do you -- what do you think is going to drive the deployment? What kind of applications and what's the timing of applications that will drive the deployment of AI in handsets? Cristiano Amon: Tal, this is Cristiano. Thank you for your question. Let me take the first one. You should think about addressable market the follow way. First of all, it's Windows 11, addressable market. We're very focused right now on laptops, whether it's commercial laptops for enterprise, consumer laptops. We're ranging price points, I think, especially as we talked in the prepared remarks, extending the road map from $700 and above. That's -- and what is defined as AI PC, a metric that I can provide to you. And I think there has been a number of OEMs indicating their respective views, but we forecast about 50% of our computers sold in 2027 will be AI PCs. That's one way to think about it. And we continue to basically see the transition of as upgrades are happening to Windows 11 and Copilot+ PCs, an opportunity for us to participate with a highly differentiated solution. I think your second question... Akash Palkhiwala: It was on AI applications. Cristiano Amon: It was about AI applications for devices. So here's how you should think about it. AI is going to do on phones, whether you're going to text, whether you're going to talk, whether you're going to touch, it's going to be a very important part of the human computer interface. And this is going to start to change a lot of the user experience on apps. It's less of a carrier conversation. It's really more of an application conversation. And those are going to start to change a lot of the use case of existing apps or you're going to start to see as we see the development of new agents that become more relevant. For example, if you are like me, a user of WhatsApp, you're going to see the ability within WhatsApp for you to search with Llama for you to do different things with their model. And eventually, a lot of the models are going to have multiple functionality across multiple apps. The way to measure this is the number of use cases. And we're -- as I said before, we're actually very happy with the trajectory. I'd like to compare what happened with the smartphone. When the smartphone -- first, there were like 10 apps and then became 100 apps and became 1,000 of apps, became hundreds of thousands of apps and then it became very clear what was happening. I think we look at a little bit the same way. We're in the beginning, but we like the number of use cases increasing, and that's going to drive a lot more AI NPU performance in the silicon and hopefully continue to expand the premium and high tier. Operator: Our last question is from Tom O'Malley with Barclays. Tom O'Malley: I have one for Cristiano and one for Akash. Just very recently here, obviously, in the quarter, there's a huge step-up in the auto portfolio, and I think you guys did a good job of kind of describing what drove that. But you've also, in your deck and kind of in your commentary talking more about AI PC being a driver. Cristiano, if you look at kind of the next 12 months, you hosted an Auto Analyst Day and you kind of talked about the opportunity being back-end loaded, and I think the end date was kind of the late 2020s. But if you look at the next 12 months, what opportunity do you think is more exciting to you the automotive side or the IoT in terms of revenue growth? Obviously, the buckets are different sizes, but just breaking those 2 out as to what can drive some growth there. And then on the Akash side, if you look into Q4, you obviously have an extra week there, but you are seeing OpEx step down. Could you just walk through the moving parts that I would expect it to be up a little bit just given the extra week? Cristiano Amon: Thank you, Tom. Actually, I appreciate the question. I really like the question to give me an opportunity to explain this. You should think of Qualcomm -- we're not just trying to build one big business of differentiation. Actually, we're building a number of business -- I'm sorry, of diversification. We're really focused on this. And when we talk about Auto Investor Day, that was actually in September 2022, we kind of outline how that is going to be turning into a big platform for Qualcomm and building into the financials. And then hopefully, you can see now, especially with this quarter, that's materializing. And that will continue. That's not going away. We expect -- given the size of our pipeline, we talk about $4 billion in '26. We talk about $9 billion towards the end of the decade. We're on track to do that. But the second one is PCs. And as we get -- it's early. As I said, we're very happy. It's exceeding our expectations. Some models sold out. We just launched. I think when we get to the Investor Day, we probably will feel comfortable putting a metric out there of what that's going to represent and how that's going to grow over time when we think about the total contribution to Qualcomm. That's one they're very excited. But we don't stop there. The next one, and I encourage you to so what we're going to do next quarter, I think AI and computing, it's driving the industrial road map towards Qualcomm. So we we're completely redesigning our industrial road map, and we're going to unveil that road map in the coming months. So we think about this as -- there are many markets that can benefit from technology. We're super focused on growth and diversification and it's about a number of bets, not just one bet. Akash Palkhiwala: And Tom, on your second question on OpEx, we had some non-labor material-related spent and tape-out related spend in the third quarter, which is why third quarter OpEx was higher and it goes down into the fourth quarter despite the extra week. And so it's just timing of non-labor spend that drove it. But fundamentally, no change in kind of the way we are managing OpEx. We're very committed to operating discipline and hiring, even when we do it, it is very focused on specific new skills that are required for diversification. So you won't see a difference in the way we are managing the OpEx for the company. Operator: That concludes today's question-and-answer session. Mr. Amon you have anything further to add before adjourning the call? Cristiano Amon: No, I just want to just quickly thank all of our partners. Our suppliers, our employees for a great job on PC execution. I think we're very proud of what we accomplished. We will continue to drive AI across each one of our businesses. We feel we have a very unique position in the ability to run AI at the edge. We're very happy with the automotive traction, and we're actually looking forward to the next generation of products launching coming months, as I said, hopefully creating a new vector for growth of the company in the future in industrial IoT. Thank you very much. Operator: Ladies and gentlemen, this concludes today's conference call. You may now disconnect.

Operator: Ladies and gentlemen, thank you for standing by. Welcome to the Qualcomm Second Quarter Fiscal 2024 Earnings Conference Call. [Operator Instructions] As a reminder, this conference is being recorded May 1, 2024. The playback number for today's call is (877) 660-6853, International callers, please dial (201) 612-7415. The playback reservation number is 13745532. I would now like to turn the call over to Mauricio Lopez-Hodoyan, Vice President of Investor Relations. Mr. Lopez-Hodoyan, please go ahead. Mauricio Lopez-Hodoyan: Thank you, and good afternoon, everyone. Today's call will include prepared remarks by Cristiano Amon and Akash Palkhiwala, in addition, Alex Rogers will join the question-and-answer session. You can access our earnings release and a slide presentation that accompany this call on our Investor Relations website. In addition, this call is being webcast on qualcomm.com, and a replay will be available on our website later today. During the call today, we will use non-GAAP financial measures as defined in Regulation G, and you can find the related reconciliations to GAAP on our website. We will also make forward-looking statements, including projections and estimates of future events, business or industry trends or business or financial results. Actual events or results could differ materially from those projected in our forward-looking statements. Please refer to our SEC filings, including our most recent 10-K, which contain important factors that could cause actual results to differ materially from the forward-looking statements. And now to comments from Qualcomm's President and Chief Executive Officer, Cristiano Amon. Cristiano Amon: Thank you, Mauricio, and good afternoon, everyone. Thanks for joining us today. In fiscal Q2, we delivered non-GAAP revenues of $9.4 billion. Non-GAAP earnings per share of $2.44, was above the high end of our guidance. Revenues from our chipset business of $8 billion, reflect strong premium tier demand for Android smartphones and continued momentum in automotive. Licensing business revenues were $1.3 billion. During the quarter, we also made significant progress on our leading technology and product road maps as well as executing on our growth and diversification opportunities. Let me share some key highlights from the business. As we drive intelligent computing everywhere, we're enabling the ecosystem to develop and commercialize on-device GenAI applications across smartphones next-generation PCs, XR devices, vehicles, industrial edge, robotics, networking and more. To that end, we recently launched the Qualcomm AI Hub, a gateway for developers to enable at scale commercialization of on-device AI applications. It features a library of approximately 100 pre-optimized AI models for devices powered by Snapdragon and Qualcomm platforms, delivering 4x faster inferencing versus nonoptimized models. As AI expands rapidly from the cloud to devices, we are extremely well positioned to capitalize on this growth opportunity, given our leadership position at the edge across technologies, including on-device AI. In automotive, the Snapdragon Digital Chassis is the industry's leading technology solution, and we're pleased to announce that our design win pipeline has increased to approximately $45 billion. We're growing faster than the addressable market and remain on track to achieve more than $4 billion of automotive revenues in fiscal '26. In premium and high-tier smartphones, our Snapdragon mobile platforms continues to set the bar for performance and on-device GenAI capabilities. Recently launched flagship Android devices powered by Snapdragon 8 Gen 3 are seeing strong demand globally, especially in China. We are extending the most sought after 8 Series capabilities, including on-device AI to a broader range of flagship and high-tier smartphones with the new Snapdragon 8S Gen 3 and Snapdragon 7 Plus Gen 3 mobile platforms launching in the second half of 2024. In cellular modems, we have again established a new industry benchmark with the Snapdragon X80, the world's most advanced 5G Modem-RF System. The X80 supports 5G advanced, the next era of 5G in addition to direct to mobile 3GPP compliant satellite communications and leading Release 18 features. Additionally, our networking solutions continue to gain traction as the WiFi 7 transition expands to the enterprise. We are excited about the upcoming launches of next-generation Windows AI PCs powered by Snapdragon. The Snapdragon X Elite is the leader in performance on device AI and power efficiency for the Windows ecosystem and is optimally positioned to lead the transition to true AI PCs. I'm also pleased to share that we recently expanded our compute portfolio with the Snapdragon X Plus platform. which is designed to address a broader range of device tiers. In XR, we're seeing good momentum in augmented and virtual reality. In particular, the Ray-Ban Meta glasses powered by our Snapdragon AR1 Gen 1 platform continue to gain traction with consumers. Additionally, the Meta Horizon OS running on Snapdragon is now open and available to third-party hardware makers. This is a significant milestone as they will expand the device ecosystem. Finally, at the Embedded World Conference in Germany, we announced 2 new solutions for the industrial IoT ecosystem. The Qualcomm QCC730 micro-power WiFi SoC in the Qualcomm RB3 Gen 2 platform. The QCC730 is specifically designed for IoT connectivity in battery power, industrial, commercial and consumer applications, featuring 88% lower power consumption than previous generations. In the RB3 Gen 2 platform is a complete hardware and software solution designed for a wide range of products, including various types of robots, drones, industrial handheld devices and more. The RB3 is supported by the recently announced AI hub and also feature support for Qualcomm Linux, a comprehensive package of operating system, software and developer tools for our IoT platforms. In summary, we're very pleased with the continued progress on our growth and diversification strategy. Beyond handsets, we have established leadership positions across automotive, XR and networking and we are well positioned to do the same in PCs, industrial and edge AI. We're optimistic about the opportunities ahead for the company and will continue to execute on our plan to deliver long-term growth and value for shareholders. I would now like to turn the call over to Akash. Akash Palkhiwala: Thank you, Cristiano, and good afternoon, everyone. I'll start with our second fiscal quarter earnings. We are pleased to announce another quarter of strong non-GAAP results with revenues of $9.4 billion and EPS of $2.44, which was above the high end of our guidance range. QTL revenues of $1.3 billion and EBT margin of 71%, were in line with our expectations. . QCT delivered revenues of $8 billion and EBT margin of 29%, which was at the high end of our guidance range, reflecting strength across handset and automotive. QCT handset revenues of $6.2 billion included the benefit of flagship Android smartphone launches powered by our Snapdragon Gen 3 mobile platform. QCT IoT revenues increased 9% sequentially to $1.2 billion, which was slightly better than our expectations. We had another record quarter in QCT Automotive, with revenues increasing by 35% on a year-over-year basis, reflecting increased content in new vehicle launches with our Snapdragon Digital Chassis products. We returned $1.6 billion to stockholders during the quarter, including $731 million in stock repurchases and $895 million in dividends. During the quarter, we also announced an increase in our quarterly dividends from $0.80 to $0.85 per share, consistent with our commitment to dividend growth. Lastly, the sale of the restraint control system business successfully completes the divestitures of the non-Arriver businesses related to our acquisition of Veoneer. We are very pleased with this acquisition, and the Arriver team is executing on the development of our computer vision and drive policy ADAS software stack, targeting vehicle launches starting in late '25. Now turning to guidance. Our forecast for global 3G, 4G, 5G handset units remains unchanged for calendar '24. We estimate that global handset units will be flat to slightly up on a year-over-year basis. This includes expected growth of high single digit to low double-digit percentage in 5G handsets. For the third fiscal quarter, we are forecasting revenues of $8.8 billion to $9.6 billion, and non-GAAP EPS of $2.15 to $2.35. In QTL, we estimate revenues of $1.2 billion to $1.4 billion and EBT margins of 69% to 73%, reflecting normal seasonality for handset units. In QCT, we expect revenues of $7.5 billion to $8.1 billion and EBT margins of 25% to 27%. Consistent with our previous comments, we anticipate QCT handset revenues to decline by mid-single-digit percentage sequentially, reflecting a seasonal trend due to the absence of flagship handset launches in the quarter. We expect QCT IoT revenues to grow sequentially by low to mid-single-digit percentage as we continue to see a gradual recovery from the macro factors impacting the industry. Following a record performance in the second fiscal quarter, we expect QCT Automotive revenues to grow by low double-digit percentage quarter-over-quarter as the increase in our design win pipeline continues to materialize into revenue. Lastly, we expect non-GAAP operating expenses to be approximately $2.2 billion. In closing, we are pleased with our execution and financial performance for the first half of the fiscal year. Specifically, we saw year-over-year handset revenues from our Chinese OEM increased by greater than 40% in the first half of fiscal '24, reflecting our strong competitive positioning and recovery of demand. Looking forward, our technology leadership positions us to continue to execute on our diversification strategy across IoT and automotive. In IoT, we look forward to normalization and demand across our customer base exiting fiscal '24. In addition, we're excited about the launch of our next-generation AI PCs powered by our Snapdragon X Elite and X Plus platforms from all leading PC OEMs starting in mid-'24. These PCs will deliver industry-leading processor performance, advanced on-device GenAI features and extended battery life. In automotive, we are pleased that our design win pipeline has increased from $30 billion in September '22 and to approximately $45 billion, providing confidence in executing to our long-term revenue targets. This concludes our prepared remarks. Back to you, Mauricio. Mauricio Lopez-Hodoyan: Thank you, Akash. Operator, we are now ready for questions. Operator: [Operator Instructions] One moment please for the first question from Matt Ramsay with Cowen. Matthew Ramsay: Cristiano, I wanted to ask you a question about sort of handset, modem and RF architecture as we move into sort of the era of AI in handsets and mobile devices, where I think it's likely that the compute system and the memory system of the phone take up more battery life potentially as we try to compute some of these applications for AI inference on the device. And I wonder if that how that changes your potential opportunity for your modem business integrated with your RF business. There was a -- one of your competitors talked about socket lost last night, and I think it went to you guys. I wonder if you might comment on how or why. But I think it's a bigger picture question as the compute subsystem of the phone puts pressure on the modem and RF does that give you opportunities for further integration. Cristiano Amon: Well, let me unpack this. I think as far as modern-RF, we believe we have a very competitive RF front end portfolio, and we have been really delivering unique features across the modem RF, especially on power. I -- as a general comment, not related to AI, but as general comment. I think as you look at RF AI running on device and AI running on the cloud modem becomes more important, especially things like latency of response or hybrid AI models has a new importance of real-time connectivity. So we're starting to see more and more the modem becoming more important. The real advantage for Qualcomm is not only on the modem-RF, even though I think we're very proud of having the leadership position there is the fact that we actually created the ability to run AI pervasive on devices without compromising battery life. And that has been reflected within our NPU performance both on phones as well as PCs and cars. And I think that's the key, I think, technology leadership position for AI, which is the best possible performance per watt. Operator: Our next question is from the line of Samik Chatterjee with JPMorgan. Samik Chatterjee: 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. Also, it's always been sort of a leader in adopting new technology and it seems like the AI phones are doing well. So how much of the recent strength do you attribute to AI-led upgrade cycle versus a normal market rebound? And I have a quick follow-up after that. Cristiano Amon: Thank you, Samik. So what moves to market for us premium and high tier. And I think what we're seeing in the China market is that the mix is improving. As the market has stabilized, when and 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 you -- 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 with the consumer. So it's a positive trend that we like. The other color I'd like to add is, we have not seen signs of weakness in the Android premium market in China, especially with our OEMs. So a lot of the strength is really coming from premium devices from Xiaomi, Honor, Oppo, OnePlus, Vivo. And I think Huawei entering that market actually increased the overall TAM of premium Android. Akash Palkhiwala: And maybe, Samik, to add a couple of quick data points on top. As we mentioned in our prepared remarks, first half of fiscal '24, our revenue from Chinese OEMs and grew by greater than 40% year-over-year, and that is also reflected in our third quarter guidance. So it's a trend that's holding up as we look forward. And then from a road map perspective, as you look into our new premium tier launches coming up later this year, in addition to GenAI, we'll have our Oryon custom CPU core's coming in as well. So we're very excited about the road map. Samik Chatterjee: Got it. And for my follow-up, maybe Akash, this is more for you. I mean when you talked about the seasonality into the June quarter, handset seasonality is sort of the typical seasonality that you see and the aggregate results or revenue being better than seasonal is really being driven by autos here with the low double rate growth that you talked about. Clearly, very strong sort of pipeline of wins, but how sustainable is this sort of pace of improvement quarter-over-quarter in terms of revenue. Just want to get a sense if this is when we start to see more sort of inflection in auto revenues given the strong pipeline you have and that drives better seasonal results going forward. even into the September quarter? Akash Palkhiwala: Yes. From an automotive perspective, as you know, we've given out a target of greater than $4 billion revenue in fiscal '26. And what you're seeing is really our design win pipeline materializing into revenue on our way to that number. And so that's the framework as to how I think about it. Two key kind of data points on our design win pipeline. So as you'll recall, the last number we had given was $30 billion in September -- about 18 months ago, September '22. The updated number that we just provided is $45 billion of design wins. So obviously, a very significant increase. And of note, within that, approximately 1/3 is driven by ADAS. So we're seeing tremendous success now in ADAS and that's adding to our design win pipeline. Operator: Our next question is from Mike Walkley with Canaccord Genuity. T. Michael Walkley: And maybe just building off the 40% increase in shipments to the Chinese OEMs holding through the June quarter guidance. just based on your expanding on device AI portfolio, is this level of demand sustainable into the back half of the calendar year? Or asked another way, do you expect the smartphone market to have kind of normal seasonal trends after the June quarter dip? Akash Palkhiwala: Yes. So as you'll recall, Mike, we had said earlier that we expect the third quarter to be the low quarter from a financial perspective, just given the seasonality of our business. That still holds true. So as we go from third to fourth quarter and then into fiscal first quarter, which is the December quarter, we expect growth as new launches of phones happen across all major OEMs. And as I said earlier, we're going to have the launch of our Snapdragon 8 Gen 4 chip as well, and we're extremely excited about what that chip does and the launches that will come through that chip later in the year. Specifically, as you think about fourth quarter, we expect the EPS growth from third to fourth quarter to be consistent with fiscal '23, and then we'll grow beyond that into the December quarter. T. Michael Walkley: Great. That's very helpful. And maybe just for a quick follow-up on the IoT business. It sounds like March is the bottom, as you laid out. Can you maybe update us on the 3 segments, just what you're seeing in terms of the inventory correction? Akash Palkhiwala: Yes. So Mike, we had talked about December fiscal first quarter as the bottom quarter. We grew from that into March by 9% sequential growth. which was better than our expectations. And then now we're guiding low to mid-single-digit growth into the September quarter. So it's -- as we had outlined at the beginning of the year, we would see improvement through the year, and that trend is holding, and we expect it to hold in the fourth fiscal quarter as well. In terms of different parts within IoT, consumer is more aligned with phones. So we've seen that recover faster. And then the industrial networking is consistent with what our peers are seeing within those industries and the recovery time line is aligned with that. If you kind of step back and think about our business there, we're pretty excited about new products that are coming out. So Cristiano talked about the PC set of products coming out later this year, device launch coming out later this year. But then in addition to that, we also have new products in industrial and WiFi 7 that will drive growth into this IoT segment as well. Operator: Our next question comes from Stacy Rasgon with Bernstein Research. Stacy Rasgon: For my first question, just on the PC outlook, it does sound like devices are going to be available for purchase in the back half. So like how much PC is actually in the Q3 outlook? And what should we expect for the PC in the numbers like into the second half and beyond, like when does PC actually get big enough for us to see it? Cristiano Amon: Stacy, thanks for the question. We have a lot of product momentum right now and especially with all the launches, I would encourage everybody to go watch the Microsoft Build event, especially or what is happening with on device AI. There's a lot of product momentum and launches. As those devices started ramp up in volume. And since a lot of them are going to be back to school, it's going to be more of a fiscal '25 event in terms of being material within the IoT segment. Anything you'd like to add, Akash? Akash Palkhiwala: Just maybe in our June quarter guidance, there isn't material PC volume forecasted in our numbers. Cristiano Amon: One thing we're going to do -- sorry, just real quick. One thing we're going to do, like we provide an update on auto this quarter. We're going to provide a more detailed update next quarter on PC, especially as we're going to have those devices are launched. Stacy Rasgon: Got it. That's very helpful. For my follow-up, I wanted to ask about Huawei revenues. So in the Q, it says that you're not expecting any further product revenue from Huawei beyond the end of the calendar year. So I know it's only low end 4G that's left, but like how big is that now in the numbers in the end? How much of that will be going away into the calendar year? Akash Palkhiwala: Yes. So Stacy, if you look at Huawei, as you've seen, they have launched multiple tiers of 5G devices already with their own chips. And clearly, we don't participate in those devices. What we are shipping at this point is the license that we have is for 4G chips. And as you rightly pointed out, it's at the low end of the spectrum. What we outlined in the Q is since the devices will eventually transition all to 5G, we don't expect any revenue from Huawei product business in '25. Operator: Our next question comes from the line of Chris Caso with Wolfe Research. Christopher Caso: Question is on QTL. And it sounds like that you're starting to see some degree of improvement particularly among the China OEMs in the QCT business. But that has thus far hasn't translated to the QTL business. Can you talk about sort of the lag between the recovery in those segments and what your level of optimism or not is -- for sort of breaking out of this range in the QTL business. . Akash Palkhiwala: Yes. So as you know, well, QTL business is really driven by the size of the market. And there is a cap on the total ASPs, up to which the royalty rate -- the percent royalty rate applies. So as we have seen the benefit on the QCT side is a lot driven by more units at the premium tier, especially above $400 in price. It does not -- it's not something that benefits the QTL business directly, the way the royalty program is structured. So that's the disconnect between the 2. Christopher Caso: Got it. That's helpful. As a follow-up, with regard to the AI handsets, a lot of the questions that we receive on this is, sort of why? And what are the applications, what are the reasons for a consumer to upgrade their handsets to AI. Cristiano, you talked about the developer hub that you're running, perhaps that gives you some insight into what the developers are doing, what's going on in the pipeline that will drive these AI handset sales? Cristiano Amon: Look, it's a great question. And I want to step back and say, in general, I think AI is going to benefit all the devices. I think AI when extends to running on device besides the benefit of working alongside the cloud. They have completely new use cases, privacy, security, latency, costs, personalization, et cetera. Here's how you should look into this. in the same way that when the smartphone started, you have a handful of apps that eventually grew to thousands and hundreds of thousands of apps, and that was really the user experience. I think we're in the very early stage. And you're starting to see some of those use cases and you have exactly that moment. Some of the phones have 10 apps and they're growing. And one of the reasons we have the AI hub because this is a new, I think, moment for the industry. it works a little bit different. It's different than how you think about the traditional app store. You have many models, many in the open source models, They can run on a device and they can be attached or built into any application. So I think we're starting to see is a lot of developer interest. As we said in the prepared remarks, we have over 100 different models, from -- models from OpenAI to Llama 3 and many, they're quantize and optimized to the NPU when they are optimized using the tool, they run 4x faster than the model without optimization. And those models and those use cases started to be implemented in apps, whether it's an image or associated with a camera, it's associated with language. So we're in the beginning of that transition. We really like what we see because it's really creating a reason for people to buy a new device, it's going to be the same on PC. It's going to be the same as they come to cars as well and in industrial. So it's an exciting tailwind, I think, for our strategy of actually driving computing and connectivity at the edge. Operator: Our next question is from the line of Timothy Arcuri with UBS. Timothy Arcuri: I wanted to ask about the mix of the business. And as you said, Akash, China is holding up quite well. It's up 40% year-over-year in the fiscal first half. But it's within shouting distance of kind of where it peaked on a quarterly basis back in fiscal '22 when they were obviously over building at that time. So can you talk a little bit about what's happening there? How much of the year-over-year growth is units versus pricing? Akash Palkhiwala: Yes. Thanks, Tim. It's -- as we said earlier, it's really the biggest benefit we are seeing is the mix being stronger. And as you know, we are competitive positioning is stronger at the higher tiers, and so that's helping us. The second is, when you look at generation over generation, the chips, especially at the premium tier are getting more capable as more -- not just GenAI, but other additional capabilities are being integrated into the chips and the strong competition between the OEMs. So there's demand for those capabilities. So we're seeing that come through as well. And it's really a combination of those things that is driving strength versus a unit upside. The unit size we are seeing is very much aligned with the market forecast, which says flat market versus last year. Timothy Arcuri: Got it. Okay. And then just as a quick follow-up. How sustainable are these RF wins that you've obviously gotten for this upcoming phone? Should we consider that as kind of part of the modem. So when the modem goes away, the RF wins also go away? Akash Palkhiwala: So of course, we'll not talk about any specific customer here, but I think I'd go back to the very first question that Cristiano answered. The key thing for us is the modem-RF architecture and how when we develop the end-to-end together, it creates an advantage for us in terms of performance, in terms of time to market for our customers as well. And that's a sustainable advantage that will stay going forward for us. Operator: Our next question is from the line of Tal Liani with Bank of America. Tal Liani: When I look at your numbers, you bid the numbers mainly on handsets. It's both for QTL and QCT, of course. And I'm trying to understand how much of the outperformance is just China versus the rest of the world. So when you look at the rest of the world, what were the trends when it comes to your QCT shipments and QTL? And then within China, where are we in the recovery cycle, right? There is ongoing growth, but there is -- what we are seeing now in the first half of the year is mainly recovery from last year. So are you now at normal levels? And from here, it should trend normally based on demand? Or are we still recovering from the low of last year? Akash Palkhiwala: Yes. So a couple of comments. First is on the overall picture across OEMs. So China saw a very significant benefit, but we had strength across other parts of the Android ecosystem as well. And so it's not something that was isolated to 1 or 2 OEMs. It was a broad trend that is just represented of the overall market and the mix shift that we discussed in the overall market. On your second question, as we think about our strength in handsets, we are very optimistic that as we go forward, this is a trend that holds forward. This is not about inventory. As I said earlier, the units are actually aligned with the size of the market and the trends are really driven by mix and increased content. Tal Liani: Got it. Okay. Second question, just on the AI. I don't know if it's possible to quantify at all. But if you look at the non-AI QCT contribution versus an AI QCT contribution, when AI is included in the mix, is there a number where it comes to the increase in content per phone. Does it mean that the semiconductor there is going to be more expensive, higher price for you? So even if the market doesn't grow, can you grow just by the market shifting to AI? That's theoretical, but I'm trying to isolate the impact of AI. Cristiano Amon: A lot of people who [indiscernible]. But let me try to give you maybe an answer to help explain this. In first step, a lot of the increased content in ASP on QCT chipsets, including premium has been driven by the compute part. And it's more performance on the compute, CPU, GPU, the NPU. Second, the NPU has been the largest area of silicon growth in those chips. So generation over generation, one of the largest improvements has been the NPU for AI, and AI is driving a lot of silicon content in those devices because the expected computational capability to run those models. The benefit financially I think it's going to come probably in the way that you're starting to see the beginning of it right now, which improves the mix. Users want to buy a more capable phone that can run AI. So it drives the market towards a richer mix of higher improvement here, share gains and then an upgrade cycle as people want to buy a new phone. That's how we should think about it in phones. PC is a little different. As we enter the PC, I think the AI and the ability to run on device AI better than any of our peers on a laptop, I think it's going to be a tailwind to the capability. Car, it builds more value on top of the platforms that were -- that are being commercialized and design win with the increase of the pipeline, especially in many of those platforms, we can do a softer upgrade to be able to run GenAI on those vehicles. So I think that's how this is going to materialize for Qualcomm. The last part of my answer is industrial, which is a new area that we're trying to upgrade to higher performance from microcontrollers to high-performance computing connectivity. I think Edge AI is proving to be a key attribute of this market going forward. Tal Liani: Our final question is from the line of C.J. Muse with Cantor Fitzgerald. Christopher Muse: I guess I was hoping you could speak to QCT gross margins. They impressively held flat despite revenues down 5%. And I guess the real question here is not just how you did it this quarter, but how should we be thinking about as you bring on non-handset revenues to the model, what incremental gross margins might look like for QCT, particularly as we think about the AI PC and IoT as well as auto, given that growing backlog. Akash Palkhiwala: Thanks C.J., yes, I think the first couple of quarters of this fiscal year, we've seen -- definitely seen strength in margin, and it's driven by the return mix that we've discussed on the call. What we're guiding for the third quarter is a sequential decline, again, reflecting kind of lack of flagship launches in the quarter. No change to what we've said on gross margins before. We've given a range, and we've been operating at the high end of the range, but no kind of fundamentally change on the framework of it going forward. Christopher Muse: Great. As a quick follow-up, on the auto side, you talked about the higher reiterated the $4 billion plus. Should we be thinking about kind of amortizing that 26-plus percent growth equally into fiscal '25-'26? Or might that come in sooner with faster growth. Akash Palkhiwala: Yes. So I mean, obviously, we are not kind of guiding quarters that far out at this point. But if you kind of take the current run rate and extend it forward towards the $4 billion target, kind of generally slope x -- slope growth increase between the 2 data points is a reasonable way of thinking about it. Operator: That concludes today's question-and-answer session. Mr. Amon, do you have anything further to add before adjourning the call? Cristiano Amon: Yes. Just a few questions, I think we're incredibly pleased with our technology and product road map evolution. And we're really looking forward to our next-generation PCs with Snapdragon as I said during the call, I encourage everyone to look at the announcement from Microsoft Build and how that's going to drive much more AI into the Qualcomm platform. And I was just going to leave you all with a thought. One great things about the execution of the company. Every time we enter a new market or we set ourselves to go to a new market, and we end up building a very strong position. We went from mobile to RF front-end, we became #1. Same thing when we went to WiFi. Automotive, it was something that we had ambition to build as part of the diversification. I think we're quickly becoming the industry partner of choice. We are -- believe that there is a long-term opportunity with virtual reality, augmented reality. And now we have the absolute majority of the designs. And with PC, we clearly build the leading platform, and we have the product momentum that we hopefully will translate in the financial in the coming year. So I just wanted to state that we feel good about the company technology capabilities and how we're driving growth and diversification for shareholders. Thank you very much for your support. Thank you to all our employees, and I'm looking forward to talking to you in the next call. Operator: Ladies and gentlemen, this concludes today's conference call. You may now disconnect.

Operator: Ladies and gentlemen, thank you for standing by. Welcome to the Qualcomm First Quarter Fiscal Year 2024 Earnings Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session. [Operator Instructions] As a reminder, this conference is being recorded, January 31, 2024. Playback number for today's call is 877-660-6853. International callers, please dial 201-612-7415. The playback reservation number is 13743224. I would now like to turn the call over to Mauricio Lopez-Hodoyan, Vice President of Investor Relations. Mauricio Lopez-Hodoyan, please go ahead. Mauricio Lopez-Hodoyan: Thank you, and good afternoon, everyone. Today's call will include prepared remarks by Christian Amon and Akash Palkhiwala. In addition, Alex Rogers will join the question-and-answer session. You can access our earnings release and a slide presentation that have [Technical Difficulty] on our Investor Relations website. In addition, this call is being webcast on qualcomm.com, and a replay will be available on our website later today. During the call today, we will use non-GAAP financial measures as defined in Regulation G, and you can find the related reconciliations to GAAP on our website. We will also make forward-looking statements, including projections and estimates of future events, business or industry trends or business or financial results. Actual events or results could differ materially from those projected in our forward-looking statements. Please refer to our SEC filings, including our most recent 10-K, which contain important factors that cause actual results to differ materially from the forward-looking statements. And now to comments from Qualcomm's President and Chief Executive Officer, Cristiano Amon. Cristiano Amon: Thank you, Mauricio, and good afternoon, everyone. Thanks for joining us today. In fiscal Q1, we delivered non-GAAP revenues of $9.9 billion and non-GAAP earnings per share of $2.75 above the high end of our guidance. Revenues from our chipset business of $8.4 billion reflect healthy Android demand and continued strong momentum in automotive. Licensing business revenues were $1.5 billion. We're pleased with these results, and I will now share some key highlights from the business. In handsets, the Snapdragon 8 Gen 3 mobile platform is setting a new standard for on-device gen AI experiences for premium smartphones and powers all through flagship Android devices launched and launching this fiscal year. Notably, the Snapdragon 8 Gen 3 mobile platform for Galaxy is featured in the recently announced Samsung Galaxy S24 Ultra globally, in addition to the GalaxS24 and S24 Plus in multiple regions. The GalaxS24-Series includes on-device AI features such as live translate, interpreter, chat assist, nitography and more. This marks the beginning of how gen AI will evolve the overall smartphone experience and highlights the significant opportunity for Snapdragon platforms. We're also announcing that we extended a multiyear agreement with Samsung relating to Snapdragon platforms for flagship Galaxy smartphone launches starting in 2024. The extended agreement demonstrates the value of Snapdragon 8, our technology leadership and our successful long-term strategic partnership with Samsung. In the quarter, we also announced the Snapdragon 7 Gen 3 mobile platform, which brings leading gen AI capabilities to high-tier Android smartphones and is a category leader in both experiences and performance. In our QTL business, we're pleased to share that we recently extended several key license agreements. First, Apple exercised its unilateral option to extend its global patent license agreement for an additional two years, taking the existing agreement through to March 2027; second, we have renewed long-term agreements with two significant Chinese smartphone OEMs. In addition, we continue to negotiate new agreements or renewals with other key licensees and OEMs, including some whose current agreements are set to expire in early fiscal 2025. Automotive continues to be an important pillar of our growth and diversification strategy. Notably, 75 new models launched commercially in 2023 were for technologies, highlighting Qualcomm's grown scale in automotive and execution of our design wins. Earlier this month at CES, we announced our collaboration with Bosch to have our Snapdragon Ride Flex SoC power their new central vehicle computer. As a reminder, Snapdragon Ride Flex enables the fusion of infotainment in ADAS functionalities on a single SoC enabling automakers to realize a unified central-compute and software-defined vehicle architecture that scales across tiers. Additionally, we demonstrated digital cockpits connected services and advanced driver systems enabled by gen AI models running locally on the Snapdragon platform. This new capabilities can be enabled on a number of existing designs via a softer upgrade. This represents significant new opportunities for Qualcomm and our partners. In PCs, we're driving towards the launch of Snapdragon X Elite in mid-2024 and are pleased that our design win traction continues to increase since the platform was announced last October. We expect Snapdragon X Elite to set the industry benchmark for on-device gen AI and copilot experiences in addition to leading performance and battery life for next-generation Windows PCs. We recently expanded our mixed reality solutions with the announcement of the Snapdragon XR2+ Gen 2. Our new platform supports 4.3k per eye resolution and 90 frames per second in 12 or more concurrent cameras to deliver crisp immersive mixed reality and virtual reality experiences. We are proud to partner with Samsung and Google to provide leading XR experiences to Galaxy users by utilizing Snapdragon XR2+ Gen 2. In edge networking, we announced the Snapdragon X35 5G Modern-RF system, the world's first commercial release 17 5G RedCap solution. The Snapdragon X35 brings a new class of purpose-built 5G for Internet of Things devices. Devices powered by Snapdragon X35 are expected to launch by the first half of 2024. We continue to believe that industrial edge devices with connectivity, high-performance computing and on device AI will become one of our largest addressable opportunities fueled by the secular trends of digital transformation. As such, we're accelerating our investments in solutions, ecosystem and broad channel enablement to position ourselves for growth while we navigate the industry-wide inventory draw down. One key area of focus is to enable our customers to unlock the potential of gen AI at the enterprise using our chipset solutions. As an example, Zebra Technologies and Toshiba recently demonstrated on-device gen AI capabilities for enterprise workflows and inventory management at retail self-checkout, respectively. Additionally, Honeywell showcased a Qualcomm-powered edge AI box for warehouse applications. As we complete the first quarter of fiscal '24, ahead of our expectations, I'm very optimistic about Qualcomm's trajectory and the opportunities ahead. The fundamentals of our growth drivers remain unchanged, our diversification strategy is working, and we're making significant progress across mobile, automotive, computing, XR, edge networking, industrial IoT and more. At the upcoming Mobile World Congress in Barcelona, we will provide an update on our seller modem and connectivity leadership as well as on our overall scale of Snapdragon gen AI. I would now like to turn the call over to Akash. Akash Palkhiwala: Thank you, Cristiano, and good afternoon, everyone. I'll start with our first fiscal quarter earnings. We are pleased to announce strong non-GAAP results above the high end of guidance with revenues of $9.9 billion and EPS of $2.75. QTL revenues of $1.5 billion and EBT margin of 74% were at the high end of guidance, reflecting slightly higher handset units. QCT delivered revenues of $8.4 billion and EBT margin of 31%, both above the high end of guidance, reflecting strength in handsets and automotive revenues. QCT EBT margin includes the benefit of revenue scale, stronger product mix and operating discipline. Handset revenues of $6.7 billion were higher than our prior expectations primarily due to the increased demand driven by the acceleration of Android flagship launches with our Snapdragon 8 Gen 3 mobile platform. Notably, our Android handset revenues from Chinese OEMs exceeded our expectations of greater than 35% sequential growth. IoT revenues of $1.1 billion reflect the industry-wide challenges we've previously outlined. We achieved record automotive revenues of $598 million which grew by 12% sequentially, reflecting the increased content in new vehicle launches with our Snapdragon digital chassis platform. Non-GAAP operating expenses decreased 5% sequentially to $2.1 billion and included the benefit of accelerated implementation of cost actions that we had previously outlined for the first half of fiscal '24. Lastly, we returned $1.7 billion to stockholders during the quarter, including $784 million in stock repurchases and $895 million in dividends. Before turning to second fiscal quarter guidance, I'll update you on global 3G, 4G, 5G handset units. We estimate that global units declined by mid-single digit percentage in calendar '23 relative to calendar '22, an improvement from our prior expectations due to the recent stabilization in demand. For calendar '24, we estimate that global handset units will be flat to slightly up on a year-over-year basis. This estimate includes expected growth of high-single digit to low double-digit percentage in 5G handsets. Turning to guidance for the second fiscal quarter. We are forecasting revenues of $8.9 billion to $9.7 billion and non-GAAP EPS of $2.20 to $2.40. The sequential decline in revenues and non-GAAP EPS relative to the first fiscal quarter will be driven by seasonality for a modem only handset customer in both QTL and QCT. In QTL, we estimate revenues of $1.2 billion to $1.4 billion and EBT margins of 69% to 73%. In QCT, we expect revenues of $7.6 billion to $8.2 billion and EBT margins of 27% to 29%. For QCT handset revenues coming off strong performance in the first fiscal quarter, we anticipate Android revenues will be approximately flat quarter-over-quarter. On a sequential basis, we expect QCT IoT revenues to grow by mid to high-single digit percentage with QCT automotive revenues slightly down, consistent with the trend in the prior year. Lastly, we expect non-GAAP operating expenses of approximately $2.2 billion. This reflects typical calendar year resets for certain employee-related costs. In closing, we're very pleased to start our fiscal year with strong execution and financial performance. In QTL, as Cristiano outlined, we are pleased to have extended several key license agreements. We do not expect any material change in QTL licensing revenue run rate as a result of these extensions. In QCT, our technology differentiation will accelerate with our on-device gen AI leadership and introduction of our custom Qualcomm Orion CPU. We also remain well positioned to execute on our diversification strategy by extending our technology portfolio to deliver industry-leading products across automotive and IoT. This concludes our prepared remarks. Back to you, Mauricio. Mauricio Lopez-Hodoyan: Thank you, Akash. Operator, we are now ready for questions. Operator: Thank you. [Operator Instructions] The first question is from Samik Chatterjee with JPMorgan. Please proceed with your question. Samik Chatterjee: Hi. Thanks for taking my questions and congrats on the results here. Maybe if I can start with AI and particularly the launch of the Samsung S24. Now you have some incremental sort of experience in terms of devices launching in the market and the performance and consumer reception you're seeing to that. So I know you outlined adoption of 3G, 4G, but any way of giving us some flavor of what you're thinking in terms of adoption of these AI devices or AI on edge in terms of the smartphone market? How similar or different will that curve look like relative to 5G adoption? And any insights from the sort of pipeline you're working on will be helpful for us? Thank you and I have a follow-up. Cristiano Amon: Hello, Samik. Thanks for the question. This is Cristiano. Look, it's early, but I think it's -- we're definitely excited about what we see in the beginning. It's not only unique to the GalasxS24, that has a number of now use cases running gen AI on the device. I mentioned a few of my prepared remarks like translation and you have a much more effective assistance in a number of different applications. We're going to see productivity coming. But we'll also see that happening with some of our other customers from China, launching a number of models. So I think we have a large number now of models being ported into our hardware for gen AI. I think we're starting to see the beginning of new use cases. Reviews have been positive, and we are happy with we've seen the results following the launch. I think we need to monitor the situation. But eventually, at a minimum, is going to have a favorable impact on mix, which is a trend that we continue to see premium and high tier with more computing power -- is the fastest-growing segment in the handset market. Samik Chatterjee: Yeah. Okay. Got it. And maybe just as a follow-up, the -- and the Android OBX customers of the Chinese OEMs you work with, they exceeded your expectation in the fiscal first quarter -- but as you're looking to the second quarter, you're guiding to a more flattish trajectory here? I know the industry has sort of been looking at inventory refill from those customers as well, driving some of the momentum. So just wondering if you can give us an update in terms of what you’re seeing from those customers? And if at all, Huawei and their reemerges in the market is starting to have an impact in terms of volume or market share for these customers as well in the context of your flat guide for them for quarter-over-quarter? Thank you. Akash Palkhiwala: Sure. Samik, it’s Akash. As we have said previously, as we entered fiscal ‘24, our view was that Android channel inventory had largely normalized. And so as we go through the year, we typically see normal bill bleed cycle around handset launches. So that’s kind of the phase we are in from our perspective. In the first quarter, what we saw was higher demand due to the acceleration of Android flagship launches with our new chip, Snapdragon 8 Gen 3. And we saw very strong demand across all the major Android OEMs. And so happy, of course, with that traction and that momentum carries over to the second quarter as well. And that’s what you’re seeing both in our results and our guide going forward. In terms of your comment on Huawei, really what we’ve seen since Huawei 5G launch is that the premium tier TAM in China has expanded. And so we’re continuing to see strong demand from our customers post that launch. Operator: Our next question is from the line of Matt Ramsay with Cowen. Please proceed with your question. Matt Ramsay: Thank you very much, guys. I guess for my first question, Cristiano, I was fit to hear, I guess, the formal announcement of an extension with your partnership with Samsung. And you mentioned, I think, in your prepared script that it started with 2024 devices, but I assume it's longer than that. So maybe you could give us a little context as to the links and any details you can share on the new agreement. You guys obviously have your new custom CPUs coming into the Snapdragon road map and some expanded MPU product as well. So we see kind of what the split is of share in the flagship at Samsung currently, but I'm just trying to understand a bit more about what this means for on a go-forward basis. Thanks. Cristiano Amon: Thanks for the question, Matt. The agreement that we announced at this earnings call, it is a multiyear agreement. We're not disclosing the duration, but there are several years into that agreement. And I think your observation is correct. I think it starts in 2024. I think as you look at the launch of GalaxS24 is a good proxy on how we should think about the agreement between us and Samsung. But most important is the thing that you outlined. Our road map is getting stronger over time, especially with our custom CPU coming to mobile, and we're aiming to have the leadership position in the mobile performance on CPU. And our NPU continue to expand as we -- as I mentioned before, we're just at the beginning of the gen AI transition. I think in summary, we're very pleased our relationship with Samsung, and it's a very long-term relationship with this customer. Matt Ramsay: Got it. Thank you for that. I guess my follow-up question is one for Akash, first of all, Akash, congratulations on the new COO hat. Well done. But my question is around margins. And I noticed that even with the IoT business down dramatically, there was some improvement in sequential gross margin in the quarter and back above 30% in QCT operating margins. So maybe you could discuss some of the moving parts with margins in the business because it was a -- pleasantly a bit better than I had modeled, and I kind of want to see what might be sustainable or what actions you took on a go-forward basis on both the gross and the operating side. Thanks. Akash Palkhiwala: Thank you, Matt, and thanks for our wishes. I'm looking forward in this new role to working with Cristiano and the executive team to kind of deliver on our long-term priorities. And of course, I'll continue to remain committed to my CFO role, working closely with the team here and maintaining consistency and transparency and looking forward to seeing a lot of you at upcoming events. On the margin side, what you saw in the first quarter is really the fact that our gross margins were stronger because the mix was richer (ph). We had a higher set of premium tier launches coming through and that impacted our volume, and we benefited from that mix -- richer mix. And if you look at our second quarter guide, we are guiding largely in line with how our first quarter came in. So that was obviously great to see. From an operating margin perspective, it's -- in addition to the strength in the gross margins obviously, the revenue scale and the actions we took on the OpEx also benefited. And so we were happy to -- extremely happy to deliver 31% operating margin in QCT and really focused on delivering to the long-term target we’ve outlined to the investors. Operator: Our next question is from the line of Mike Walkley with Canaccord Genuity. Please proceed with your question. Mike Walkley: Great. Thanks for taking my question and congrats on extending some of the licensing deals. I guess, just want to jump a little bit into the IoT business, the three segments, I assume, consumer is still weaker. But can you update us kind of how the inventory bleed is trending for the three business within IoT? And then within that question too, just on the recovery of IoT, share with us the X Elite ramp and how material this might become for IoT, say, in the next one to two years? Akash Palkhiwala: Maybe I'll address the first part and then Cristiano can talk through the X Elite question. From an IoT entry perspective, what we have seen is stabilization really on the consumer side. As you know, we were one of the first to call out the weakness in IoT, and now we're seeing it go through both on the industrial and the edge networking side. And consistent with our previous comments, we think the first quarter was the bottom for our IoT revenue stream. We're guiding second quarter up mid to high-single digits. Second half of the year -- fiscal year, as we see the inventory channel kind of normalizing and end markets kind of benefiting from that -- we're excited about what our product portfolio can bring and overall, lots of opportunities for us. So over -- in my mind, there's significant uncertainty, but we are cautiously optimistic, and I think we have a great product portfolio as we look forward. Cristiano Amon: Look, your question about X Elite and in PC. It's too early. We're tracking to the launch of products with this chipset tied with the next version of Microsoft Windows that has a lot of the Windows AI capabilities. We're still maintaining the same date, which is driven by Windows, which is mid-2024, getting ready for back-to-school, what we're excited about it is since we announced that Tech Summit showing the performance of the product and the AI capabilities, design traction continue to increase. So we had increased the number of designs since last quarter. and we continue to march forward towards the launch. We like that everybody is now talking about on-device AI on PC. That's where we started this journey with X Elite. And I think that proved to be a tailwind to the opportunity for us in PCs. Mike Walkley: Great. Thanks. And maybe Cristiano, just a quick follow-on question. Just on the auto business, how should we think about the ramp of that business over the next one to two years? You've talked about a lot of design win activity and digital chassis ramping this year, but with ADAS coming into the model, how might that business ramp towards your target in 2026. Cristiano Amon: No, absolutely. Thank you for your question. Look, let me step back a little bit and say we're extremely pleased with our performance in auto, especially when you look at the overall market. Right now you can look at Qualcomm results with record revenues and very strong, I think, year-over-year growth. In 2023, in this year that just closed, we launched 75 models with our silicon with a significant improvement in silicon content as it relates to those immersive cockpit and in many cases, processing for safety. So we're very happy with the business. And I think the answer to your question is, we are on track to meet our target that we said on the Auto Investor Day of $4 billion and $9 billion, respectively, I think for ‘26 at the end of the decade. So we’re on track for that. And the next quarter, we’re going to give you an update on the design win pipeline that continues to grow. Operator: Our next question comes from Stacy Rasgon with Bernstein Research. Please proceed with your question. Stacy Rasgon: Hi, guys. Thanks for taking my question. So given that you've got Android, Android was pretty strong in December, and it's flat into March. How are you thinking about June seasonality given all these trends and moving pieces? I know it's usually down a bit for March, but I guess in the current what are you thinking about June seasonality. Akash Palkhiwala: Stacy, it's Akash. No change to the shape of the year comments that we made last time. Following second quarter, we do expect third quarter to be the lowest quarter. It's one of the quarters where we do not have any significant flagship launches. And as a result, you kind of see a decline in third quarter then growth back into the fourth quarter. And it's -- when you look at second to third quarter, we expect a trend consistent with the last two years. First half, obviously benefited from this acceleration of launches for Android and pretty happy with that. And I think it sets us up as we look forward in terms of both content growth with our strong road map and just positioning overall in the handset market. Stacy Rasgon: Got it. Thank you. And so my follow-up, I just want to ask about Huawei -- was Huawei still completely out of the model in December? And is it out of the model in the March guidance? Akash Palkhiwala: Yeah. So as we’ve said in the past, Stacy, we do have a 4G license to ship Huawei and so we’ve continued to ship based on customer demand. But as you’re aware, they have launched a 5G device with their own chip, and that’s, I think, the priority going forward. Operator: Our next question is from the line of Chris Caso with Wolfe Research. Please proceed with your question. Chris Caso: Yes. Thank you. I guess just a question on QTL and coming from your comments about the global handset market, it sounds like you're a little more optimistic on the 5G market on the year, QTL revenue has been kind of stuck in this range because of where handset units have been. Do you -- I guess what's the outlook for QTL going forward in the context of what you're expecting for the handset market overall. Akash Palkhiwala: Yeah. So as we outlined for our handset market, when you look at calendar '24, overall market, we expect it to be flat to slightly up. But within that, 5G, obviously, is our target market, especially for the chip business, we expect that to be high-single digit to low double-digit up on a year-over-year basis. Within QTL, I will stick with the guidance we have given before. We think there's a scale to the business that's aligned with the handset market and the 2 will move in line. And then on the extensions of the license, I just wanted to make sure that I said this in my prepared remarks, but just to confirm, as a result of the extension, we do not expect any material change in our QCT licensing revenue run rate. So it's consistent with the program. In the QTL licensing revenue run rate, it's consistent with the program. Chris Caso: Okay. That's helpful. As a follow-up, Cristiano, I wonder if you could speak to sort of the decision to reengage in custom cores with Orion and what outcome you expect that? I mean, it sounds like that's been one of the reasons or one of the things behind the renewal of the Samsung agreement. What sort of change in the market because Qualcomm did custom cores in the past? And what do you expect to get out of that in terms of market share and content and such? Cristiano Amon: Thank you, Chris, for your question. Look, it's consistent, I think, with the strategy we outlined, I think, following the acquisition of Nuvia. In the past, Qualcomm has been designing now its own custom course. And I think the first instantiation of that was for PCs. Actually, if you remember, in the past, that was the key motivation as we embark on this journey to create a leading SoC for laptops for the Windows ecosystem. We needed to have the performance leadership and we needed to design our own CPU to deliver the results that we did with X Elite. Now we're taking that across the entire road map. Your observation is correct. As we take that into mobile next, we're seeing significant interest from our partners as it truly becomes a leadership position in the marketplace now across all course, not only graphics and AI but also CPU. And we’re not stopping there, following smartphone that’s going to go into our automotive business, and we’re excited about what the team has accomplished to date. Orion is really well positioned to be the leading CPU core in the industry. Operator: Next question comes from the line of Timothy Arcuri with UBS. Please proceed with your question. Timothy Arcuri: Thanks a lot. Can you talk about restocking in China? It looks like the China Android obviously, it was up a ton and it's being guided flat. Your peer was a bit cautious on this. Can you talk -- do you think you're shipping that to consumption? And do you think you're going to ship to consumption through the rest of the year? And then I had another question. Akash Palkhiwala: Yeah. Tim, consistent with what I said earlier in the call, I think we were kind of largely at normalized inventory for Android entering the fiscal year. What you saw in the December quarter, at least for us, to a large extent was a build for the various premium tier launches that happened during the period. And so we do expect normal bill bleed cycles through the year as devices launch. But that's kind of the framework with which we are operating going forward. Timothy Arcuri : Got it. And then now that you have the modem for longer for this one flagship customer, one can envision a scenario where maybe you can leverage that into some new RF content that you have not had in the past. Is this a scenario? I mean, it seems like it could add $1 billion maybe. I mean you were sort of running to $4 billion a year in your RFFE business prior to stopping to tell us what that is. So it seems like that is something you could potentially leverage the reliance on your modem business? Thanks. Akash Palkhiwala: Yeah, Tim. I’d say that’s a conversation, obviously, that we will talk to the customer about. It’s a part of our portfolio, and we’ll make it available if they’re interested. Operator: Our next question is from the line of Ross Seymore with Deutsche Bank. Please proceed with your question. Ross Seymore: Hi. Thanks for a couple of questions and Akash, congrats on the COO role. The first one is on the OpEx side of things. You guys did a great job in the calendar fourth quarter and you gave the guidance for the fiscal first or fiscal second quarter, how should we think about that for the remainder of the year, given your commentary on kind of doubling down on some of the opportunistic investments to diversify the company, new cores, etc. Akash Palkhiwala: Yeah, Ross. Thank you very much. From an OpEx perspective, really, the way we think about it is any hiring that we do will be very selective and focused on really acquiring new skills that are required for diversification. But other than that, we've gone through a reduction recently. We think we're at scale to a large extent, and we're committed to operating discipline. Ross Seymore: Great. And I guess for my follow-up, I noticed in the 10-Q, you had a new 10% customer, I think it was a 14% customer. I don't expect you to name who that is. But is that a reflection of the strong China demand that you talked about in the continuation of good future growth opportunities or was there any onetime aspect of that customer, whoever it may be popping up in the quarter? Akash Palkhiwala: I think the you framed it in your first theory is a reasonable way of thinking about it. Operator: Our next question is coming from the line of Tom O'Malley with Barclays. Please proceed with your question. Tom O'Malley: Thanks for taking the question. Just passing on my congratulations to Akash as well. I just wanted to ask on the ASP side for Android. You're obviously kind of characterizing the market that's flattish into March, kind of the bottom in June and then improving from there. But you benefited from some good mix in the beginning of the fiscal year here. Could you talk about what you would expect from a mix perspective as you go to the back half? Would you see the same kind of strength on the ASP side that you've kind of seen over the past year? That would be really helpful to understand. Thank you. Akash Palkhiwala: Yeah. So if you think about premium flagship launches for our OEMs, a lot of the launches happen in the holiday time frame just before the holidays going into Chinese New Year as well. And so you've seen a lot of those happen. We do have some significant launches through the middle of the year, but obviously, the next big launch goes into the holiday season, starting with Apple and then going into the Android launches. So that's a typical cadence. Now when -- just to confirm, just the premium tier we are talking about. Of course, there are other tiers and including the high tier, where we have very significant presence and that does drive a significant portion of our -- the launches that happened through the year and also our revenue base. Tom O'Malley: Helpful. And then just on the auto business, you've clearly seen some weaker data points just out of the ecosystem. Can you explain why your auto business may not be levered to some of like the ADAS areas where you've seen the particular weakness of late? And like when do those ADAS and win start layering on? Is that more of like a '25 story for you guys or '26. Just can you talk about the pipeline and when you see those more advanced wins kind of layering into the to the revenue stream? Thank you. Cristiano Amon: Hi. This is Cristiano. Look, the automotive story of Qualcomm is primarily driven by share gains as models with our silicon part of our pipeline started to materialize into revenue. And the way you should think about it, historically, a lot of the revenue was telematics, now you see the largest component been a lot of the fully immersive digital cockpits on the car. And we already have some revenue from ADAS processing. You see a lot of cars for example, in China with both ADAS and autonomy with our processor, you see some of our customers in the United States of our processor. And I think that continues to grow as we get towards our 2026 revenue target, you’re probably going to see very healthy components of all of those elements. Tom O'Malley: Thank you. Operator: Our final question is from the line of Tal Liani with Bank of America. Please proceed with your question. Tal Liani: Thanks. I have two follow-ups on answers or questions you had before. The first one is Samsung. On one hand, there is a new contract. On the other hand, Samsung is going to use their own more in '24 versus '23. So net-net, are you expecting revenues of Samsung to go up or down in '24 versus '23? What are your expectations of share losses within -- can you frame it for us? And the second question is on the auto business. You had a phenomenal quarter. It's very different from the other auto companies, most of the other (ph) companies had weakness. What is the strength related to meaning is it share gain with certain customers? Is it new product or can you just put some color on the strength, the relative strength versus the others? Thanks. Akash Palkhiwala: Yeah, Tal. Ut's Akash. So on this -- on Samsung and this is a conversation about the premium tier, I assume. In GS23, we did have global share. In the GS24 that just launched and consistent with what we said on the last quarter, we expect to have a majority share based on the model split between us and [indiscernible]. As Cristiano indicated in his prepared remarks, one of the benefits of the agreement that we did with them is it gives us predictability on our position within the premium tier going forward. And then from a content perspective, there's clearly content expansion happening. And this is really when you look at our premium tier road map, not just with gen AI coming in our custom CPU course coming in as well, but then also across other technologies. As consumers demand more capability, we see our content and our ASP both continue to grow. Switching over to your second question on automotive. You should really think -- the way to think about our automotive business is we're tied to the launch of new cars. Clearly, the industry is going through a transformation, digitization of cars, and we are right at the intersection of that transformation. We are we're benefiting our cars put in more infotainment content for experience within the car. More ADAS content comes into the car as well. And really, we get to benefit from all those intersection points in the car, and we're increasing the content as new cars launch. So that's the maybe a disconnect between some of our peers what they're seeing and what we're seeing. Stepping back, I mean, clearly, this is an industry that's going through some shorter-term dynamics, so we'll be closely monitoring it. But when you step back, our technology, our position, our products look really good, and we're excited about where we're going. Operator: Thank you. That concludes today's question-and-answer session. Mr. Amon, do you have anything further to add before adjourning the call? Cristiano Amon: Yes. Just in closing, I'd just like to remind everyone, look, we're as I said, we're happy with the quarter. We see the android market stabilizing after we've been to '23. That was a year of correction. We like the transition of user experience with gen AI that could create an opportunity in mobile. This is one of those times for Qualcomm. They are both our Apple and Samsung revenue on the chip side or under contract. We're very happy about that. We continue to move towards stability of the QTL revenue stream with those new agreements. As you look at the growth opportunity, I think the auto results speak for itself. We're now in the IoT segment, really focus on the launch of X Elite. In the PC, we announced a new product for XR. And if you believe that, that market is finally going to get very large scale, we're well positioned with our partnership with Meta as well as Samsung and Google. And as IoT, especially industrial goes to the correction, we expect that to resume growth. So we're focused on what we can control, busy work with the growth and diversification of the company. And I want to say a big thank you for all of our partners and employees they help us get to this quarter. Thank you very much, and I talk to you all next quarter. Operator: Ladies and gentlemen, this concludes today's conference call. You may now disconnect.

Operator: Ladies and gentlemen, thank you for standing by. Welcome to Qualcomm’s Fourth Quarter and Fiscal Year 2023 Earnings Conference Call. At this time, all participants are in a listen-only mode. Later, we'll conduct a question-and-answer session. [Operator Instructions] As a reminder, this conference is being recorded November 1, 2023. Playback number for today's call is 877-660-6853. International callers, please dial 201-612-7415. The playback reservation number is 137-41-657. I would now like to turn the call over to Mauricio Lopez-Hodoyan, Vice President of Investor Relations. Mr. Lopez-Hodoyan, please go ahead. Mauricio Lopez-Hodoyan: Thank you, and good afternoon, everyone. Today's call will include prepared remarks by Cristiano Amon and Akash Palkhiwala. In addition, Alex Rogers will join the question-and-answer session. You can access our earnings release and a slide presentation that accompany this call on our Investor Relations website. In addition, this call is being webcast on qualcomm.com, and a replay will be available on our website later today. During the call today, we will use non-GAAP financial measures as defined in Regulation G, and you can find the related reconciliations to GAAP on our website. We will also make forward-looking statements, including projections and estimates of future events, business or industry trends or business or financial results. Actual events or results could differ materially from those projected in our forward-looking statements. Please refer to our SEC filings, including our most recent 10-K which contain important factors that could cause actual results to differ materially from the forward-looking statements. And now to comments from Qualcomm's President and Chief Executive Officer, Cristiano Amon. Cristiano Amon: Thank you, Mauricio, and good afternoon, everyone. Thanks for joining us today. In fiscal Q4, we delivered non-GAAP revenues of $8.7 billion, and non-GAAP earnings per share of $2.02 above the high-end of our guidance. Revenues from our chipset business of $7.4 billion reflect a more stable Android handset environment. Licensing business revenues were $1.3 billion. During the quarter, we also made significant progress on our leading technology and product road maps while improving operational efficiency. We remain fully focused on our future growth and diversification opportunities. Let me now discuss key highlights from the business. As we enter the age of generative AI, we're seeing an unprecedented pace of innovation. On-device Gen AI is evolving in parallel with Gen AI in the cloud enabling entirely new use cases. It has the potential to change how we interact with our devices making the user experience more natural intuitive, relevant and personal with increased immediacy, privacy and security. We have quickly established Qualcomm as a leader in on-device Gen AI for smartphones, next generation laptops, XR and automotive, and we are well-positioned to benefit from this opportunity. We expect high performance on-device AI to become a requirement over the next few years, driving content, units, or both. Our Snapdragon platform is highly differentiated from its competitors. First, we significantly increased the AI processing performance in power efficiency of our best-in-class NPU, CPU and GPU. Second, we are collaborating with multiple partners in ecosystems to enable a host of consumer and productivity based AI models running natively on our platform. Third, we're enabling multibillion parameter Gen AI models to run continuously and concurrently for multiple use cases, including multimodal. For example, in the latest Snapdragon 8 Gen 3 smartphone platform, state-of-the-art large language models, such as Llama and [Vicuna] (ph) up to 10 billion parameters are running at up to 20 tokens per second. And large vision models such as stable diffusion can generate images from text in less than one second with ultra-low power consumption. As always running on-device Gen AI becomes pervasive we believe it will create one of the most significant changes in user experience similar to the transition from the feature phone to the smartphone and the introduction of the graphical user interface for PCs. Snapdragon will play a significant role in this transformation. We also reached an important milestone in our expansion into PCs with the announcement of our Snapdragon X Elite platform. It is the result of a relentless pursuit to create the ultimate intelligent computing experience and establish Snapdragon as the industry leader in performance and power efficiency. The Snapdragon X Elite includes our first implementation of the custom Oryon CPU, which exceeds the multi-threaded CPU performance of any x86 or ARM competitor in its class. It also matches the single-threaded CPU peak performance of the leading x86 CPU competitors at 70% less power. Additionally, our premium integrated Adreno GPU delivers up to two times faster performance than the competition at ISO power or matches competitor peak PC performance as 74% less power. Snapdragon X Elite also features our newest Hexagon NPU. With 45 tops of performance, the Hexagon NPU is capable of running Gen AI models with over 13 billion parameters on-device. In total AI performance of the Snapdragon X Elite across CPU, GPU and NPU is 75 tops, the highest in the industry. Microsoft is redefining the entire Windows experience with the AI Copilot and the Snapdragon X Elite is built from the ground up for this opportunity. We look forward to PCs powered by Snapdragon X Elite from leading OEMs starting mid 2024. The merging of physical and digital spaces remains a significant future opportunity for Qualcomm and we recently launched a Snapdragon AR1 platform, our first dedicated platform for smart glasses. AR1 Gen 1 was developed in close collaboration with Meta and powers the new Ray-Ban Meta smart glasses. It features a dual ISP camera system for premium photos and videos as well as powerful on-device AI for image enhancement virtual assistance, real-time translation, visual search, and more. Together with Meta, we're developing next generation technologies to create the future of spatial computing. The AR1 Gen 1 along with a previously announced Snapdragon XR Gen 2 are a testament to the strength of this long standing partnership. Across the industry, Snapdragon remains the platform of choice for all leading VR, MR and AR designs. In networking, we continue to be a global Wi-Fi leader across enterprise and home networks as well as broadband gateways. Our Wi-Fi 7 solutions are seeing strong traction with more than 350 design wins across all categories to-date. We recently announced several new collaborations, including with Charter Communications in the U.S. and EE in the UK, both of which are preparing to roll out enhanced next generation Wi-Fi 7 connectivity to the residential and small and medium size business customers. We’re excited about the launch of our Fiber Gateway Platform which adds 10 gigabit passive optical network capabilities to our portfolio. With Fiber, in addition to 5G and Wi-Fi 7, we're now positioned to lead in next generation broadband solutions. Additionally, our unique service defined Wi-Fi technology signature feature introduced with our Wi-Fi platforms offers a unified data flow management architecture from cloud to device. It delivers orchestration, classification, scheduling, and insights to enable the end-to-end management of home networks in real-time optimizations across devices. In automotive, the digital transformation of the industry continues to bring new levels of computing, intelligence and cloud connectivity to the vehicle. These trends are driving new user experiences, advancements in driver assistance, autonomy, and safety. They also offer the potential for new revenue opportunities as vehicles gain the ability to evolve with over the air updates in digital services. The vehicle is becoming software defined and the Snapdragon Digital Chassis remain at the center of this transformation. We are pleased that our Digital Chassis solutions will bring advanced capabilities to the upcoming Cadillac ESCALADE IQ, which is planned for commercial production in 2024. The Cadillac ESCALADE IQ will be equipped with the Snapdragon Cockpit, Snapdragon Auto Connectivity and Snapdragon Ride platforms. Additionally, we're proud of our partnership with BMW for all vehicles as well as the upcoming Neue Klasse. We're also excited that the Snapdragon Digital Cockpit and Connectivity solutions now powered the new Mercedes Benz User Experience starting with the 2024 E-Class sedan. We recently expanded our Digital Chassis offering with the launch of two new platforms for two wheelers and other vehicle classes such as motorcycles, e-bikes, scooters and all-terrain vehicles. Our new platform design wins and launches with Gogoro Harley-Davidson and others are receiving positive feedback from the ecosystem on their ability to advance technology development and bring new user experiences to these vehicles. Finally, we announced a new long-term relationship with Amazon Web Services to enable automakers to integrate cloud technologies into their vehicle development lifecycle. The offering combines the Qualcomm Cloud AI 100 solution our Snapdragon Ride platforms as well as AWS breadth of services and capabilities. This will advance the future of software defined mobility and change how vehicles are designed and developed. In handsets, we announced our latest premium mobile platform the Snapdragon 8 Gen 3, which delivers industry leading performance and extraordinary experiences to consumers for the upcoming Gen AI era. Some key features include intelligent capture with the world's smartest AI powered camera, console level gaming with ray tracing with global illumination, studio quality audio, the world's first XSPAN technology, best-in-class connectivity, and the world's fastest on-device AI processing on a smartphone. We look forward to flagship device launches powered by the Snapdragon 8 Gen 3 by global OEMs and smartphone brands, including Xiaomi, Honor, OPPO, Vivo, OnePlus, Sony, and More. In addition, we recently entered into an agreement with Apple to apply Snapdragon 5G Modem-RF systems for smartphone launches in 2024, 2025 and 2026. This agreement reinforces our track record of sustained leadership across 5G technologies and products. We are proud of our ongoing relationship with Apple. As we look forward, our technology roadmap has never been stronger and the fundamentals of Qualcomm's growth drivers remain unchanged with significant opportunities in the coming years. We continue to focus on stockholder returns in executing on our ongoing diversification opportunities while maintaining operating discipline. I would now like to turn the call over to, Akash. Akash Palkhiwala: Thank you, Cristiano, and good afternoon everyone. I'll start with our fourth fiscal quarter results. We delivered non-GAAP revenues of $8.7 billion and EPS of $2.02, which is above the high-end of our guidance. QTL revenues of $1.3 billion and EBT margin of 66% were in-line with our expectations. QCT delivered revenues of $7.4 billion, an EBT margin of 26%, which were near the high-end of our guidance on strength in handset and automotive revenues. Handset revenues of $5.5 billion increased 4% sequentially and were higher than expectations due to the benefit from the early stages of recovery in Android demand. IoT revenues of $1.4 billion were down 7% quarter-over-quarter, including softness in industrial IoT demand. Automotive revenue grew 23% sequentially to $535 million, making this the 12th consecutive quarter of double-digit percentage growth on a year-over-year basis. Non-GAAP operating expenses decreased 1% sequentially to $2.2 billion. Before turning to guidance, I'll summarize our fiscal ‘23 results. We delivered non-GAAP revenues of $36 billion and EPS of $8.43 despite the challenging macro environment. We remain focused on our strategic priorities of extending technology leadership and driving revenue diversification, while taking significant steps to improve our operating efficiency. We continued our strong momentum in automotive and delivered record revenues of $1.9 billion, with year-over-year growth of 24%, progressing towards our target of greater than $4 billion in revenue by 2026. We exceeded our fiscal '23 cost action target, reducing non-GAAP operating expenses by 7% relative to the fiscal '22 exit rate, executing on our commitment to manage the cost structure given the current operating environment. Our business continues to generate strong free cash flow, with a record of $9.8 billion. Lastly, our balance sheet remains strong with $11.3 billion in cash and marketable securities. Now, turning to guidance. We are seeing early signs of stabilization in demand for global 3G, 4G, 5G handsets. We now estimate that calendar ‘23 handsets will be down mid-to-high single-digit percentage relative to calendar ‘22, an improvement from our prior expectations. In the first fiscal quarter of ‘24, we are forecasting revenues of $9.1 billion to $9.9 billion and non-GAAP EPS of $2.25 to $2.45. In QTL, we estimate revenues of $1.3 billion to $1.5 billion and EBT margins of 70% to 74% with sequential growth driven by an increase in global handset units for the holiday season. In QCT, we expect revenues of $7.7 billion to $8.3 billion and EBT margins of 26% to 28%. On a sequential basis, we estimate double-digit percentage growth for QCT handset revenues and anticipate both IoT and automotive revenues to decline consistent with last year. QCT handset revenue forecast includes the benefit of normalization of Android channel inventory and higher demand due to the acceleration of flagship launches with our newly announced Snapdragon 8 Gen 3 mobile platform. Notably QCT handset forecast include sequential revenue growth of greater than 35% from Chinese OEMs. QCT IoT revenue forecast reflects the industry-wide cyclical factors we've previously discussed, including lower demand and elevated channel inventory. Lastly, we expect non-GAAP operating expenses to be flat relative to the fourth fiscal quarter. As we enter fiscal ‘24, we are encouraged by the early signs of demand stabilization in handsets and our strong competitive positioning across revenue streams. Key industry trends such as heterogeneous mobile computing and on-device generative AI provide a strong foundation for content growth and expansion to new device categories, driving growth opportunities for Qualcomm. In closing, I want to thank our employees for their hard work and dedication and for remaining focused on execution and continuing to deliver industry leading products. This concludes our prepared remarks, back to you, Mauricio. Mauricio Lopez-Hodoyan: Thank you, Akash. Operator, we are now ready for questions. Operator: Thank you. [Operator Instructions] The first question comes from Samik Chatterjee with JP Morgan. Please proceed with your question. Samik Chatterjee: Yes. Hi. Thank you. Thanks for taking my questions and, congrats on the results here. I guess if I can start with Cristiano your comments about on-device AI becoming pervasive in a few years, I think investors are largely looking for more sort of evidence and validation that this is going to be a key focus area for a lot of OEMs smartphones and other device OEM. So, as you look over the next sort of 12 to 18 months, what should investors look at in terms of more validation of either wins or revenues that you expect from the monetization of the trend, in relation to what investors can really look to as milestones to validate that this is actually going to be sort of playing out over the next three to four years. And I have a follow-up. Cristiano Amon: Thank you so much, Samik, for your question. For those that have not seen, I think, I would recommend to see the highlights of our Snapdragon Tech Summit that just happened a couple of weeks ago when we announced the results of our investments in Gen AI. I'll tell you Samik that on-device Gen AI, as I mentioned in my prepared remarks, are evolving in parallel to the cloud. And it's going to have a significant impact in how you change the user experience. Just think about a simple use case as you're texting, every single test that you write could be an input to a model, and that could bring prediction of your behavior and bring other applications. We demonstrated a number of use cases. They're under development by many other OEMs. There are a number of different models from large language models to large visual models. One unique position of Qualcomm we have many of those models running natively on a platform. We're creating a model zoo for Snapdragon. And you saw announcements from Microsoft, from Meta, from what we're doing on Android, we're doing with our Chinese partners. And you're going to start to see those signs. Especially what flagship device is launching in ‘24, as you started to see those use cases changing photography, changing, messaging, changing scheduling, changing assistance, how you should think about this financially for us? You have the potential to create a new cycle for phones, and it will have an impact on increased silicon content. Just to put in perspective, we have significant increased the processing performance of our AI, processing in the device or NPU is going to have silicon content, is going to have an impact on mix, and it's going to have an impact on unit of all of it. And it's likely going to start as use cases get developed with flagships launching ‘24, but it could be very significant as you look at the next two to three years. Samik Chatterjee: Okay. Got it. And for my follow-up, I guess, you're sounding a lot more positive around the recovery in the Android OEMs, sort of the smartphone market. I think investors at the same time are grappling with the potential sort of puts and takes, particularly when it comes to your primary or a large, Android customer Samsung using more in house solutions going forward. So, when we think about sort of, seasonality beyond the December quarter, particularly around the launch periods, how should we think about your market share with Samsung progressing and what impact does that have on relative to your typical seasonality from December to March? Thank you. Cristiano Amon: Very good question. Let me unpack that question. Let's divide the conversation in two. I think the first part of the conversation, as we said in the prepared remarks, we're happy that the inventory dynamics that we have seen within the Android, business are largely behind us right now. And, one data point that we provided in a cautious, I think, remarks is sequentially from Q4 fiscal to our guide, we're seeing a total growth of revenue from Chinese OEMs, both in China and outside China of 35%. And I think that shows that our customers are in a great position. I think even facing new interests in the market. And, it's also strength of our road map and the stabilization of the market. The second question is about Samsung, look, we're happy with partnership with Samsung. There's the upcoming launch of the GS24. We expect to have the majority share. Our product is really great. I think as I said, we probably have one of the best product roadmaps in the history of the company, especially in the Gen AI processing capabilities. And the product is getting better. We were happy to talk about what we have done in PC with our new Oryon CPU. That CPU was coming to mobile especially in ‘25, and we expect even more, I think, evolution of Gen AI. So the roadmap gets better over time. Overall, we're positive about our relationship Samsung. Thank you. Operator: Our next question is from Matt Ramsay with Cowen. Please proceed with your question. Matt Ramsay: Thank you very much guys. Good afternoon. I guess for my first question, Cristiano, I did pick up on the 35% growth sequentially with China OEMs. But you guys, the question I've been getting a ton is around Huawei and what they're doing. So, you guys called out, I think, last quarter that they were going to be getting some supply on seven nanometer from SMIC and being able to do some devices themselves. And you called out an impact to your revenue. But I think longer term into all of next calendar year, there's some expectation that they might get some more supply. Some of it from SMIC on seven, some of it from SMIC on 16. And that might be a unit headwind to some of your other OEM customers. Maybe you can sell into them as well on 4G. So, if you could unpack a little bit of what's going on with Huawei and how you see it impacting the market in China that would be helpful. And I have a follow up. Thanks. Cristiano Amon: Thank you for the question, Matt. I think maybe separate and first, as we indicated in the last earnings call, I think we indicated that we don't have any more projection of selling our 4G, I think, SOCs to Huawei. And, going forward, we don't expect to have any significance, it's going to be a very small, I think, contribution from Huawei. I think the more interesting answer to your question, and that's the reason I provide the 35% data point, is as Huawei launched the device, we what we are seeing from our customers is continue, I think, growth from our customers on the Android side. We see a mix improvement of our customers moving towards flagship and, it's kind of reflected in our numbers. So it does not change, I think, the trajectory that we have with our Android customers in China. And there is a possibility that I think that Huawei is upgrading their existing customer base. You know there was a data point, there's about a 100 million Huawei former customers with a four to five year old Huawei phone, and that could have an impact on increasing the TAM. Matt Ramsay: Thank you, Cristiano. I guess as my follow-up, it was very impressive, some of the products that you put forward for the PC market at the latest Snapdragon Summit, I think you were right to call out the performance levels, the power levels and the much, much different support from Microsoft. I guess what I'm trying to understand a little bit more is support for ARM PCs, whether in gaming or in enterprise use cases, by other ISVs. So folks that might need to use other end applications that wouldn't be touched directly by Qualcomm or directly by Microsoft. Cristiano could you give us a little bit of an update there? What are you seeing from the ISV ecosystem and in what parts of the PC market do you see potential momentum for your products? Thanks. Cristiano Amon: Look, there's a lot to unpack here. I can speak about this for a whole day, but I'm going to try to be succinct. First thing, we're incredibly proud of the accomplishments of our team. I think, Snapdragon X Elite took the leadership position in this space for any mobile computing device. We're incredibly happy with performance of the new CPU, both single-threaded and multi-threaded performance. But not only that, I think it's important to highlight the AI processing capability because that's key to answer your question. If you look, versus announcements on NPU or some of the other ARM competitors. We had 45 tops performance on the NPU with a total tops performance on X Elite of 75. And that aligns with the transition that Microsoft is making towards a Windows AI future, especially the new services with the Copilot and everything we're doing with Microsoft, on-device working together on-device AI with the cloud and with the Azure endpoint. We're excited about that. And you should start thinking about the PC business, almost like the auto business. We're focused on next generation PCs, not existing PCs, and as those windows started to switch to Windows AI and our platform launches. it create opportunity for us to start gaining scale. Specifically to your question. Microsoft has been very active together with us of bringing a lot of applications natively through the platform. I think we had, a significant progress made across consumer in commercial applications. You continue to see announcements and Windows 11 can also run every, x86, 32, and 64 bit to the Microsoft emulation. We also made significant strides in the emulation performance. So, I think Snapdragon X Elite represents the results of this Microsoft Qualcomm collaboration. And I'll finish the answer by saying, if you look at the announcements of other computing companies talking about having an ARM based PC preprocessor, that is validation that that's our TAM now. It is going to be part of the expansion of TAM for Qualcomm. We're a new player and we look at this as a growth opportunity. We’re excited about it. Operator: Our next question comes from the line of Mike Walkley with Canaccord Genuity. Please proceed with your question. Mike Walkley: Great. Thanks. A quick question for Akash. I think a strong cost execution coming in ahead of plan for exiting the fiscal ‘23, and flattish into the start to Q1. How should we think about OpEx level plan for the year? Is there more areas to cut or you think your main kind of flattish for the year from the good start? Akash Palkhiwala: Yes, thanks, Mike, for the question. Yes, we're very happy that we set a target for fiscal ‘23 of a reduction of 5% relative to the ‘22 exit rate. And we came in at 7%. As we've continued to mention, we, we have recommitting to operating discipline and we did implement additional actions this quarter proactively. And the way we are managing our portfolio is really while we are reducing cost, we want to ensure that we continue to invest, appropriately in technology leadership and diversification in some of the areas that Cristiano just went through. So that's the balance we are trying to strike. And, and as we look at the rest of the year, again, we're committed to maintaining operating as we move forward. I think we're in a very good place from an OpEx perspective. We are investing in the right areas and we'll, we'll focus on those, that scale. Mike Walkley: Great. Thanks. And kind of building on that, my follow-up question to you, Cristiano. Just to follow-up on the on-device, Gen AI opportunity, how should we think about the increased dollar content per device for Qualcomm or increased ASPs relative to your high-end Snapdragon shipped today? Thank you. Cristiano Amon: Look, let me start and see if, Akash wants to add any, something else to the answer. The way we think about this is let, you rather than provide a specific dollar content is, it has a mix improvement and it will drive towards a richer mix of higher in premium tier devices. It has an ASP increase, especially because of the accelerated performance for AI. And we're combining that with significant advancements in CPU and GPU as well. And it has the opportunity to drive units, whether it's a new upgrade cycle, or share gains. Akash, I don't know if you want to add anything. Akash Palkhiwala: Well, and maybe just the other thing to keep in mind is outside handsets as we talk about PC opportunity. Of course, our AI leadership becomes extremely important there. And then also within IoT, we think about Gen AI as something that's going to be a key technology going forward. It'll expand our addressable market, expand the dollars we make per device on, in that area as well. So, it's a much broader play for us, including automotive with ADAS, IoT and PC. Operator: Our next question comes from the line of Stacy Rasgon with Bernstein Research. Please proceed with your question. Stacy Rasgon: Hi guys. Thanks for taking my questions. For my first one, I want to ask the March quarter seasonality question a little more directly. And Akash, can you just give us some of the puts and takes on that March quarter seasonality? I mean, we've got a strong Apple quarter presumably in December that rolls off. We've got Samsung that launches, although we can question what the share is. We've got other things going on. Just how do we think about that seasonality in the context of everything that's going on, which we'll be expecting? Akash Palkhiwala: All right. Sure. So let me maybe try to address, shape of the year as a broader comment. I mean, we do expect the first quarter and the fourth quarter to be the strongest quarters within the year. And then third quarter, as you know, is typically the lower quarter because we don't have a flagship phone launch that happens during the quarter. But, when you step back and kind of look at as we enter fiscal 2024, we're very happy with kind of the early signs of stabilization in the global handset market. And so we are cautiously optimistic as we go forward with that stabilizing and the normalization of Android channel inventory, we are on a strong trajectory as we go through the year. Stacy Rasgon: Got it. That's helpful. For my second question, I want to ask about the new Apple agreement. So you put that out a little while ago. You're modeling 20% share now in the phone that launches in ‘26. So that'll be primarily a fiscal ‘27 issue. How should we think about, the shape of that in ‘24 and the launches that happened in ’24 and ‘25? Do we assume that you've got close to 100% of the majority of the units there and then it drops down for modeling purposes to 20% on the ‘26 launch or like, what does that look like? Akash Palkhiwala: Yes. So the way you should think about the new agreement with our kind of going into specifics, the framework is very consistent with the previous agreement. It covers three launches. So, the launch in ‘24, launch in ‘25, and launch in ‘26. And, again, the framework is consistent with what we had before. For financial planning purposes, we're taking the same approach as we did with last agreement, and that's 20% you mentioned where in the last year, we are planning as if we're going to get 20% share. But you know, to the extent that we get more than that, that'd be upside for our plan. Operator: Our next question is from the line of Ross Seymore with Deutsche Bank. Please proceed with your questions. Ross Seymore: Hi guys. Thanks for letting me ask a question. I just wanted to dive a little bit into the automotive and IoT sides of things. Just a clarification for your fiscal fourth quarter guide, Akash. I believe you said they'd be somewhat similar to last year. I just wondered what you meant by that. And then a bigger cyclical question, we've heard a number of different companies talk about inventory burn in those two markets. You guys highlighted it in IoT, so I wondered where we were there. And are you seeing anything in automotive? Akash Palkhiwala: Sure. So, the financial guidance we gave is that the year over -- the quarter-over-quarter trend from September quarter to the December quarter in automotive and IoT will be consistent with last year. So if you look at last year, automotive was down, I think, 1% or 2%. And so we're guiding effectively down 1% or 2% or flat for automotive. We obviously had a very strong quarter in the September quarter. The business traction continues to accelerate for us. The product roadmap is great. As Cristiano outlined in his prepared remarks, the relationship with the customers was very strong as well. So, we continue to be optimistic and we're well on our way to execute on the financial targets we have given long-term. From an IoT perspective, again the same guidance that it's consistent with last year, what the trend we saw between the September December quarter. And really when you think about IoT, we're seeing some of the same factors that other players in the industry are seeing, some demand weakness coupled with channel inventory. As we look forward, we think our first quarter as the bottom for the year for IoT. We expect to strengthen from that point on, and especially as we get into the second half of the fiscal year, with the environment normalizing, but then also very increasingly strong traction for our products. We think we'll have a strong second half in IoT. Ross Seymore: Just wanted to ask a follow-up on the gross margin side of things. Cristiano, you talked about AI at the edge and across a number of different products, whether it's the PC side, the handset side, etcetera. I just wondered what does that mean to the gross margin within QCT. It seems like it opens up new TAMs on the unit side. Outside of handsets, probably increases the TAM from a dollar content on the handset side. Does that yield upside to gross margin about the same? Just what are the puts and takes as we translate all that to the profitability side? Akash Palkhiwala: Sure. So, from a shorter term perspective, as you'll see from our guide, we did we did very well in September quarter, we are guiding in-line for December quarter. I think your question is more of a longer term opportunity of the expansion of our gross margin as we get into these new areas. And we definitely agree that I think as we scale in outside handsets especially in automotive and IoT, we have an opportunity for margin expansion. Cristiano Amon: You know, Ross, this is Cristiano. Just two things I want to add real quick on the first question and then on this. As, we can scale in markets, for example, such as auto and in certain segments of the IoT, like PCs, XR, those things, they also have the opportunity to give us operating margin efficiency because our R&D is highly leveraged, especially on the computing the connectivity part. So the more that we get scale, we’ll continue to probably be accretive to margins. I want to make a quick comment on your IoT. You should look at the IoT dynamics, not all IoT are created equal. I think we have a lot of things within our IoT. So there's existing business that are subject to the some of the inventory dynamics, but there are new growth opportunities there. One of I remind everyone that PC is in there, which is, likely going to be material in fiscal ‘25, if you think about devices with the X Elite or launching towards the second of ‘24, you have XR, which was still in the early phase of that opportunity, it has networking, we have Fiber, we didn't have it before. So, I think we're positioned now to expand in networking with Fiber and 5G and Wi Fi-7 is positive. And, you know, it has still an opportunity to move, processing to the edge when IoT next. So, we're going to be -- those are less subject to the some of the cyclical dynamics we're seeing right now for existing business. Thank you. Operator: Our next questions are from the line of Christopher Rolland with Susquehanna. Please proceed with your questions. Christopher Rolland: Thanks for the question, guys. How are you guys thinking about global handset units over your next fiscal year? And then also given your new product launches here, how should we think about Qualcomm ASPs, as we progress for the next fiscal year as well. Akash Palkhiwala: Chris, it's Akash. So, as we mentioned on the call, we’ve seen kind of early signs of stabilization in the handset market, including in China. And for calendar 2023, we now expect mid to high single digit versus 2022, which is an improvement from what we had before. As we look at 2024, the recent demand stabilization obviously provides a positive setup as we go into the year. So we are cautiously optimistic on how 2024 plays out. But specifically on 5G units, which is really our target market, we expect high single digit to low double digit growth from 2023 into 2024. So that's kind of the market that we pursue and we think there's growth opportunity there going into next year. From an ASP perspective, because of all the factors we discussed earlier in the call with the chips becoming way more capable, especially with GenAI, we think we are on a good trajectory to continue to expand our ASP consistent with the last three year trend. So if you look at our last three year trend, we've added, approximately 10% increase in any tier of chipset every year. And we think as we look forward, we have the opportunity to do that, going forward. Christopher Rolland: That's a great update. Thank you. Another question for you quickly. There was some new language in your 10-K around the, European Commission proposing regulations around standard essential patents, potentially devaluing those patents I wasn't familiar with this. How serious do you think that risk could be? And are there any other meaningful developments in any other geographies? Or are we all kind of status quo? Alex Rogers: Yes. So thanks for that question. This is Alex. We've been tracking these developments in the European Union. There's actually a, variety of parks to this proposed regulation ranging from wanting more transparency and ownership of SEPs and essentiality of SEPs to, to other issues relating to kind of pre-legal processes and, and other sorts of regulations that would affect the licensing and go to court process. The European Union right now is in what they call a trialogue process. It's going to take a while to get through, parliament, and the member states are going to weigh in. The commission's going to weigh in. The European Patent Office is actually opposed to parts of the regulation. Erickson and Nokia, of course, weighing in as well. So this is going to be a fairly, messy just call it legislative process that will take some number of years to sort out. It's being followed in other jurisdictions. We're following it here in the US. The US Patent Trademark Office has weighed in somewhat negatively I think. And it's being followed in China as well. So this will kind of play out over some years. It's not that unusual to have a variety of different SEP related, policy initiatives underway in different jurisdictions. Operator: Our next question is from the line of Chris Caso with Wolfe Research. Please proceed with your questions. Chris Caso: Yes, thank you. Good evening. The first question is regarding the overall handset demand and understand the comments you made about 5G units going into next year. I guess one part of the question is with the increase that you saw in the China business. How much of that do you believe was associated with just inventory normalization as opposed to actual more end market units. And then what does that mean for QTL, which has also been somewhat depressed because of the lower handset market, what should we expect on that as we go into next year? Akash Palkhiwala: Yeah, Chris, it's Akash. So, the way we think about the handset market is we've seen a stabilization in the market and we're projecting forward, especially into the December quarter and QTL's guide as something that stable market represents. And so we're guiding a midpoint of $1.4 billion, sequential growth of 11%. In terms of breaking down the revenue growth in QCT, between inventory and market, obviously, it's kind of difficult to do over a quarter. But we do think that inventory is a big part of it. And it's really the market is stabilizing where it's at with inventory really driving a majority of the improvement in addition to our market share position and revenue growth that comes with, content increase as new chips get launched. Chris Caso: Got it. And with regard to QTLN, I guess I'd assume to see the QTL numbers to come back closer to where we've seen them in the past. That's going to require some more, improvement in end market demand, is that accurate? Akash Palkhiwala: I mean, QTL revenue forecast is really a function of the scale of the overall handset market and so as the scale changes, it would improve QTL revenues as well. Operator: Our next question is from the line of Brett Simpson with Arete Research. Please proceed with your questions. Brett Simpson : Yeah. Thanks very much. My question was really on fiscal 2024 android, smartphone outlook. And I guess there's a lot of moving parts here with Huawei building up their own chipsets. And we've all seen the volumes they're talking about for next year. And you've also got a fairly high share in flagship segments with Samsung. So just looking at fiscal 2024, can you perhaps just provide us a framework for whether or not Qualcomm can grow Android's handset sales in fiscal 2024? Thank you. Akash Palkhiwala: Brett, we're not, we're not guiding the full year at this point. We gave you the guidance for first quarter and I gave you an outline as well of how we expect the shape of the year to play out for the overall company. And I think those pointers should give you a sense of our view into the year. Brett Simpson : Okay. May maybe just to follow-up, Akash, in terms of your OpEx plan for fiscal 2024, I mean, we've seen your sales in fiscal 2023 decline, an operating profit down pretty significantly in fiscal 2023. How are you thinking about the OpEx for fiscal 2024? And I guess, and specifically, when I look at Qualcomm's headcount, over 50,000 people in the business and a lot of your large fabless peers have about half that headcount. How do we think about the sort of spending plan for next year just given the puts and takes here. Thank you. Akash Palkhiwala: Yeah. So, Brett, as you're aware, through calendar, through fiscal 2023 we took, action on cost reductions a couple times. And as I also mentioned, this quarter we've taken additional action. So the idea is how do we maintain operating discipline while continuing to invest in the diversification initiatives that are so important for the company going forward. And what you're seeing in our forecast is a representation of those factors. Operator: Thank you. Our final question is from the line of Tal Liani with Bank of America. Please proceed with your questions. Tal Liani: I want to ask about market share. Next year, MediaTek is saying that they're doing great and they're gaining share, Huawei published now their target for 100 million units versus 60 million that they had before. And the question is, how do you feel about your market share for handset sourced within China? What are the areas maybe that you are strong at? What are the areas that you think you'll see more competition? Thanks. Alex Rogers: Akash, I will start and maybe you had some quantitative comments. Tal, I think I will say if you just recap, in fiscal 2023 that just ended, we had a share increase, both globally and in China, of sell through. And we'd like, I think the direction that we have been going as we said, we will continue to retain, majority share at Samsung. We feel good about that relationship going forward. And we have, seen traction from premium and high tier before Chinese OEMs in spite of the launch of in the successful I think, initial sales of a newcomer, and that's kind of also reflected in the sequential, 35% growth. Akash, I don't know if there anything you'd like to add. Akash Palkhiwala: No, I'll just say, this competitive environment is no different than what we've had in the past. And really, if you look at our current products and going forward, we think our competitive differentiation is actually accelerating both with our custom CPUs coming into our handset product line. And with GenAI in addition to kind of other factors that differentiate us. So, we're pretty confident as we go forward, we're in a good place from a competitive positioning perspective and content increase. Tal Liani: Thank you. Operator: Thank you. That concludes today's question and answer session. Mr. Amon, do you have anything further to add before adjourning the call? Cristiano Amon: No, Thank you all for listening to and participating in the call. I just want to say thank you to our employees. Our suppliers, our partner, and I think we're being focused on the things we can control and really focus on building incredible, I think, products as we continue to change Qualcomm from a communications company to a connected computer company and go into new markets. Thank you again and looking forward to talk to you all next quarter. Operator: Ladies and gentlemen, this concludes today's conference call. You may now disconnect.

Operator: Ladies and gentlemen, thank you for standing by. Welcome to the Qualcomm Third Quarter Fiscal 2023 Earnings Conference Call. [Operator Instructions] As a reminder, this conference is being recorded, August 2, 2023. The playback number for today's call is (877) 660-6853. International callers, please dial (201) 612-7415. The playback reservation number is 13739729. I would now like to turn the call over to Mauricio Lopez-Hodoyan, Vice President of Investor Relations. Mr. Lopez-Hodoyan please go ahead. Mauricio Lopez-Hodoyan : Thank you, and good afternoon, everyone. Today's call will include prepared remarks by Cristiano Amon and Akash Palkhiwala. In addition, Alex Rogers will join the question-and-answer session. You can access our earnings release and a slide presentation that accompany this call on our Investor Relations website. In addition, this call is being webcast on qualcomm.com, and a replay will be available on our website later today. During the call today, we will use non-GAAP financial measures as defined in Regulation G, and you can find the related reconciliations to GAAP on our website. We will also make forward-looking statements, including projections and estimates of future events, business or industry trends or business or financial results. Actual events or results could differ materially from those projected in our forward-looking statements. Please refer to our SEC filings, including our most recent 10-K which contain important factors that could cause actual results to differ materially from the forward-looking statements. And now to comments from Qualcomm's President and Chief Executive Officer, Cristiano Amon. Cristiano Amon: Thank you, Mauricio, and good afternoon, everyone. Thanks for joining us today. In our fiscal Q3, we delivered results consistent with our guidance with non-GAAP earnings of $1.87 per share, above the midpoint of our guidance. We recorded fiscal Q3 non-GAAP revenues of $8.4 billion, including $7.2 billion from our chipset business and $1.2 billion from our licensing business. This quarter also marked our 11th straight quarter of year-over-year double-digit percentage growth in QCT Automotive revenues. We are pleased with our technology, product and design win execution, positioning us well for continued leadership enhancements and future growth and diversification in automotive and IoT. I will now share some highlights from across the business. Our Snapdragon Series mobile platforms continue to set the benchmark for premium tier mobile experiences. Smartphones powered by our Snapdragon 8 Gen 2 represent the top devices according to Antutu benchmarks in Android Authority. We are also pleased that the Snapdragon 8 Gen 2 for Galaxy will again power Samsung's newest flagship device lineup globally. The Galaxy Z Flip, Galaxy Z Fold 5 and the Galaxy Tab S9 series. Our fastest Snapdragon ever for Samsung defines a new standard in smartphone computing capabilities AI experiences, desk top-level gaming features, professional-grade photography, enhanced mobile productivity and more. This launch underscores Qualcomm and Samsung's mutual commitment to delivering premium consumer experiences for flagship Galaxy devices. We are extremely proud of our successful partnership with Samsung Mobile. We are also pleased to extend Snapdragon experiences to mass market 5G smartphones. The redesigned Snapdragon for Gen 2 mobile platform will bring premium experiences at reduced prices to help drive 4G to 5G migration, especially in new 5G deployments worldwide. We're looking forward to device announcements in the second half of 2023. In automotive, we hosted our first Automotive Summit in Suzhou, China, with more than 1,000 automotive OEMs, Tier 1s, ecosystem partners, media, analysts and government officials in attendance. The broad participation at the event demonstrates Qualcomm's strong position as a technology partner to the growing automotive ecosystem worldwide, especially EVs as well as Snapdragon digital chassis technology and product leadership. We also won more than 10 new designs with leading automakers across the globe for next-generation digital cockpit and telematics systems. In Consumer IoT, the recently announced Meta Quest 3 is the first virtual and mixed reality headset to be powered by a next-generation Snapdragon XR platform developed in collaboration with Meta -- the Quest 3 features 2x the graphical performance, higher resolution and a slimmer, more comfortable form factor than the Quest 2. We're also helping to drive the growing ecosystem of VR and MR developers in China. Oppo recently announced their Oppo MR Glass Developer Edition, powered by Snapdragon XR2. And in compute, our next-generation PC platform with integrated custom Orion CPUs in a significantly upgraded AI engine remains on track for commercial readiness. We look forward to sharing more information at our Snapdragon Summit in October. In networking IoT, we continue to gain momentum with WiFi 7 customer design wins. As an example, TP Link expanded its retail small and media business lines by launching 5 new routers spanning indoor and outdoor deployment scenarios, all based on Qualcomm networking Pro WiFi 7 platforms. Lastly, we're very pleased to share that we have begun shipping our fixed wireless access solutions in support of Reliance deals upcoming 5G FWA service in India. In industrial IoT, we launched a video collaboration platform suite, which provides OEMs choice and flexibility for the design and deployment of immersive video conference devices across conference rooms, health care settings and at home video calling with friends and family, enabling Windows, Android and Linux on our platforms offers the ability to customize and deploy videoconferencing products across diverse environments. Additionally, our platforms offer industry-leading AI-based noise suppression and dynamic framing. We also launched the QCS 8550 and QCS 4490, our first software-defined IoT solutions at Hannover Messe. These solutions enable next-gen smart cameras, drones, robotics, cloud gaming, industrial handhelds, panels point-of-sale devices and more. Lastly, together with Arrow Electronics, we announced a strategic collaboration to accelerate edge and AI adoption to the formation of Edge Labs, an aero center of excellence designed to help customers alleviate IoT development challenges while increasing adoption of edge AI across a variety we have an update on our progress in Generative AI since the last call. We're very pleased and encouraged by the rapid acceleration of Gen AI at the edge. This presents a significant opportunity for Qualcomm across our end markets. Use cases at the edge are evolving differently than the cloud given the inherent context, immediacy, privacy, security, application reliability and personalization capabilities available on device. For example, in handsets, models such as Stable Diffusion and Control Net or changing user experiences for content creation and photography. Large language models embedded in the user interface can also enable enhanced virtual assistance. In personal computing, real-time copilots can bring significant enhancements to productivity and creativity, the benefits of which are well understood and very compelling for enterprises across industries. We believe the automotive industry will use some of the most advanced edge AI capabilities from large language models for personalized and curated content and services driver and occupant monitoring and AI virtual assistance to contextual search. ADAS and autonomy applications can be enhanced by the fusion of data from cameras and other sensors for combined real word perception, drive path prediction and more. We're helping enable this capabilities and expect Gen AI use cases to extend to XR, edge networking and industrial IoT. Within the quarter, we expanded our collaborations across the ecosystem, and we are engaged with multiple hyperscalers, OEMs and ISVs. Notably, we recently announced a collaboration with Meta on Llama 2-based AI implementations on flagship smartphones and PCs that will enable developers to create new and exciting Gen AI applications using the AI capabilities of Snapdragon platforms beginning in 2024. Together with Meta, we're working to optimize the execution of Meta's Llama 2 large language models directly on device. We also announced a focused collaboration with Microsoft to scale AI capabilities and bring best-in-class AI experience to users across consumer, enterprise and industrial devices. At the Microsoft Build Developer Conference, our own device, Stable Diffusion, was showcased on a Windows on Snapdragon power laptop. We're also working with them to enable a host of productivity-based applications with multiple large models running on the device. As part of this collaboration, our AI engine direct SDK is now available to Windows developers to easily accelerate their AI apps on Snapdragon compute platforms. This marks a significant milestone. In summary, we are uniquely positioned to help shape and capitalize on the upcoming on-device Gen AI opportunity. Our AI technology is highly differentiated with best-in-class high-performance, low-power heterogeneous computing across our CPU, GPU and NPU. And a multibillion parameter Gen AI models run pervasively and continuously on device, we believe our NPUs unparalleled AI processing performance and power efficiency will become a requirement. We look forward to sharing more about our Gen AI capable products at Snapdragon Summit in October. Before I turn the call over to Akash, I would like to provide an update on how we are managing our business in the current macroeconomic environment. We remain focused on executing our strategy and prioritizing capital and resource allocation on our future growth and diversification opportunities. Simultaneously, we are focused on long-term operating margin targets, all while maintaining technology leadership across wireless connectivity, high performance, low power processing and artificial intelligence. To that end, we're taking a conservative view of the market, and we'll be proactively taking additional cost actions to ensure Qualcomm is well positioned to deliver maximum value for stockholders in an uncertain environment. I would now like to turn the call over to Akash. Akash Palkhiwala : Thank you, Cristiano, and good afternoon, everyone. I'll start with our third fiscal quarter results. We delivered non-GAAP revenues of $8.4 billion and EPS of $1.87, which was above the midpoint of our guidance. QTL recorded revenues of $1.2 billion and EBT margin of 66% and reflecting slightly lower-than-expected global devices. QCT revenues of $7.2 billion and EBIT margin of 24% were consistent with the midpoint of our guidance. Handset revenues of $5.3 billion reflected the industry landscape we have previously outlined. IoT revenues increased 7% sequentially to $1.5 billion, driven by consumer and industrial IoT customers. We saw continued momentum in automotive for our Snapdragon digital chassis products with revenues of $434 million, a growth of 13% year-over-year. Non-GAAP operating expenses were flat sequentially at $2.2 billion. We have successfully executed on our fiscal '23 cost actions and are on track to exceed our commitment of a 5% reduction relative to fiscal '22 exit rate. During the quarter, the sale of Veoneer's active safety business to Magna was completed for net cash proceeds of $1.5 billion. Before turning to the fourth fiscal quarter guidance, I'll update you on global 3G, 4G, 5G handset units and channel inventory. We continue to estimate that calendar 23 handset units will be down at least a high single-digit percentage relative to calendar '22, reflecting the macro environment and a slower recovery in China. This forecast contemplates growth in handset units going into the holiday season. In IoT, channel inventory remains elevated due to weaker demand driven by the broader macroeconomic conditions. Since it remains difficult to predict the timing of a sustained recovery and customers remain cautious with purchases, we continue to operate under the assumption that inventory drawdown dynamics will be a factor through the end of the calendar year. Turning to guidance for the fourth fiscal quarter. We are forecasting revenues of $8.1 billion to $8.9 billion and non-GAAP EPS of $1.80 to $2. In QTL, we estimate revenues of $1.15 billion to $1.35 billion and EBT margins of 64% to 68%, driven by a slight sequential increase in global handset units. In QCT, we expect revenues of $6.9 billion to $7.5 billion and EBT margins of 24% to 26%. This forecast is consistent with our prior guidance of muted seasonality in QCT revenues primarily due to the timing of purchases by a modem-only handset customer. On a sequential basis, we are forecasting Android handset revenues to be roughly flat with mid-single-digit decline in IoT and low double-digit growth in automotive. Lastly, we expect non-GAAP operating expenses to be approximately flat relative to the third quarter. As we approach fiscal '24, our revenue growth will largely depend on macroeconomic environment, global handset units and China recovery. In the first fiscal quarter, we expect 2 drivers of sequential revenue growth. QTL seasonality and handset launch by a modem-only customer. In addition, we expect a sequential decline in IoT and automotive revenues, consistent with the seasonal trend we've seen in the last couple of years. As you will recall, we had previously communicated we would evaluate additional cost actions as the environment continues to evolve. Until we see sustained signs of improving fundamentals, our operating framework does not assume an immediate recovery. Given our commitment to operating discipline, we will proactively implement additional cost actions in the first half of fiscal '24. This will be incremental to the reductions we have successfully completed in fiscal '23. Despite these actions, we will preserve investments in our strategic priorities and position ourselves to emerge stronger as the recovery from the broader industry begins to take hold. In closing, we remain focused on executing on our vision to bring connectivity, high-performance, low-power computing and on-device generative AI to the edge. Our guiding principles remain the same. -- prioritize technology leadership, accelerate diversification and drive earnings growth to create value for our stockholders. This concludes our prepared remarks. Back to you, Mauricio. Mauricio Lopez-Hodoyan : Thank you, Akash. Operator, we are now ready for questions. Operator: [Operator Instructions] The first question is from Matt Ramsay with TD Cowen. Matt Ramsay : Akash, I guess for my first question, you were kind enough to give us a little bit of color in your prepared script just now on December and went through a few things there pretty quickly. So I wanted to double-click on a few. Maybe you could recap for us, just the trends you expect in handsets versus IoT and auto that you gave. And in particular, you talked about some seasonality being better in the fourth calendar quarter in the handset market, but that inventory burn was still going to be part of the dynamic. So if you could talk through that in a little bit more detail, what kind of magnitude are you expecting for the industry in the fourth quarter? What's built into your estimates? And is the inventory burn just an Android dynamic? Or do you think that the prepurchases from Cupertino are still an effect in the December quarter? Akash Palkhiwala : Sure, Matt. So there was a lot in there. I'll try to unpack it. Let me divide it into parts. So first, starting with the market. Our forecast does assume sequential growth into the December quarter as we go into the holiday season. From a financial perspective, consistent with historical years, we typically have 2 significant drivers of growth going into December from September. First is QTL, and we expect to see that growth as the market grows as well. And then second is handset launched by a modem-only customer. Off of the base we have in September, we expect to see that growth as well. So those would be the 2 significant growth drivers into the quarter. From an IoT and automotive perspective, if you look at the last couple of years, we've seen a trend of a slight decline in both areas quarter-over-quarter from September to December. So we just think the same seasonality will play out, not something that goes beyond that. It's just a normal timing that we've seen in the market in the past. Maybe the last comment I'll say is our forecast for September and December quarter does assume no material revenues from Huawei. As you are aware, we have a 4G license for shipping into Huawei. We do not have a 5G license, and we are not assuming any material revenue going forward. So hopefully, that covers all the different parts. Operator: The next question is from Samik Chatterjee with JPMorgan. Samik Chatterjee : I have a couple, but maybe Akash, if we can start with the calendar fourth quarter comment that you just had. If I look back at some of the seasonality that you had in prior years there. We see a wide range. I mean somewhere between sort of 10% plus to somewhat of a higher number as well in the double digits. Maybe if you can give us a bit more color in terms of -- as you think about, you said in your smartphone outlook as well a recovery in the December quarter in terms of volumes. How are you thinking about it relative to typical seasonality in the prior years? Akash Palkhiwala : Yes. So Samik, maybe no additional comments to what I just said. I think if you look at our history, with the growth in the smartphone market, we see QTL grow with it. And so we expect a similar gain this year. And then I'd probably say similar to on the modem customer side as well, we'd see something similar to what we've seen in the past. So I think using historical trend as a way to model it going forward is a reasonable way of doing it for those 2 factors. Samik Chatterjee : Okay. Okay. And for my follow-up, I mean, obviously, the inventory on the balance sheet did come down a bit, but how are you thinking about the opportunity here to sort of discount to clear some inventory of the balance sheet or even sort of from an investor's perspective or how should we think about the risk about inventory write-down if the recovery is sluggish for a period of time? How should we think about those drivers given that the inventory drawdown has continued for a longer-than-expected duration? Akash Palkhiwala : Yes. So Samik, obviously, our analysis is reflected in our results. We think you will understand the drivers that got us to the industry, the inventory balance. It's the overall industry being weaker. And with 6 months lead time, you're planning for a different market. And what we're comfortable with is that we have the inventory on the right parts. There is long lifetime on it, and there's demand for it. So our latest analysis on the topic is reflected in our results. Operator: The next question is from Mike Walkley with Canaccord Genuity. Mike Walkley : Great. Cristiano, I just want to talk about the Snapdragon for Gen 2 that you talked about. How is the initial uptick in terms of Android demand from your customers looking at that? And do you think, given the supply-demand imbalance that you'll be able to now make gain share in 2024 as you move downstream on Android? Cristiano Amon: Mike, thanks for the question. So let me just start with the Snapdragon 4 Gen 2. What we like about it is it insource, the market needs to drive now the next wave of 4G to 5G migration. Just as an example, Xiaomi just recently launched the Redmi 12 5G smartphone yesterday in India at an ASP at USD 135. So we're very encouraged with now the ability to create this 4G to 5G migration. I think there are a number of markets now that are deploying 5G and developing economies. And as you pointed out, now we don't have supply constraint anymore at the last year. And our new product road map, we're encouraged about the ability to drive that 4G to 5G migration at those price points. Mike Walkley : Just a quick follow-up, just on the IoT business. Can you give us just an update on the 3 segments or any of the segments doing better than others in terms of the inventory believe or the outlook that you provided? Akash Palkhiwala : Sure, Mike. So this is Akash. I'll start and maybe Cristiano can add on top of it. So in the short term, the IT business is seeing some of the same dynamics as you're seeing come through with our peers from a demand side and what the impact it has on the inventory -- channel inventory. When we saw the initial weakness, it started with consumer, but we did see it go across to other parts of IoT as well, especially within China. But we're pretty happy with the results we had in the June quarter. We are up approximately 7% on revenue. And it was really growth across industrial and consumer that drove that benefit. Difficult to kind of predict the timing of recovery and the inventory drawdown. We did say that it would be a factor through the end of the calendar year. But that's the framework for the very short term on IoT side. Cristiano Amon: Maybe the only thing I was going to add, Mike, as we indicated multiple times, there's a lot of things in our IoT segment. And there are some of those things that they have yet to materialize. I think we talk about our PC space, which we're excited about the new product we have been developing with our custom CPUs. We're still in the beginning of virtual reality. We're encouraged by now other players entering the market, which will ignite develop our ecosystem. And I think lastly, on networking. We like the WiFi 7 design win pipeline that could materialize in a new cycle into the future. So as we outlined, there's a number of different things within that segment. Operator: The next question is from the line of Stacy Rasgon with Bernstein Research. Stacy Rasgon : Hello. Sorry about that. I wanted to ask about tip gross margins. They seemed reasonably strong in the quarter even with revenues down. They seemed like maybe they were implied up a bit sequentially the guide seems pretty stable into September. Can you give us any feeling for drivers of the margin pricing mix? You talked about some additional cost dynamics. I don't know if there's anything in there on the cost of goods side. some of the dynamics there? And how should we expect that to evolve? Is it just mix that drives it going forward? Are there other things that we should think about? Akash Palkhiwala : Sure, Stacy. It's Akash. Yes, we did come in a little bit better than forecasted for the September quarter, and it was really primarily driven by a mix of products. we're guiding approximately flat margins going into September from June. And that's a reasonable way of forecasting our margins going forward as well. So we expect to be in the range as we go forward. Stacy Rasgon : If I could ask one more briefly. Cristiano, you're talking a lot about AI and how that's going to contribute. How does AI actually contribute to the model going forward? Like are you anticipating that venture drives an upgrade cycle? Or is it more content? Or is it ASPs for the chips fall less than they would otherwise? Like how do we think about how that actually drives the model as adoption happens? Cristiano Amon: Very good. Thanks for the question, Stacy. Look, I think I will unpack the answer to the question. And first of all, we're very confident of what we see happening at the edge. On device, I think there's a number of reasons AI is developing on devices, a little bit different in the cloud. Everything that is real-time AI, always-on AI, context latency, reliability, personalization. And I think that can apply to products across all of our end markets. When it will happen, we are going to announce a new set of products at the Septran Taxi that are all going to be GnAI-capable products that were on phones, on computing products on all of the other segments in auto and IoT. And we think the monetization will happen 2 ways, right? The easiest way to think about it is if our customers in our partners that are working with us. We mentioned a few in the prepared remarks, come up with the new use cases and you have now an AI-capable smartphone, that changes the size of the phone market. It could create an upgrade cycle in between 5G and 6G, and changes the size of the market, also improve the mix towards our product lines and ASP increases. For you to do device, Gen AI on device, you need a different computing platform. And that's what we have been doing with our NPU. I think it's probably the unmatched by any of our peers and ability to do high-performance AI pervasively and continuously a low power. And we look, those things could create an inflection point as hard to predict the timing, but we can see how it changes the mix and improve the ASP in our products. Operator: Our next question comes from Ross Seymore with Deutsche Bank. Ross Seymore : I just have one question, one follow-up. On the December quarter soft guide that you gave, Akash, you talked about your modem-only customer having its typical seasonality in the fourth quarter, calendar fourth quarter. What is typical seasonality and/or your expectations for the Android side of things in that quarter? Akash Palkhiwala : Yes. So from an Android perspective, we expect the quarterly trend to be consistent with history. If you look at what typically happens for us in Android as we launch our new chips in the in the March quarter, and that's when the new premium tier chip comes out, and that's typically the stronger quarter for us. So it's really driven by timing of product launches. But fundamentally, when you look at our position within Android, even within '23, we've actually grown share of sell-through from '22 to '23. So we continue to be in a very strong position, and it's just the market dynamics that's kind of driving the cyclicality in the business. Ross Seymore : And I guess as my follow-up, sticking with you, Akash, on the OpEx side of things, you talked about macro still being uncertain, and so you were going to take actions in the first half of year fiscal '24 on the cost side of the equation. Could you give us any more color on that? I assume it's largely on the OpEx side. You guys have been successful in hitting your 5% reduction, if not beating it exiting this year versus last. Any sort of quantification you can provide on what your expectations are for OpEx in that new cost-cutting plan? Akash Palkhiwala : Sure. So let me give you the framework of how we're thinking about it, and I don't have quantification at this point. But we've -- in '23, we exceeded the target we set. And as we've said before, we'll continue to look at additional reductions as the environment evolves. So given that what we're planning to do is proactively implement additional actions in first half of '24. And the framework for it is we're going to preserve our strategic priorities. We're going to reduce in certain areas, but then also have the capability to invest in new technology, especially AI and continue to invest in our diversification plan. So it's really an effort to get our investment portfolio right as consistent with the priorities going forward for the company. Operator: Our next question is from the line of Chris Caso with Wolfe Research. Chris Caso : Yes. As a first question, if perhaps you could talk a bit about mix, where is your mix sitting as compared to where it was last year? And obviously, the mix has skewed higher during times of supply constraints and now there's greater availability. So how is that affecting margins and revenue? And as things go forward, how do you expect that to change as well? I guess there's some concern that mix shifts down to perhaps some lower end of the portfolio as the 5G cycle matures and emerging markets tend to become a bigger part of the 5G mix. Akash Palkhiwala : Yes, Chris. It's Akash. If you look at the mix change, it's really happened through the year where we expanded our position in the lower tiers a bit, and it's already reflected in the comments I made earlier to Stacy's question on gross margin. So really no incremental comments to what I said earlier. As we look forward, one of the key opportunities for us is really how do we expand the ASP as just we're continuing to see incremental demand across all tiers for more capability in the chipset. And to Cristiano's earlier point with generative AI becoming so critical in edge devices going forward. it's going to drive an inflection point in terms of our presence there and our ability to expand content. Chris Caso : That’s helpful. Just a follow-up question about geographic revenue in particular to the handset business. And we’ve been hearing about perhaps greater macro concerns in China as compared to elsewhere. In terms of normalizing the business and getting the global handset market back to where it once was. Is this mainly a situation where we need to see China come back and normalize? Or is more of a global trend. What needs to improve in other words, to get back to what used to be normal? A –Akash Palkhiwala : Yes, I’d say a couple of parts. So we’ve seen weakness across China and other emerging markets. Those are definitely the 2 areas. In developed markets, it is largely held. There is some smaller impact but not as much. I think the opportunity is really across the board. I think 1 is just from an overall replacement rate perspective, you could see that increase going forward, driven by new technology cycles, but also within the emerging markets in China, you could see some normalization of return and demand as things stabilize. So those would be the opportunities. Just to be clear, in the guidance that we’re giving at this point, we are not including those, and that would be upside to our plan. Operator: Our next question is from the line of Brett Simpson with Arete Research. Brett Simpson : Akash, I had a near-term question on smartphones. I mean some of your smartphone peers are reporting better fundamentals near term. I think MediaTek's -- in the June quarter, they were up 6% in smartphones, and they're talking about mid-teens growth sequentially in September quarter. And I think Qorvo has also talked about quite a significant uplift in September. And I know you said there's weakness elsewhere in QCT, but can you just maybe home in on the smartphone business? And can you reconcile with some of the peers and what they're guiding and what you're guiding? Is it just really Apple and Huawei is going through a volatile patch for orders? Or is there something more structural you think it work? And maybe a second question for Cristiano. You talked earlier this year I think at Mobile World Congress actually that you were assuming no Apple business in 2024 because you didn't have orders and new orders there. Has anything changed with regards to Apple? And how should we think about this relationship beyond calendar '23? Akash Palkhiwala : Yes, Brett. So I'll start with your first question. If you -- let me break it down into Android and Apple in 2 parts. Within Android, two comments to keep in mind. First is we don't think there has been any significant shift in share between the players over the last few months. However, what has happened is when you look at our total share of sell-through for '23 relative to '22, as I mentioned earlier, we've actually gained share within Android. So we continue to have a very strong position and the kind of the seasonality across the quarters for Android is really a reflection of when devices are launched and which tiers we play in, which is the premium and high tier, which they center around the holiday season versus midway through the year. So that's how I would think about the Android market. On Apple, as I've said before, we expected muted seasonality in the fourth quarter due to the timing of chipset purchases. We did see them buy additional chipsets earlier in the year. And so what we are forecasting now is expected demand, expected shipments into the next quarter. So it's -- that really just speaks to timing again rather than some fundamental trend. As you know, we expect to be a majority of the share in the new upcoming launch, and so it's not really a share question. Cristiano Amon: Brett, to your second question, for the iPhone that is launching this year, we are going to support the modem. We're not making any updates to our prior plans for 2024. Operator: Our next question is from line of Tal Liani, Bank of America. Tal Liani: Yes. Auto market, we spoke a lot about the handsets. I have two questions related. Auto market was also weak. Can you give an update on why it grew 13% versus 16% Street expectations? But this 13% is also lower than what we have seen before. So can you talk about the trends there? IoT was in line with expectations, but it's still declining 24% a year. So what is the trend over there? And on the handset side, I'm just wondering if there was deterioration throughout the quarter or it was improvement throughout the quarter? Kind of what was the intra-quarter trend? Akash Palkhiwala : I understand. I understand. On the handset side, really largely in line with what we had expected. So no trend one way or the other. Auto, in our actuals, came in slightly below our expectations. However, if you see what we guided for the upcoming quarter, quarter-over-quarter growth, we're guiding low double-digit growth. So it's just timing between the quarters that's impacting it. Within IoT, I'd say very consistent with comments earlier in the call, it's really the overall environment and how it impacts demand and impact on inventory is what's reflected in our numbers, very consistent with what some of our peers have seen as well. Tal Liani: And Akash, just a clarification on something you said. You said that December should be in line with normal seasonality. I tried to look back at seasonality, and it's inconsistent. It's very hard to speak about normal. What -- how do you define normal seasonality for the sector? Akash Palkhiwala : If you break it down into parts. I think you look at QTL growth, we've consistently seen QTL grow as a result of mix of devices and total market size. So that would be part one. The second is we've seen the handset market grow primarily due to the launch of a flagship device by a modem-only customer. And so we would see that as well. So those are the 2 factors that would drive a majority of our growth into the December quarter. Operator: Our last question is from the line of Timothy Arcuri with UBS. Timothy Arcuri : I had 2. So Akash, I'm wondering if you can provide more color just on these channel headwinds. You gave a $2 billion number, I think, for December and then that came down to $1 billion or it was supposed to come down to $1 billion in March. And it was supposed have been gone by June. Obviously, it's not gone. Can you kind of quantify what the headwind is? And maybe also talk, is that component inventory at your customer is still coming down? Or is that handset sell-in still being above the handset sell-through? And then I had a second question as well. Akash Palkhiwala : Yes. So when we talk about channel inventory, we talk about total inventory across beyond us. So it's customers and channel both combined. I mean, clearly, as we've gone through the year, the headwinds have been meaningfully higher than we'd expected going into the fiscal year. So that is reflected in the updates that we're giving. No fundamental change to our view of our share position and overall market we've talked about as well. So it's just those factors running through our numbers. We don't have an updated estimate of how much the total impact would be. But it's the same factors that we've been talking about through the year. We've not changed the total market size since the last call. Timothy Arcuri : Got it. And then just last thing. So do you have any data on the refurbished market? It seems that it has gotten pretty large and maybe it's affecting the new Android market. Sort of what portion of the handset TAM this year do you think is used or refurb? Could it be -- I mean, we've seen numbers in the $350 million unit range, something like that. So the market is flat to down, but the market for new phones is really actually down quite a bit. Can you actually talk to that? Akash Palkhiwala : Yes. So we have the same data as you do on the refurbished phones. It has grown over the last couple of years. when we give the market, the global handset unit information, we're not talking about the refurbished phones. We are talking about new phones. And so it's already factored into the guidance we gave. Operator: This concludes today's question-and-answer session. Mr. Amon, do you have anything further to add before adjourning the call? Cristiano Amon : Thank you. We'd just like to thank all of our employees, our customers, our suppliers and partners. I think the key messages were -- we like our strategy, continue to execute on our strategy. We're executing to plan. I think we have 1 of the best product road maps in our history. We like the design traction. And in the current uncertain environment, we're just focused on taking action on things we can control and make sure we're prepared when the market rebounds. Last comment is we see a new inflection point, as I mentioned before, on the edge from Gen AI. And what we like about it, that to happen on device, fundamentally, you need a new computing engine. We have CPU, GPU, but you need something different, which is the NPU. I think we have been investing this for over a decade. We're very happy how it performs, and I would like everybody to follow what we're going to show and announce at the upcoming Tech Summit in October. Thank you very much. Operator: Ladies and gentlemen, this concludes today's conference call. You may now disconnect.

Operator: Ladies and gentlemen, thank you for standing by. Welcome to the Qualcomm’s Second Quarter Fiscal Year 2023 Earnings Conference Call. [Operator Instructions] As a reminder, this conference is being recorded today, May 3, 2023. The playback number for today’s call is 877-660-6853. International callers, please dial 201-612-7415. The playback reservation number is 13737571. I would now like to turn the call over to Mauricio Lopez-Hodoyan, Vice President of Investor Relations. Mr. Lopez-Hodoyan, please go ahead. Mauricio Lopez: Thank you, and good afternoon, everyone. Today’s call will include prepared remarks by Cristiano Amon and Akash Palkhiwala. In addition, Alex Rogers will join the question-and-answer session. You can access our earnings release and a slide presentation that accompany this call on our Investor Relations website. In addition, this call is being webcast on qualcomm.com, and a replay will be available on our website later today. During the call today, we will use non-GAAP financial measures as defined in Regulation G, and you can find the related reconciliations to GAAP on our website. We will also make forward-looking statements, including projections and estimates of future events, business or industry trends or business or financial results. Actual events or results could differ materially from those projected in our forward-looking statements. Please refer to our SEC filings, including our most recent 10-K, which contain important factors that could cause actual results to differ materially from the forward-looking statements. And now, to comments from Qualcomm’s President and Chief Executive Officer, Cristiano Amon. Cristiano Amon: Thank you, Mauricio, and good afternoon, everyone. Thanks for joining us today. In a challenging macroeconomic environment and broad downturn across the semiconductor sector, we're pleased to deliver fiscal Q2 results consistent with our prior guidance. We delivered fiscal Q2 revenues of $9.3 billion, non-GAAP earnings of $2.15 per share were at the midpoint of our guidance. Our chipset business delivered revenues of $7.9 billion near the high end of our guidance range. Our licensing business delivered revenues of $1.3 billion at the low end of the guidance range on weaker demand for handsets. The evolving macroeconomic backdrop has resulted in further demand deterioration particularly in handsets at a magnitude greater than we previously forecasted. As a result, we're operating under the assumption that inventory drawdown dynamics remain a significant factor for at least the next couple quarters. Additionally, while expectations are for a rebound in China demand in the second half of the calendar year, we have not seen evidence of meaningful recovery and are not incorporating improvements into our planning assumptions. While the challenges we are facing are impacting the semiconductor industry, we remain focused on managing what is within our control and will continue to execute on our diversification strategy in leading technology and product roadmap. As market visibility remains limited, we're actively managing operating expenses, and we'll continue to evaluate additional opportunities to drive greater operating efficiencies without losing sight of the automotive and IoT growth opportunities ahead. Let me now provide key highlights from across our business. In handsets, we extended our 5G technology and product leadership with the Snapdragon X75 5G modem RF system. The world's first 5G advanced ready modem RF platform that will drive the next phase of new 5G capabilities globally, starting in 2024 across segments, device types and networks. The X75 modem is now the benchmark for 5G performance and features for all flagship smartphone launches next year. Our Snapdragon 8 Gen 2 mobile platform is the standard for Android flagship devices globally, with launches across leading OEMs, including Samsung, Xiaomi, Vivo, Oppo, OnePlus, Honor, Motorola, ASUS and ZTE. Additionally, our Snapdragon 7 Series is redefining the high tier. Our recently-launched Snapdragon 7+ Gen 2 mobile platform outperform its competitors' premium-tier solutions, winning multiple accolades for its superior power and performance. We are seeing excellent adoption across Chinese OEMs, resulting in share gains. OEMs are also reporting strong initial sales for products powered by the 7+ Gen 2. In automotive, we see continued traction across global automakers and Tier 1 customers, driven by the increased adoption of our Snapdragon digital chassis. We are very pleased to be partnering with Mercedes-Benz on our next-generation Snapdragon Digital Cockpit platforms. This is a result of our long and close collaboration with the MBition Mercedes-Benz Software Factory and engineering teams and various partners to create an industry-leading MBOS premium cockpit experience. The new platforms will be featured in Mercedes vehicles beginning in 2023. Additionally, our OEM partners recently launched vehicles with our third-generation Snapdragon Cockpit platform, including the Xpeng P7i and Lotus new Eletre SUV. Notably, during the quarter, we won 12 new designs across our Snapdragon Cockpit and Snapdragon Connectivity 5G platforms with automakers across the globe. We remain on track to execute on the milestones outlined during Automotive Investor Day. In consumer IoT, we continue to be encouraged by the positive momentum with Windows on Snapdragon. Dell recently launched the Inspiron 14-inch laptop powered by the Snapdragon 8cx Gen 2 Compute platform. In addition to OEMs, we're expanding our ecosystem across bios, hardware, software, ODM and channel partners. We're also launching the Windows on Snapdragon developer portal to enable consumer and enterprise ISVs to test, port and optimize their applications directly on Qualcomm Silicon. Our next-generation Snapdragon Compute platform, with custom Orion CPUs and industry-leading AI acceleration, is on schedule to enable commercial device launches in 2024. As a reminder, we remain the platform of choice for all significant ecosystem players for XR, notably Meta, the joint partnership with Samsung and Google and broadly in China. While still in its early phases, we believe the merger of physical and digital spaces will become a significant opportunity for Qualcomm. We also continue to win designs for home robotics, smart appliances and smart camera applications with household names such as Bosch, LG Electronics, Panasonic, Samsung and Sony. In Edge Networking IoT, we're very pleased to share that we're now collaborating with Reliance Jio on rolling out 5G FWA across India, servicing millions of residents. We also recently announced the Qualcomm 5G Fixed Wireless Access Platform Gen 3, offering operators the ability to expand their service coverage to new areas while lowering cost and enabling faster deployment. Additionally, we continue to lead the transition to Wi-Fi 7 with more than 175 cumulative designs across all product categories. Access points account for 89 of these designs, with 16 launches in the quarter. In Industrial IoT, we announced the Qualcomm Aware platform to empower developers and enterprises to easily build real-time intelligence and visibility solutions. The platform combines simple, secure and scalable cloud-based services with power optimized and precise location tracking and an extensive hardware ecosystem to deliver tailored edge solutions across many industries. Additionally, we led the Bluetooth SIG working group to help establish a new standard for electronic shelf labels that are scalable, ultra-low power and highly secure. This will help enable large retailers to accelerate the digital transformation of the store with electronic labels that can interact with both store and consumer devices. Our OEM partner, SES-imagotag, recently announced an agreement with Walmart to deploy electronic shelf labels across 500 stores over the next 12 to 18 months. I would now like to provide a perspective on the disruptive trends in the artificial intelligence space and the significant opportunity for Qualcomm. Demand for generative artificial intelligence models is growing at an exponential rate. Generative AI models such as ChatGPT, Stable Diffusion and DALL-E have already scaled to millions of users in a short period of time. We believe that this model will evolve quickly, continue to grow in popularity and change user experiences across mobile, personal computing and automotive. Beyond changing Internet search, this model will have an impact on content creation such as text, images, audio and video for both entertainment and productivity. It will also transform many industries. For these models to realize their full potential and scale, they will need to run locally on devices at the edge. At Mobile World Congress, we demonstrated the world's first on-device Stable Diffusion, a greater than 1 billion parameter foundational model for text-to-image applications running completely on a Snapdragon-powered Android smartphone. In the coming months, we will significantly improve performance and be able to run models in excess of 10 billion parameters locally on the device, and we will increase this capability substantially for our products in 2024. Qualcomm is uniquely positioned to enable the proliferation of AI use cases on edge devices. We're advancing AI to make core on-device capabilities ubiquitous such as perception, reasoning, action and now, content creation. With millions of AI-enabled platform shipments per year, unparalleled AI processing performance per watts in the broadest range of device categories from smartphones to PCs, automotive and IoT, Qualcomm is firmly at the forefront of this upcoming transformation. Further, very large AI models are placing significant incremental demands on energy-intensive and expensive cloud computing infrastructure. As such, a hybrid AI architecture leveraging accelerating computing at the edge can offload or support cloud processing by running AI inferencing directly on the device. Beyond cost optimization, additional benefits of running generative AI on device include improved latency, security, privacy and the ability to meet data compliance requirements. This is a new and exciting opportunity for Qualcomm in one of our priority investment areas. As I close my prepared remarks, I would like to reiterate that the secular technology trends driving the long-term growth opportunities for Qualcomm remain unchanged. Despite the disappointing macroeconomic environment, our investments in technology leadership, our best product road map and history and strategic customer relationships across multiple industries position us well to execute on our strategy and expand across new and diverse end markets. I would now like to turn the call over to Akash. Akash Palkhiwala : Thank you, Cristiano, and good afternoon, everyone. I'll start with our second fiscal quarter results. Despite a difficult operating environment, we delivered revenues of $9.3 billion, which was above the midpoint of our guidance, and non-GAAP EPS of $2.15. QTL recorded revenues of $1.3 billion and EBT margin of 68%, reflecting lower-than-expected global handset units. On a year-over-year basis, we estimate global handset sell-in units declined by approximately 14%. QCT revenues of $7.9 billion and EBT margin of 27% were both near the high end of our guidance. Handset revenues increased 6% sequentially to $6.1 billion, benefiting from device launches with Snapdragon 8 Gen 2, our latest premium-tier chipset platform. IoT revenues of $1.4 billion reflected a larger-than-expected impact of macroeconomic environment on demand and channel inventory drawdown. Automotive revenues of $447 million grew 20% year-over-year, driven by the adoption of our Snapdragon digital chassis and are aligned with our long-term revenue target. Non-GAAP operating expenses of $2.2 billion were favorable relative to our guidance by approximately $80 million. We returned $1.7 billion to stockholders, including $903 million in stock repurchases and $834 million in dividends. Additionally, we are pleased to have announced a 7% increase in our quarterly dividend, consistent with our commitment to dividend growth. Before turning to our third fiscal quarter guidance, I'll give you an update on cyclical challenges impacting the semiconductor industry. Financial headwinds have increased meaningfully relative to our initial expectations going into the fiscal year. With a combination of an uncertain macroeconomic outlook, persistent inflation and a slower recovery in China, which continued to impact demand globally. We now expect global 3G, 4G, 5G handset units in calendar '23 to be down at least a high single-digit percentage relative to calendar '22, which is lower than our prior expectation. Given the weaker handset forecast, until demand normalizes and visibility improves, we anticipate that customers will remain cautious with purchases and reduce channel inventory risk further. Within IoT, we continue to see the impact of similar factors as Handsets. Since it remains difficult to predict the timing of a sustained recovery, we are operating under the assumption that the inventory drawdown dynamics will remain a significant factor for at least the next couple of quarters. To effectively navigate this uncertain landscape, we are focused on driving operating efficiencies while maintaining our commitment to invest in diversification and long-term technology leadership. We believe we remain well positioned to capture a rebound in demand once it occurs. We are on track to meet our commitment of a 5% reduction in non-GAAP operating expenses relative to our fiscal '22 exit rate. This includes a further reduction of spending in handsets to fund diversification investments in Automotive and IoT. As the environment continues to evolve, we will evaluate and execute additional cost-reduction opportunities to help exceed our operating expense target. Turning to guidance for third fiscal quarter. We are forecasting revenues of $8.1 billion to $8.9 billion and non-GAAP EPS of $1.70 to $1.90. Our guidance reflects the impact of macroeconomic headwinds, weaker global handset units and channel inventory drawdown. In QTL, we estimate revenues of $1.15 billion to $1.35 billion and EBT margins of 64% to 68%. In QCT, we expect revenues of $6.9 billion to $7.5 billion and EBT margin of 23% to 25%. Based on the midpoint of QCT revenue guidance, we estimate a larger-than-normal sequential decline primarily due to the timing of purchases by a modem-only handset customer. On a sequential basis, we are forecasting Android handsets and Automotive revenues to be roughly flat, with mid-single-digit growth in IoT. Consistent with our previous messaging and second quarter results, QCT gross margins reflect the impact of the transition from supply constraints to elevated channel inventory in addition to foundry cost increases. Lastly, we expect non-GAAP operating expenses to be approximately flat sequentially. As we look ahead, we expect the dynamics impacting the third fiscal quarter to extend to the fourth quarter, including the timing of purchases by a modem-only handset customer resulting in muted seasonality in QCT revenues. In closing, while we are not immune to near-term headwinds, we are well positioned to benefit from an eventual recovery in the macro environment. Despite a reduction in global handset units and the continued drawdown of elevated channel inventory, QCT handset revenues has benefited from increased content per device, expanded traction with OEMs and improved mix across tiers. We remain focused on executing our diversification strategy and positioned ourselves for success in our largest growth opportunities, including Automotive, Industrial and Networking IoT, personal computers and XR. We're confident in our ability to navigate the current operating environment, given our strong balance sheet and debt rating. Thank you. Back to you, Mauricio. Mauricio Lopez: Thank you, Akash. Operator, we are now ready for questions. Operator: [Operator Instructions] First question is from Samik Chatterjee with JPMorgan. Please proceed with your question. Samik Chatterjee: Hi, thanks for taking my questions. Thanks for all the details in the prepared remarks. I had one on smartphone and one on auto, so if I can just start on the smartphone one. I think I know you're sort of taking down your guidance for the overall market outlook today for 2023. But if I look at your QTL guide, it does sort of imply that you're looking at more of a stabilization in the sell-through at an absolute level. So when I look at your QCT guide rate there, it does suggest that most of the headwinds you're seeing or expecting there are inventory and timing of the purchases. Maybe just sort of confirm if that's the way sort of -- if I'm interpreting that right? And what's the maybe magnitude of the timing and the inventory headwinds to the QCT revenue guide for fiscal third quarter? And I have a follow-up. Akash Palkhiwala: Yes, Samik, you're thinking about it the right way. It's the right thing to connect the market forecast to QTL, and then QCT really has this additional factor that is related to the inventory drawdown. Our view of inventory drawdown is really the macro headwinds increase -- have increased meaningfully since the beginning of the fiscal year, and so what we've seen is the impact on market is driving a scenario where it takes longer to run through the existing inventory. We don't have a fundamental change in how much inventory we think the channel had going into the year that was accessed. It's just how long it takes to run through it as a result of the market forecast. Samik Chatterjee: Yes. Okay. Good. And on the auto side, Cristiano, you talked about the 12 design wins, but you mentioned them being in Cockpit and Connectivity. So I wanted to check if you have an update on ADAS and the engagement from your customers on that front and your product road map? And related to auto, I think there's been some concern about exposure to China volumes in terms of your pipeline. If you can sort of maybe just some ballpark estimate about how much of your pipeline is reliant on China electric vehicle volumes? And how should we -- how are you thinking about sort of the risk around those production numbers. Cristiano Amon: Very good. The 12 designs is what happened in the quarter. So we just highlight in the quarter, we had designs on the digital cockpit as well as 5G for telematics. We do -- we are working on some new designs on ADAS that is going to take us throughout the second half of the year, but we're not announcing at this time. The second comment is on China market. We have seen, I think, consistent with the overall theme of China, some weakness in China auto. I think consistent with the rest of the market. But our design and presence with the China EV, with the local OEMs is very, very high. And I think we continue to gain share. Operator: The next question is from the line of Matt Ramsey of TD Cowen. Please proceed with your question. Matthew Ramsay: Thank you very much guys. Good afternoon. I have two questions. I guess I'll just ask them at the same time to make this quicker. The first one, Cristiano, in China, you were pretty clear in your script and I think you were -- you guys were earlier than most bellwether companies in flagging this, but the recovery in China in the second half of the year might be a bit more muted. And I think during the peak, obviously, things were being over shipped into China during the peak. I think we were 500 million units, give or take, on an annualized basis in China, and I think we're running closer to 300 million now on a sell-through basis. Maybe you could update us, are those numbers roughly right? And what are you guys seeing in terms of a recovery? And maybe how much are you undershipping that today that could still help your numbers in the back half of the year as you come back to shipping with parity of sell-through? And I guess I do have a follow-up, but maybe I'll just do that one first. Akash Palkhiwala: Matt, it's Akash. In terms of China sell-through, I think if you're looking at any of the analyst resources that's sizing the scale of the market, we're seeing pretty much the same number. So if you're -- that's what you're quoting, I don't have the exact numbers in front of me, but that's what you're quoting, it'd be consistent. The way we are thinking about the inventory drawdown is, of course, it's a near-term phenomenon. We're going to get past it. The strength of our design win pipeline is very strong, so if you -- if one way to measure it in our minds is we look at our share of sell-through. And we've seen that share grow from '22 to '23, so that should give you a sense of our position going into the next year. Cristiano Amon: Just -- Matt, this is Cristiano. I just want to add one thing. Common sense, and I think the overall expectation is following the reopening, the China market was going to bounce back. It has been very suppressed, I think, during the lockdown and during the pandemic. I think what we're basically saying is we have not seen those signs yet, so therefore, we thought that prudence not to put in our planning assumptions, but you're going to be monitoring the situation. But the dynamic we see right now is exactly what Akash outlined. It's an inventory drawdown, and that's why I think the difference between the QCT and the QTL business. Matthew Ramsay: As my follow-up, mid-single digits up, I think, in the guidance you mentioned for IoT. There are sort of three different segments of the business there. If you could -- that there's been an inventory correction across the IoT business, and I think many of us have less visibility on a granular basis there than in your handset business. So if you could just talk through the dynamics of that business recovering a bit in June, that'd be helpful. Akash Palkhiwala: Sure. So it's Akash. When the initial weakness that we saw in IoT was in consumer, and then we've kind of seen that expanded into industrial and edge networking, and specifically China playing a significant role in that weakness. So it's a combination of all 3 areas. Now as we look forward, a lot of the growth that we're expecting within the quarter is actually going to be across -- recovery across all 3, so there isn't one that stands out that I would point to. And then maybe the last point on IoT is really when you step back and think about the broader digital transformation process and where we are at, our technologies continue to become more relevant. Cristiano talked about Edge AI, and that's going to be another technology that's going to be extremely important in Industrial, PC, XR and other areas. So still very optimistic about how things look longer term, and we'll kind of work through everything in the short term. Operator: Our next question is from the line of Mike Walkley with Canaccord Genuity. Please proceed with your question. Mike Walkley: Cristiano, just a follow-on question for you just on the market dynamics. You made some comments about how well the Snapdragon 7 is performing relative to premium tier from your competitor. Can you talk about design win traction and share gains that you're seeing maybe further downstream from the premium tier? And once inventory clears, do you think that you start to see some sharper share gains coming back maybe in the Chinese New Year into calendar Q4? Is that too early to call on the inventory side? Cristiano Amon: Mike. Thanks for the question. I will say we are no longer in -- and that's probably an understatement, right? We're no longer into a supply-constrained environment. So as the supply constrained environment got resolved, we have the ability to gain share. And I think as Akash outlined, if you look at our share of activations and sell-through compared to '22, you see a very positive picture for us in China. We've been gaining share on what we call the high tier. The 7 -- the new 7 Series, we made a lot of investment including leveraging the Snapdragon brand and the position of the 7, very well received in the market. Our 7+ outperformed, I think, the competition premium tier, and we like because it sets the floor. And then you have Snapdragon very uniquely positioned in the 8 series. And I think as outlined from a share perspective, we're gaining share. Just the whole markets to go into the dynamic that we just outlined on inventory, but we like our position in the marketplace. Mike Walkley: Great. Thanks and maybe a quick follow-up for Akash. Just on QCT margins, just given the inventory work there, is there any mix or anything else we should think about on QCT margins as you go through this inventory clearing and less modem-only shipments over the next couple of quarters? Akash Palkhiwala: Yes. So from a gross margin perspective, as we've consistently said, and I said this in the last call -- last earnings call as well. Once we get past supply constraint, we expected some pressure on gross margins, so you're seeing that come through. But if you step back from that and just look at mix of devices and how that drives margin 1 way or the other, there isn't anything that's significant enough to discuss. It's really the current environment playing through. And then as we look forward, as remaining disciplined with pricing as we grow in a mature market. Operator: Our next question is from the line of Stacy Rasgon with Bernstein Research. Please proceed with your question. Stacy Rasgon: Hi, guys. Thanks for taking my question. For the first one, I was wondering if you could define what you mean by muted seasonality for September quarter. I think you're usually up. I mean, it's not uncommon for you to be up double digits. What are you thinking now? And I guess maybe if you could talk a little bit about the different drivers, Handset, IoT, Auto into Q4? Akash Palkhiwala: Sure, Stacy. It's Akash. If you look at our typical seasonality from third quarter to fourth quarter, it's really driven primarily by the launch of a new flagship device and the build that happens for that device. Outside of that, there are some other puts and takes, but that's the primary driver of the growth. What we're suggesting is, as I outlined in the prepared remarks, we expect that to be muted because the lower demand from the modem-only handset customer extends from June into the September quarter as well. And the reason for this is we saw them buy a little more earlier in the year, and so this is just kind of balancing purchases of chips from us. To be clear, this is not a comment -- to be clear, this is not a comment on their sell-through and it's not a comment on our share within the OEM either. This was just the timing of purchases from chips from us. Stacy Rasgon: Thank you. For my follow-up, like, I know you said you expect the inventory drag in the last next couple of quarters. But I guess, into June, given the magnitude of the drawdown is better or worse or about the same as what you saw in March? I'm just trying to gauge directionally, is it getting at least better or worse even though we know it's still there? Akash Palkhiwala: Yes. So honestly, Stacy, there's a different story with every OEM. There are certain OEMs who are much further ahead in reducing the inventory profile and there are others, including the ones we just discussed, happening over the next couple of quarters. So I haven't specifically sized it in terms of scale, but I would say each of the quarters has an impact from that phenomenon. Operator: Next question is from the line of Ross Seymore with Deutsche Bank. Please proceed with your question. Ross Seymore: Thanks for me asking the question. Cristiano, I just wanted to focus on the diversification side of things. I know organically what you're doing in IoT and Automotive. Are there inorganic opportunities to accelerate that? Or is the diversification effort going to just simply take time because Automotive and IoT are great markets, but they take a reasonable amount of time to penetrate, especially given their relatively smaller size versus your Handset-oriented businesses? Cristiano Amon: Thank you, Ross. Look, there are inorganic opportunities that we continue to look into the market. We've been clear. We have been focused in identifying M&A opportunity to help us to accelerate diversification. We've been very careful just because in the current environment, we wanted to do something that is actionable and we'll continue down this process of identifying, but we are looking at inorganic options as well to accelerate diversification. And we're also very excited about -- what I mentioned into the prepared remarks, I think this incredible opportunity that we now have. We're very uniquely positioned to do AI in a very high performance and low power and all the devices at the edge, and I think that's going to accelerate our diversification strategy across all the new segments. Even though it could create a new upgrade cycle in phones, but it's going to be relevant to all of the other segments of diversification as well. Ross Seymore: Thanks for that, Christiano. I guess one for Akash as my follow-up. On the Handset segment, it looks like you're guiding that down kind of low teens sequentially. I know you said Android's flat and the modem-only customer would be the headwind. How is Android flat if you still are saying macro is a problem, inventory burn's a problem, et cetera? Is that just evidence of the share gain? Or what's going on there? Akash Palkhiwala: Yes. I assume your question, Ross, was related to QCT? Ross Seymore: Just QCT, that's what you guys call it. That's not aggregate. Akash Palkhiwala: Yes. Yes. So if you think about our historical kind of trend between these two quarters in the Android business, we're staying very consistent with that -- this quarter. I mean, if you look at last year, second quarter to third quarter, our Android business was roughly flat, and we're guiding the same this year. So it's just following the same trend and the factors, the market and inventory drawdown exist in both quarters. Operator: Next question is from the line of Joe Moore with Morgan Stanley. Please proceed with your question. Joe Moore : Great. Thank you. I guess as you look at the year-on-year decline in Handsets, how much of that would you attribute to inventory build in a year ago, inventory depletion now or any kind of change in kind of like-for-like pricing? Can you just kind of separate out those 3 factors? Akash Palkhiwala: Yes. Joe, we haven't talked about it or given specific numbers on it. But one of the frameworks to look at it would be to look at the two years combined. One year had the bill, the second year has the bleed. And if you look at that combined, it will give you a framework of what the run rate strength of the business is. The other thing I would say is just the one thing to calibrate in that framework is also to look at the market size as the overall market has continued to come down. But that's, I think, a good way to at least start figuring out the run rate of the business. Joe Moore : Okay. And then you mentioned you always sort of felt like as you came out of an allocation mode that there be a little bit of a gross margin headwind. What causes that? Is it just that -- are there expedite easy we're getting before? Is it more promotional now? And has there been any change in kind of like-for-like pricing as you've kind of moved out of that type of supply environment? Akash Palkhiwala: Yes. So it's a combination of them. I mean given supply constraints, we were able to exercise some pricing leverage that gets neutralized in the current excess inventory environment, and so that's just playing out through the numbers. The other two factors to keep in mind is we had a price increase from foundry that ran through starting first of January as well, and some underutilization in our RF front-end fabs that over time will get filled back in as demand comes back, and so that should be a tailwind for us going forward. Operator: Our next question is from the line of Blayne Curtis of Barclays. Please proceed with your question. Blayne Curtis: Thanks for taking my question. But maybe just following up on that last one on gross margin. I mean I guess if I'm looking at the numbers, it seems like your ASP is still going up. So is it really just the higher cost? And I guess second part of it is, I think there's a lot of concern about more competitive environment, MediaTek moving up to the high end. So just can you go back and just talk about that environment? I think you said there's no more like-for-like, but I mean, I think there's a lot of concern about maybe people buying older products and not taking Gen 2 and MediaTek moving up. Just kind of touch on those points. Akash Palkhiwala: Yes, Blayne, so I'll address the first part and then Cristiano will address the second part. On gross margin percentage, I think it's a reasonable way of thinking about it. Our gross margin dollars per device continues to grow, and that's the strength and it kind of adds scale and profitability to the business, but we have seen gross margin percent get impacted by the couple of factors I just outlined. But again, those are, to me, kind of ins and outs of the business. It's better to kind of step back and look at the broader longer-term opportunity for us to continue to add content to our chips, which we have done very successfully over the last 3 years. And we have an opportunity to do that, especially with our new custom CPU course coming into play into all of our product lines, including Handsets. And then with the AI that Cristiano just outlined, that will create an opportunity for us as well. Blayne Curtis : Go ahead. Cristiano Amon: No, I'm sorry, I'm just going to add a couple of comments to your specific questions. Look, the way we see this, we have done, I think, the right choices of investment. We feel pretty good about the road map and we took this very, very focused strategy and make sure that our 7 tier outperforms the competition premium tier. And that changes the landscape, which means we are very well positioned above that in the 8, as I outlined. Our design traction is very good especially within all of the OEMs, no exception. I remind you that we are globally with Samsung. Our agreement with them, we have the launch of GS 23, that just happened, then we have the Fold and Flip. And then we have the GS24. It's going to be a number of years of association of Samsung with Snapdragon brand globally. And the size of the market is not good, but our position is very strong. And as I outlined before, we're gaining share. Blayne Curtis: And then if I could just follow up with the modem-only. In terms of the timing, there's -- I guess you guys have been waiting if there's any decision of that customer to move away. I'm just curious if that timing you would be notified at this point? Or if you thought that the timing of shipments had anything to do with their transition? Cristiano Amon: No, it has nothing to do with the transition. The further transition, I think we said a number of earnings calls ago that we're expecting to be in the product that they launched in '23. And in '24, we have no change to our planning assumptions. Operator: Our next question come from the line of Brett Simpson of Arete Research. Please proceed with your question. Brett Simpson: Thanks so much. Cristiano, I wanted to ask about the state of the Android market. There seems to be a sort of consistent structural share loss here. And I guess, even going back pre-COVID, Apple has been growing their business since COVID and Android just seems to keep losing share. So what do you think is going on? And how much of the structural decline in Android, do you think, is the secondhand iPhone market? And then I don't know whether you can size this, how big do you think the secondhand market is and how it's affecting Android? And what do you think the Android value chain is going to do to reboot their business? Cristiano Amon: Yes. No, it's a great question, and there are a number of things to unpack. So first, I just want to go back a little bit in recent history. I think there was an addressable market for premium devices, and to some extent, premium and high-tier devices that became available as Huawei declined in share. And the reality, Apple pick a significant amount of their share. We did as well, I think. So our competition, I think everyone grew as the expense of the market. And I think that is resulting to a much larger -- you look at that Huawei Android as a net loss of Android, and that's for the areas that Apple gained share. The market is smaller and those -- even the component of hand-me-down phones, it's accounted in our planning of a smaller market. I think that's a -- that's where we are until we go to the next upgrade cycle, cyclical business. But our position in Android has improved, and I think if you look of our trajectory actually on the smaller Android market, we've been gaining share and focus on the value share of the market with concentration in the high and the middle tier. Brett Simpson: Do you think the secondhand market is growing structurally? I mean, just to understand the dynamics because some of the data we've seen, it would suggest that this is starting to have an impact on the Android volumes. Akash Palkhiwala: Yes, Brett, it's Akash. So I divide this into two parts. I think there's a second hand market that has been around for a long period of time in emerging markets as a hand-me-down device, and so that obviously still exists. There has been a little bit of a change at the top with the refurbished phone market, and so that's something that we're definitely closely watching and definitely contemplated in our numbers at this point. Operator: Our last question is from the line of Tal Liani with Bank of America. Please proceed with your question. Tal Liani: Akash, sometimes you give us more indications of future quarters and I wanted to ask about QTL, QCT for the September quarter. Can you provide us some comments on your expectations? Akash Palkhiwala: Sure. For QTL, typically, the market size is relatively flat between the June and the September quarter. There is a slight change in the market and our revenue is relatively flat as well, so you should think of that as a proxy based on historical trend. There isn't something specific going on this year that I'd say is different than last year, pending a recovery in the market. From a QCT perspective, on the fourth quarter, we typically have seasonality, seasonal growth. And what I said in my prepared remarks is that we expect muted seasonality this year because of all the factors that we've been discussing on this call and have been outlined in the prepared remarks as well. So that would be a framework to come up with number for September. And then obviously, as we go from there, you go into holiday season, that's typically a strong quarter for us and we would realize benefits as we go there. Tal Liani: Got it. And what's normal seasonality for Q4 for QCT? When you say muted, what's your benchmark? Akash Palkhiwala: Well, I would say if you look at last year, you would probably come with a number that would be normal, and we don't expect to be close to that. We'll see a lot of different factors. We don't have, to be honest, that clear insight into quarters at this point to give a forecast. So if you can wait for the next call, we'll definitely be updating you on that. Operator: That concludes today's question-and-answer session. Mr. Amon, do you have anything further to add before ending the call? Cristiano Amon: Yes. Thank you so much for listening to our call. Here's the summary. Like from our perspective, while the market conditions remain challenging, we're very confident to reach our Q3 estimates at this point. We're taking action where we can control as we navigate the near-term headwinds, but it's -- most important, we'll continue to execute on our strategy. We like our strategy. I think we're investing in the right technologies for growth and diversification, especially in the IoT and Auto. I feel we have a very competitive road map, so we're well positioned to benefit when the market returns to growth. And I think the last comment is we are going to become very relevant in AI. As you look at the speed of new models appearing new companies investing, new use cases, the ability to run those things locally. I talk about having ability to run 10 billion parameter models on the phone without compromising battery life and be able to demonstrate that very shortly in this year, and you can see how that creates an even larger opportunity for us in Automotive as well the entering of next-generation personal computing. So excited about that, we'll continue to invest in this area. In summary, we're very focused on our long-term success and we're steadfast in our commitment to drive maximum value for our stakeholders. And I want to thank all the employees for their dedication and contributions to Qualcomm and also our many partners and suppliers. Thank you. Operator: Ladies and gentlemen, this concludes today's conference call. You may now disconnect.

Operator: Ladies and gentlemen, thank you for standing by. Welcome to the Qualcomm First Quarter Fiscal 2023 Earnings Conference Call. [Operator Instructions] As a reminder, this conference is being recorded, February 2, 2023. The playback number for today’s call is 877-660-6853. International callers, please dial 201-612-7415. The playback reservation number is 13735295. I would now like to turn the call over to Mauricio Lopez-Hodoyan, Vice President of Investor Relations. Mr. Lopez-Hodoyan, please go ahead. Mauricio Lopez-Hodoyan: Thank you, and good afternoon, everyone. Today’s call will include prepared remarks by Cristiano Amon and Akash Palkhiwala. In addition, Alex Rogers will join the question-and-answer session. You can access our earnings release and a slide presentation that accompany this call on our Investor Relations website. In addition, this call is being webcast on qualcomm.com, and a replay will be available on our website later today. . During the call today, we will use non-GAAP financial measures as defined in Regulation G, and you can find the related reconciliations to GAAP on our website. We will also make forward-looking statements, including projections and estimates of future events, business or industry trends or business or financial results. Actual events or results could differ materially from those projected in our forward-looking statements. Please refer to our SEC filings, including our most recent 10-K, which contain important factors that could cause actual results to differ materially from the forward-looking statements. And now, to comments from Qualcomm’s President and Chief Executive Officer, Cristiano Amon. Cristiano Amon: Thank you, Mauricio, and good afternoon, everyone. Thanks for joining us today. In fiscal Q1, despite the ongoing macroeconomic headwinds and short-term challenges impacting the semiconductor industry, we delivered revenues of $9.5 billion and non-GAAP earnings of $2.37 per share, including year-over-year growth in QCT Automotive in IoT. QCT revenues of $7.9 billion were down 11% year-over-year as a result of weaker handset demand and inventory drawdown. In the current quarter, combined auto and IoT revenues represent 27% of total QCT revenues, reflecting continued progress on revenue diversification. QTL delivered $1.5 billion in revenues within Q1. As the handset industry continues to experience reduced demand, we are now expecting elevated channel inventory levels to persist at least through the first half of calendar ‘23. In addition, multiple end industries within IoT are also experiencing weaker-than-expected demand and elevated inventory levels. Given the current macroeconomic and demand environment, we’re implementing further spending reductions and streamlining operations without losing sight of the significant growth and diversification opportunities ahead. This is consistent with our commitment to actively manage operating expenses as indicated during our last earnings call. Combined with the actions we have already taken in the quarter, we expect to reduce non-GAAP operating expenses by approximately 5% relative to a run rate exiting fiscal ‘22. Despite near-term headwinds, our long-term growth opportunities remain unchanged. Our leading technologies, such as advanced wireless connectivity; high-performance, low-power compute and on-device intelligence are enabling the ongoing trends of digital transformation across industries. From a product and technology perspective, we believe we are in the strongest position in our history. Our strategy is working, and we remain focused on expanding our addressable market to approximately $700 billion in the next decade and firmly establishing Qualcomm as the connected processor company for the intelligent edge. I will now provide key highlights from across our business. In automotive, the industry continues to evolve at an unprecedented rate, driven by the adoption of digital technologies. The software-defined vehicle is at the core of this transformation, offering automakers a significant opportunity to deliver enhanced connectivity, improved safety and security features, increased levels of autonomy as well as new business models and revenue streams. We believe the Snapdragon Digital Chassis is the industry’s preferred purpose-built platform to help drive this innovation for the next generation of vehicles. At CES, we announced Snapdragon Ride Flex, which enables digital cockpit, advanced driver assistance systems and automated driving functions to coexist on a single SoC, a first for the automotive industry. Automakers and Tier 1s can now scale a unified center compute and software-defined vehicle architecture across their portfolio. We also demonstrated our expansion into two-wheelers with the latest infotainment and cloud connected digital services to enhance safety and deliver a more personal experience for riders. Our solutions also enable OEMs and fleet providers to deliver over-the-air updates, subscription services, remote diagnostics, geofencing, theft protection and more. We are very proud of the progress we have made in automotive, and we believe that we are the best positioned technology partner to help drive this industry into the future. In handsets, our recently announced Snapdragon 8 Gen 2 mobile platform begins a new era of AI accelerated experiences for smartphones. The Snapdragon 8 Gen 2 includes our first ever AI-powered camera processor that enables real-time semantic segmentation for photos and videos. A dedicated 5G AI processor that can enhance 5G data speeds, coverage, latency and battery life and an updated general purpose AI engine with a larger tensor accelerator for increased formats. We are also pleased to enable the world’s first satellite-based two-way capable messaging solution for Android smartphones. Snapdragon Satellite will provide global connectivity for messaging, utilizing Iridium’s weather-resilient L-band spectrum and will initially be available on next-generation premium smartphones using Snapdragon 8 Gen 2 within the second half of 2023. Yesterday, I was pleased to join Samsung’s Unpacked event, where they launched the Galaxy S23 family of smartphones, powered by the Snapdragon 8 Gen 2 mobile platform for Galaxy globally. This premium platform features accelerated performance and unique customizations made possible by our expanded strategic partnership with Samsung. The Galaxy S23 represents the first smartphone announced from this partnership. In IoT, which is poised to become our largest addressable market, our revenue stream spans across three categories: consumer, edge networking and industrial. In consumer IoT, our next-generation PC platform with integrated custom Oryon CPUs and upgraded AI engine has sampled on time and is exceeding our internal KPIs, delivering disruptive CPU performance per watt across tiers. In addition, Snapdragon’s AI capabilities and leading battery life opens unique new possibilities for differentiated user experiences for the modern workforce. Key examples are Windows Studio Effects, including portrait blur, eye framing and noise cancellation with voice focus. Together with Microsoft, we’re broadly engaged with the app ecosystem and are pleased that native applications have been launched for Windows on Snapdragon by market-leading ISVs such as Zoom, Amazon Prime Video, VMware Carbon Black, Cisco AnyConnect and CrowdStrike. Additionally, as Adobe announced at our Tech Summit, its creativity suite of apps, including Adobe Photoshop, Lightroom, Fresco and Acrobat will run natively on Snapdragon. We’re now engaged with major PC OEMs with multiple platform design wins across their product road maps for consumer and commercial. In edge networking IoT our Wi-Fi infrastructure and networking products continue to gain share, led by strength in enterprise Wi-Fi access points and carrier gateways. We see several trends that are favorable to our Wi-Fi solutions. Wi-Fi mesh networking continues to grow in popularity worldwide, increasing the number of Wi-Fi chipsets installed per home. The hybrid work trend appears to have had lasting impacts on enterprise networking with workers relying on real-time collaboration tools regardless of whether they are in the office or remote. Broadband internet service providers are turning increasingly to a modular software development model, creating new opportunities for Qualcomm in next-generation home gateway routers, and the transition from Wi-Fi 6 and 6E to Wi-Fi 7, which we’re currently leading across home, enterprise and carrier segments. In 5G, fixed wireless access, we’re encouraged by the significant momentum in India following the recent 5G auctions. Operators have publicly stated their ambition to provide broadband services to 100 million homes using 5G FWA. Qualcomm is well positioned to enable the 5G FWA ecosystem in India with our leading product portfolio on 5G millimeter wave-based high-power CPEs complemented by small cell and compact macro cell infrastructure modem RF platforms. We are currently working with CPE and infrastructure OEMs on the commercial rollout in India, spanning both millimeter wave and sub-6 spectrum. In industrial IoT, digital transformation is still in the early phases, and the scale of the opportunity for Qualcomm in the long term across many verticals is significant. In the tracking and logistics space, we believe we have established one of the largest ecosystems of manufacturing partners. Last month, we announced a new IoT optimized modem, the QCX216 for applications such as smart utility meters, trackers, e-mobility, parking meters, home automation and security and other location-based solutions. The QCX216 reduces power consumption by up to 80% versus the previous generation solution while also enabling customers to design modules with an up to 40% lower cost structure. In retail, our point-of-sale solutions continue to drive the transition from traditional terminals to full-feature Android-based terminals. We have shipped over 70 million Snapdragon devices since 2016 into handheld and desktops point-of-sale terminals worldwide. In enterprise video collaboration, we’re leading this rapidly growing segment, powering many of the key OEMs such as Poly, Logitech, Nit, [ph] Cisco, Bose, AVer and Alibaba. These are just a few examples of our traction within industrial, and we remain excited about the growth prospects as digital transformation accelerates. In summary, the overall long-term growth opportunity for Qualcomm remains unchanged as demand for technology extends to virtually every device at the edge. Our track record of innovation provides a unique perspective and capability to be at the forefront of the digital transformation across new and diverse end markets. I would now like to turn the call over to Akash. Akash Palkhiwala: Thank you, Cristiano, and good afternoon, everyone. And thank you for joining our call during a busy earnings week. I’ll start with our first fiscal quarter results. Consistent with our prior guidance, we delivered revenues of $9.5 billion and non-GAAP EPS of $2.37. QTL recorded revenues of $1.52 billion and EBT margin of 73%, reflecting slightly lower global handset units. QCT revenues were $7.9 billion and EBT margin was at the high end of our guidance range at 28%. Handset revenues of $5.8 billion reflected the impact of industry-wide headwinds we had previously communicated. IoT revenues were up 7% year-over-year to $1.7 billion, mainly driven by growth from our edge networking products. Automotive continued its momentum with year-over-year revenue growth of 58% to $456 million, driven by the adoption of our Snapdragon Digital Chassis. Non-GAAP operating expenses were lower than our guidance, decreasing 6% sequentially, which includes the benefit of certain cost actions we outlined last quarter. Our balance sheet remains strong with $8.2 billion in cash and marketable securities at the end of the first fiscal quarter. In addition, we expect to receive a majority of the transaction price of $1.5 billion on the completion of the sale of Veoneer’s active safety business to Magna by SSW Partners. We expect the transaction to close by the end of the fiscal year. We returned $2.1 billion to stockholders, including $1.3 billion in stock repurchases and $842 million in dividends, in line with our capital return program. Lastly, our GAAP EPS results included a $0.10 benefit from the U.S. tax requirement to capitalize and amortize R&D expenses. This benefit is excluded from our non-GAAP results. Before turning to second fiscal quarter guidance, I’ll provide an update on short-term cyclical headwinds facing the semiconductor industry. The environment continues to be dynamic with challenging macroeconomic conditions and COVID headwinds in China, driving industry-wide demand weakness. Given this uncertainty, we are incorporating a negative bias for 3G, 4G, 5G handset volumes for calendar ‘23 relative to calendar ‘22. The impact of broadening demand weakness across handsets and IoT products and the easing of supply constraints has contributed to elevated channel inventory. Based on our current assessment, we expect QCT customers to continue to draw down on inventory, at least through the second and third fiscal quarters. At this point, we’re optimistic that the demand and channel inventory may normalize during the second half of the calendar year, and we remain in a strong position to take advantage of the opportunity when it occurs. While our business is not immune to the macro environment, we are confident in our ability to navigate this landscape. As Cristiano summarized, we have continued to expand our actions to reduce operating expenses beyond the initiatives we previously outlined. While we are reducing spending on handsets and SG&A, we continue to fund our diversification investments in IoT and automotive, which is consistent with our long-term strategy for the business. The initial benefit of these actions is reflected in our fiscal first quarter results and second quarter guidance. Overall, we are targeting a combined 5% reduction in non-GAAP operating expenses relative to our fiscal ‘22 exit rate. Turning to guidance for the second fiscal quarter. We are forecasting revenues of $8.7 billion to $9.5 billion and non-GAAP EPS of $2.05 to $2.25. The midpoint of our guidance includes an assumption of lower end market demand and the continued drawdown of channel inventory. We are forecasting QTL revenues of $1.25 billion to $1.45 billion and EBT margins of 66% to 70%, reflecting a sequential seasonal decline in handset units. In QCT, we estimate revenues of $7.4 billion to $8 billion and EBT margins of 25% to 27%. We expect handsets and automotive revenue to be flat sequentially, offset by a reduction in IoT revenues due to the factors I just outlined. We estimate non-GAAP operating expenses of approximately $2.25 billion. This reflects the typical calendar year increases for certain employee-related costs, offset by the savings from our cost reduction actions. In closing, with the uncertainty of the macro environment, we will remain focused on operating discipline and managing the factors we control. Our diversification strategy is on track, as evidenced by our design win pipeline across IoT and automotive customers. In addition, our long-term secular growth opportunity remains unchanged. We are focused on executing on our strategy, enabled by our leading technology road map and best-in-class product portfolio. Thank you. Back to you, Mauricio. Mauricio Lopez-Hodoyan: Thank you, Akash. Operator, we are now ready for questions. Operator: [Operator Instructions] First question is coming from the line of Samik Chatterjee with JPMorgan. Samik Chatterjee: I have a couple. Maybe for the first one, I hear you on the inventory digestion. But maybe one of the other concerns that investors have had for this year on the handset side is sort of delay, if any, in terms of launch plans from the Android OEMs about sort of related to their new handsets or any changes in their pricing strategy and sort of the chips that they intend to then sort of prioritize or sort of the high-end versus maiden chips that they want to prioritize to achieve those pricing strategies in the market. Maybe if you can give us some color in terms of what you’re seeing from the OEMs on that front outside of the inventory digestion? And I have a follow-up. Thank you. Akash Palkhiwala: Sure. Samik, it’s Akash. Really from a handset launch perspective, especially in the tiers that Qualcomm is very strong at, we’re continuing to see our customers launch on time. So, you’re -- we obviously saw the Samsung launch happen yesterday. Our Chinese OEMs are also planning to launch their devices on schedule. So, no change from our perspective on launch timing in the key tiers for us. Samik Chatterjee: Okay. And maybe just for my follow-up. On the IoT side, you mentioned the weakness that you’re seeing in that broader market, but maybe if you can delve into that a bit more. Are you seeing sort of more weakness just sort of being higher on consumer IoT, or is that more worsening across industrial IoT and edge networking as well? And if you can quantify what -- how to think about the edge networking opportunity relative to India in 2023? Thank you. Akash Palkhiwala: Sure. So from an IoT perspective, it’s very similar impact to other parts of the industry. It’s really the short-term cyclical headwinds that the entire industry is seeing. We’re seeing a factor of that as well. And so, it’s two parts. It’s demand weakness and then OEM inventory drawdown, both of those factors similar to handsets. And within our product line, we’re seeing -- we obviously started seeing impact in consumer IoT that we’ve talked about previously, and we’ve seen that expand a bit into industrial and edge networking. But, as we look at these -- we see these are short-term factors that are clearly kind of driven by the cyclicality in the industry that’s going on. But, when you step back and look at our design win pipeline, it still reflects the opportunity in front of us. Cristiano Amon: This is Cristiano. Samik, just to add one thing, you ask about India. Yes. We -- as we said in our prepared remarks, we’re excited about that opportunity. It’s probably likely it’s going to be one of the largest opportunity for 5G as fixed wireless access. And as we mentioned, the opportunity will be across all the operators to connect in the order of 100 million homes. So, that could be very significant. What we like about it is that millimeter wave has been utilized as well for fixed wireless access. So, that’s a great opportunity for us. Operator: Our next question is from Matt Ramsay with Cowen. Matt Ramsay: Akash, I wanted to ask a little bit of question -- a couple of questions about margins. You talked pretty explicitly about OpEx, but we’re seeing no surprise maybe with the dynamics in the macro and the inventory correction that the QCT operating margins have come down some. And maybe you could just walk us through the puts and takes on margins from here. Is March the bottom? And how should we model sort of gross margin in QCT as we go forward, given the mix of the segments might be a bit different during this inventory correction? Thanks. Akash Palkhiwala: Sure, Matt. So, let me address it in two parts. First, from a gross margin perspective, we did slightly better than our expectations and the results that we announced for the first fiscal quarter. And then, we’re guiding similar margins into the second quarter. So, from a gross margin perspective, we are holding well. And even in the challenging environment we’re in, we are doing a relatively good job. As we’ve said in the past, we always expected that once we get to supply constraints, there’ll be some gross margin pressure, and that was factored into our long-term target. So, there’s really nothing new that we haven’t told you before on gross margin side. On operating leverage, which is really the second driver here is the impact that we’re seeing from the inventory drawdown reduces the operating leverage in the business temporarily in the short term. And so, you’re seeing the operating margins being impacted by that. But kind of once you step back and abstract out of that change, you should see the operating margin more in line with your expectations. Operator: Next question is from Mike Walkley with Canaccord Genuity. Mike Walkley: Cristiano, while Qualcomm has done really well in premium tier Android, with supply easing, what’s the appetite to maybe go down to into the mid- to high-tier Android? And if so, what would be time line to maybe take share if you have interest in that market? Cristiano Amon: Thank you, Mike, for your question. Actually, it’s a great question. What we have seen in this current demand environment as well as the inventory drawdown, actually, the premium tier had done a little bit better than what the mass tier has been impacted, I think, consistent with our expectations. I think you saw that in some of our customers’ earnings call as well. However, we expect that as you get to the second half of the calendar year, we hope that the inventory drawdown situation improves as well as China reopens. And we will see an opportunity for the mid and the low tier to come back and our design traction is good in those tiers with the OEMs, and we’ll see what happens. So, we’re not -- we’re not factoring that better second half yet in our planning assumptions. I think we’re waiting. But, I think there’s optimism just because of the inventory drawdown as well as China reopening. Operator: Our next question from Stacy Rasgon with Bernstein Research. Stacy Rasgon: I have two. For the first one, Akash, you’re talking about the inventory correction, March as well as in June. You’re guiding handsets kind of flattish in March. I was wondering if there’s any sort of like preliminary color you could give us on the June quarter trajectory. Like, do you guys think March quarter in general is the bottom? And then, I have a follow-up. Akash Palkhiwala: Yes. So, the way, Stacy, we are thinking about kind of how things play out is the short-term headwinds, cyclical headwinds that we’re seeing that uncertainty remains, and we’re seeing that in handsets and IoT, so both from a demand perspective and inventory drawdown. So, we expect our QCT customers to be cautious. And until there is more visibility, they’re going to be careful with additional purchases and draw down inventory. So, that’s what’s factored in our updated guidance. When we look at the second half of the year, as Cristiano said, we’re pretty optimistic that demand and channel inventory normalizes. And that allows us to take advantage of the growth from that point on, given our strong position when the dynamic occurs. In terms of bottom, the way I think about it is we’re going to see impact for the March and June quarters, and I think there’s an opportunity from that point on as we grow in the second half of the year. Stacy Rasgon: Got it. If I could ask a quick follow-up. In your Q, you talked about you had a $344 million tailwind from higher average selling price year-over-year in the quarter, and that was for the overall chip segment. But you used to give that number strictly for handsets. Can you give us some feeling for how pricing has been trending in the handset business relative to that overall benefit you see in QCT? Akash Palkhiwala: Yes. So, if you think about pricing in the handset business, it’s usually a function of two things. First is within a given year more capabilities being added to the device, especially on the application processor side. And so, you’ve seen us benefit significantly from that over the last three years. And as we look forward, we are continuing to see demand for additional functionality. So, that’s kind of tier for tier improvement opportunity for us and for the overall industry. And then, the second factor is mix within peers and that, of course, changes across quarters. And so, that goes up and down based on what sells through in that quarter and which customer it is. But that’s more timing versus kind of a fundamental trend of revenue growth. Operator: Our next question is from Ross Seymore with Deutsche Bank. Ross Seymore: I want to focus on the handset guidance for the next quarter fiscal 2Q being flat sequentially. Can you just talk about the puts and takes that are getting you to flat? And Akash, last quarter, you gave a framework about, I think, $2 billion of inventory burn headwind. I just wonder if you were indeed successful in getting halfway through that, or is the issue now pervasive because just demand has dropped? So just the puts and takes on that would be helpful. Akash Palkhiwala: Yes, Ross. So, from a handset perspective, what we’ve assumed in the March quarter is a standard seasonal decline, and I said this in my prepared remarks from December into March. So, it’s what you would expect seasonally happens once you go between the quarters. And so, that’s what we’ve assumed, and that informs our QTL forecast for the quarter as well. Ross Seymore: But you guided flat sequentially. So, I’m just trying to -- from December to March, are you saying it would be down, except for now it’s going to be flat because you’re burning less inventory? Akash Palkhiwala: Okay. So I understand the confusion. So, the -- what I talked about was the total handset market, which we are expecting to be down quarter-over-quarter, consistent with seasonal trend. What we said was flat was QCT handset revenue, we expect to be flat. And of course, that’s a function of mix of chips and also inventory drawdown differences. Operator: The next question comes from Joe Moore with Morgan Stanley. Joe Moore: Going back to how much inventory you’re reducing in handsets. What’s your visibility into that? And I mean, are you -- are there certain customers where they sort of didn’t take anything in December and so you know that they’re coming back? Just can you give us a sense of are you sure this is all inventory reduction and not end demand? Akash Palkhiwala: Yes. Joe, we have a sense of kind of what sell-through the OEMs had because of our QTL business. And then we have the ability to compare that with what’s happening in QCT. So, we do have a pretty good sense of what is happening in the industry. And we’re confident that a large portion of it was inventory drawdown. Joe Moore: Okay. Great. And then specific to the China region, I think you mentioned some new launches in the March quarter, but it sounds like the situation there is pretty challenging in terms of visibility. Like, is China different than the rest of the world for you right now? Akash Palkhiwala: Yes. The uncertainty in China definitely reflects in our customers’ purchases, and that’s what we talked about that we expect until there is more visibility, we expect customers to be careful with additional purchases and draw down on inventory. But in terms of handset launches, we are still seeing the OEMs being extremely active and planning handset launches on the regular cadence and driving functionality within the market. Cristiano Amon: This is Cristiano. Let me just add one thing. If you look at the China handset market, the majority of sales, even though they have a big online component, the majority of sales is offline market. So, as we have -- saw, with the lockdowns and the COVID situation, there was a big impact in the handset market in China. Common sense, and that’s how some of our OEMs are also thinking is as the COVID gets behind China, you should expect the markets to open up. And what we have visibility right now is a lot of the new device launches preparing for that and some of it, which is going to be announced at Mobile World Congress. It’s too early to draw a conclusion. So, let’s go back to that conversation that there is optimism that second half could be better. Operator: Our next question is from Blayne Curtis with Barclays. Blayne Curtis: I guess kind of a combination of the two. I’m curious inventories are up on your balance sheet, Akash. Just kind of curious whether you need to work those down as well? And then I guess for Cristiano, just going back to a prior question, on the midrange. I’m curious about the pricing environment. I mean, MediaTek is having a tough first half as well. Can you just comment on what that environment is? And then, your kind of just thoughts in general about pricing and moving for share within the modem business? You did a good job navigating at the high end during the shortages, but just kind of curious, favoring profitability versus share? What are your thoughts? Thanks. Akash Palkhiwala: Sure. Blayne, it’s Akash. I’ll take the first one, and then I think Cristiano will take the second one. From an inventory perspective on our balance sheet, you’re seeing something similar to what you’re seeing on our peers and customers as well, the same set of drivers. As you know well, for leading-edge nodes, which is where we operate, the lead time is 5 to 6 months now for the foundry and chip production. And so, we were clearly starting wafers based on a different market expectation and before the inventory drawdown. So, we’ve calibrated that down. We are working with our suppliers and over time, we’ll get to a reasonable place. It is important to also remember that when you look at three years ago versus today, we’ve grown tremendously in terms of revenue and scale across our businesses. And then also supply has caught up to demand. So those two factors would naturally increase inventory anyways. But the remaining we’ll be working through, as I mentioned. Cristiano Amon: Hi Blayne, Cristiano, I’m going to take your second question. Look, it’s probably clear, both us and the other chip supplier in the handset market, dealing with the same challenges, which is the demand weakness and inventory drawdown. In the areas that we have more competition, which is mid- to low-tier, we also saw that’s the one that’s most impacted by the demand weakness. So, as we think about the market open up, our view is we’re very well positioned from a competitive perspective. We have visibility into the design pipeline. And we will remain disciplined on pricing, which is consistent to how we have behaved over the past few years. Operator: The next question comes from the line of Brett Simpson with Arete Research. Brett Simpson: I wanted to ask about fixed-wireless access. And I think you talked about in the prepared remarks that you saw a big opportunity in India playing out over the next couple of years with fixed wireless access. But can you maybe just talk a bit about the ASPs that Qualcomm gets from a typical device in fixed wireless access? And how do you see the business evolving in the next couple of years as you start to attack that in the opportunity and you can see some of the success you’ve had in the U.S. so far here and maybe other markets? Just maybe help us understand how this really plays out for Qualcomm? Thank you. Cristiano Amon: So, I will start by saying that we really like that market, and we think the market is a long-term market. I think the -- it’s clear to see now that home broadband, for the first time, you have a wireless solution that can augment fiber. And it’s really about fiber and 5G, you don’t find cable everywhere outside the United States. So, we think that’s an opportunity for both, developed and developing economies. And of course, if you look at the size of India, that’s why we’re very excited about it. We saw the auctions. The investments are being put into place by the operators and infrastructure. When we sell into that market, I think while I can’t really talk about the ASP, I tell you, it’s accretive in margins to our handset business, especially because we have a lot of content, in many cases, we also have the ability to do on Wi-Fi access point in addition of the 5G modem. And we are very well positioned with millimeter wave technology. Brett Simpson: Okay. Did you say -- sorry, Cristiano, did you say you booked that in mobile systems, or is that an IoT business? Akash Palkhiwala: It’s within the IoT revenue stream. Brett Simpson: Okay. Okay. Fantastic. Akash Palkhiwala: Yes. What I mentioned is it’s compared to our handset business, the ASPs that we have for fixed wireless is really accretive to margins. That’s what I meant, but it’s in the IoT business. Brett Simpson: Okay. Maybe just a follow-up. I wanted to ask about the recent U.S. restrictions around Huawei. Are you seeing any impact in this at all? I mean, it looks like Huawei has been shipping quite a lot of 4G devices recently. Have you been shipping components to Huawei? And if so, can you maybe just help with the impact of the latest restrictions on the business? Thank you. Alex Rogers: Yes. So, this is Alex. I’ll start, and then maybe Akash can fill in if he has anything further. So, I don’t think it’s fair to characterize it as the latest restrictions on Huawei. What we’ve seen are news reports to the effect that Commerce is considering not issuing new licenses to Huawei. And we haven’t heard anything from Commerce itself. Qualcomm has a set of licenses that we’ve had for a while that basically allow us to ship 4G and other chipsets, including Wi-Fi to Huawei. Those licenses were she goes Commerce reached the determination that they don’t affect national security issues. Those will continue for some number of years. And so, within the scope of those licenses, we don’t see an impact. Akash, anything else? Akash Palkhiwala: Nothing to add. Thank you. Operator: The next question is from the line of Tal Liani with Bank of America. Tal Liani: Two questions. Inventory days doubled and it has been going up every quarter in the last 4 quarters, 5 quarters. Can you talk about inventory days? And what is it composed of if there is any anything special we need to discuss just because of the high value? And second, more qualitatively, I want to understand what is the lag or what should be the lag on sales in China from inventory levels versus demand recovery as China reopens? Meaning, from the time that China reopens and there is demand for handsets, how should we think about the lag from that to being translated into demand from you? Akash Palkhiwala: Yes. So Tal, it’s Akash. From our perspective, the way we’re about our inventory -- and it’s really not necessarily inventory, it’s really wafer starts. What we would like to do is, given the lead time of 5 to 6 months, start wafers, 5 to 6 months in advance, plus some room on top for mix changes that might happen during the period. So, that’s the framework under which we operate. You’re right that our current inventory balance is higher than where we’d like it to be. And earlier in the call, I went through the rationale as to how we ended up there. So, we’re working with our suppliers, and we’ll kind of normalize it over time, and we feel confident we can do that. On your second question on the lag, I think that’s already embedded in the way we provided our view into the future, which is -- as we expect inventory drawdowns to happen through the March quarter then going into the June quarter, but as we go into the second half of the calendar year, as demand comes back and normalizes, we have the ability to benefit from it. Tal Liani: Got it. Last question. I’m getting a repeated question on your licensing part. I saw today the -- what you said about Nokia and Ericsson. Can you discuss licensing portion in terms of any forthcoming discussions, negotiations or anything that we need to be aware of, or is it as stable as it was the previous year? Alex Rogers: So, this is Alex. It really is just as stable as we’ve described previously. All the major OEMs are signed up long term. No other new renewals are coming up until fiscal year ‘25. The Nokia license basically split into a couple of parts, infrastructure to Nokia handset to Microsoft. Those licenses as they evolved, were not -- no longer material to the QTL business. So, that’s pretty much where things stand. Operator: Your next question comes from C.J. Muse with Evercore ISI. C.J. Muse: Two if I may. The first one, if you look back three months ago, you talked about kind of a two-quarter correction. Now it’s at least three. And so just curious to level set kind of how things have transpired over the last three months. How much of the change statement here is just end demand declining versus your customers working down Qualcomm semiconductor inventory? And then, the second question, you kind of spoke to it earlier around building inventory, and would love to hear your thoughts around kind of wafer start volume commitments. How to think about the impact to QCT margins in calendar ‘23? And is there any risk of a onetime catch-up payment on reduced volumes? Thanks so much. Akash Palkhiwala: So, on your first question, C.J., from an inventory perspective, there are a couple of drivers to it. So, first is the weaker market; second is inventory drawdown. And both are significant factors. And then the third, I’d say, is we’ve also seen IoT having the same sum of the characteristics. And so, you’re seeing a combination of those factors impacting the time period for which the drawdown lasts. Again, as we look at it, this is a shorter-term thing that when you step back, it doesn’t necessarily -- the drawdown doesn’t impact the strength of the business. And so, as the recovery happens, we’ll be in a position to benefit from it. Can you repeat your second question? I’m not sure I understood it well. C.J. Muse: Yes, sure. As it relates to your wafer commitments, particularly with TSMC, if you’re taking down the volume purchases, any risk to pricing and/or catch-up payments? Akash Palkhiwala: Yes. So, a lot of our commitments were more in the form of prepayments rather than volume commitments. So, that just means you get the prepayment back over a longer period of time. But we’re navigating through those and nothing to report at this point. Operator: That concludes today’s question-and-answer session. Mr. Amon, do you have anything further to add before adjourning the call? Cristiano Amon: Yes. Maybe just to summarize, I think how we see the earnings call. I think beyond 2023 for Qualcomm, we see many of our growth initiatives, increasing scale, including auto, PCs, XR and 5G FWA, we’ll talk about it in industrial. When we look at the current environment, we remain very confident in our ability to navigate the economic downturn and the short-term challenges, given our strong balance sheet and consistent history of strong free cash flow generation. As you can see, we’re taking action where we can control, and we believe we’ll emerge even stronger as we continue to execute on our strategy. We’re focused on Qualcomm’s long-term success, and we’ll work diligently to continue to drive growth, especially auto and IoT, diversify the company and deliver value for stockholders. I’d like to thank all the employees for the dedication and contributions to Qualcomm as well as our many partners and suppliers, and thank you all for attending the call. I know it was a popular earnings day today. Thank you. Operator: Ladies and gentlemen, this concludes today’s conference call. You may now disconnect.

Operator: Ladies and gentlemen, thank you for standing by. Welcome to the Qualcomm Fourth Quarter and Fiscal 2022 Earnings Conference Call. [Operator Instructions] As a reminder, this conference is being recorded November 2, 2022. The playback number for today's call is (877) 660-6853. International callers, please dial (201) 612-7415. The playback reservation number is 13733389. I would now like to turn the call over to Mauricio Lopez-Hodoyan, Vice President of Investor Relations. Mr. Lopez-Hodoyan, please go ahead. Mauricio Lopez-Hodoyan : Thank you and good afternoon, everyone. Today's call will include prepared remarks by Cristiano Amon and Akash Palkhiwala. In addition, Alex Rogers will join the question-and-answer session. You can access our earnings release and a slide presentation that accompany this call on our Investor Relations website. In addition, this call is being webcast on qualcomm.com, and a replay will be available on our website later today. During the call today, we will use non-GAAP financial measures as defined in Regulation G, and you can find the related reconciliations to GAAP on our website. We will also make forward-looking statements, including projections and estimates of future events, business or industry trends or business or financial results. Actual events or results could differ materially from those projected in our forward-looking statements. Please refer to our SEC filings, including our most recent 10-K, which contain important factors that could cause actual results to differ materially from the forward-looking statements. And now to comments from Qualcomm's President and Chief Executive Officer, Cristiano Amon. Cristiano Amon : Thank you, Mauricio, and good afternoon, everyone. Thanks for joining us today. Fiscal '22 has been a strong year for Qualcomm with record performance in our chipset business and a strong execution of our diversification and growth strategy. We remain focused on continuing to transition Qualcomm from a wireless communications company for the mobile industry to a connected processor company for the intelligent edge. We're driving the transformation of industries and growth of the digital economy by powering the billions of smart connected devices at the edge, utilizing our One Technology Roadmap with leadership in wireless connectivity, high-performance, low-power computing and on-device AI. While the semiconductor industry is being impacted by significant macroeconomic headwinds and other short-term challenges from which we're not immune, the fundamentals of Qualcomm's growth drivers remain unchanged with significant opportunities in the coming years. In Q4, we delivered record revenues of $11.4 billion and non-GAAP earnings per share of $3.13, reflecting record revenues in our chipset business and solid performance in licensing. QCT revenues of $9.9 billion were up 28% year-over-year, including record performance across handsets, automotive and IoT. Fiscal '22 revenues of $44 billion were up 32% year-over-year. QCT, the growth engine of the company, contributed revenues of $37.7 billion, up 39% year-over-year with combined fiscal year IoT and automotive revenues growing 38% year-over-year. QTL delivered $6.4 billion in revenues. Let me now summarize a few highlights from the fiscal year. In handsets, we entered into a new multiyear agreement with Samsung, expanding the use of Snapdragon platforms for future premium Samsung Galaxy products globally. We also executed on the changing OEM landscape opportunity, securing key premium and high-tier design wins with our customers in China. Snapdragon has become synonymous with premium mobile experiences worldwide. In automotive, our design win pipeline across connectivity, digital cockpit and ADAS is now greater than $30 billion. We also completed the acquisition of Arriver, which enhances our ability to deliver open, scalable, fully integrated and competitive ADAS solutions. Importantly, we have firmly established ourselves as a key strategic and technology partner for the automotive industry, and the Snapdragon Digital Chassis is now the preferred platform for next-generation vehicles. In IoT, we extended our chipset road map to capitalize on trends driving the connected intelligent edge, notably, the conversions of personal computing with mobile; the intersection of physical and virtual spaces; the enterprise transformation of the home; the expansion of broadband; and the ongoing digital transformation across many verticals. In consumer IoT, we increased OEM design wins in ecosystem traction for our next-generation Windows on Snapdragon solutions, which incorporate our custom CPUs. The game-changing AI capabilities of our Snapdragon compute platform recently demonstrated at Microsoft Ignite 2022 developer conference will redefine user experiences on Windows 11. We also announced a multiyear agreement with Meta to develop premium virtual reality and mixed reality experiences starting with next-generation devices powered by custom Snapdragon XR platforms. We continue to be a leading platform provider for virtually all commercially available and announced XR devices and remain well positioned as XR develops. In edge networking IoT, we have seen positive share traction related to the rollout of WiFi 6 and 6E solutions for enterprise access points and retail mesh systems. And we are seeing strong interest in new design wins for our WiFi 7 solutions. Additionally, our 5G fixed wireless access broadband solution is now the industry's platform of choice for wireless fiber globally. In industrial IoT, we built a strong foundation for growth with significant wins across industrial handhelds, robotics, payments, gateways, smart camera, enterprise collaboration and edge processing. The growing diversity of these end markets position us well to benefit from durable and margin-accretive growth opportunities in industrial. In licensing, we extended our agreement with Samsung through 2030, establishing an important benchmark for the long term and for future renegotiations. In addition to delivering record financial results, our fiscal '22 achievements validate our strategy and have provided a strong foundation for long-term growth. As we look to fiscal '23, further deterioration of the macroeconomic environment and extended China COVID restrictions have resulted in demand weakness and temporary elevated channel inventory across the industry. As good stewards of capital for our stockholders, we are committed to managing our business in light of the current environment without losing sight of the significant growth opportunities ahead. To that end, we're being very disciplined in managing operating expenses while optimizing our R&D investments to prudently focus on growth within automotive and IoT. We have already implemented a hiring freeze, and we have planned spending reductions across our mature product areas and SG&A to fund our diversification. We are continuing to evaluate additional actions, and we are prepared and committed to making further reductions to operating expenses as needed. It is important to note that the current inventory drawdown is a cyclical adjustment that has no impact on the underlying growth and earnings power of the company in the long term. And we are in a strong position to manage the near-term headwinds. Beyond 2023, we see a number of our strategic growth initiatives increasing in scale. We anticipate automotive revenues will grow consistent with our auto Investor Day projections as the design win pipeline materializes. We expect to see an inflection point in Windows on Snapdragon PCs in 2024 based on a significant number of design wins to date. XR is just at the beginning of its growth curve. 5G wireless fiber presents significant opportunities in regions such as India and other developing economies that have just started to deploy 5G networks. Lastly, the digital transformation of industries will continue to gain momentum, driving connectivity and intelligence at the edge. In summary, despite the short-term challenges, the fundamentals of our growth strategy remain intact. We remain confident in our ability to navigate the current economic downturn given our strong balance sheet and consistent history of strong free cash flow generation. We will continue to focus on stockholder returns and executing on our ongoing diversification opportunities. The powerful secular tailwinds driving multiyear demand for our One Technology Roadmap across multiple end industries are unchanged and resilient. We remain on track to expand our addressable market by more than 7x to approximately $700 billion in the next decade and firmly establish Qualcomm as the connected processor company for the intelligent edge. I would now like to turn the call over to Akash. Akash Palkhiwala : Thank you, Cristiano, and good afternoon, everyone. In a challenging macroeconomic environment, we are pleased to announce strong fourth quarter results with record revenues of $11.4 billion and non-GAAP EPS of $3.13. These results reflect year-over-year increases of 22% and 23% in revenues and EPS, respectively, driven by strength across QCT. This was also a record quarter for QCT revenues of $9.9 billion and EBT margin of 34%, both above the midpoint of our guidance with year-over-year revenue growth of 28% and EBT dollar growth of 37%. Handset revenues of $6.6 billion increased 40% versus the year ago quarter on strength of our Snapdragon product portfolio across premium and high tiers. As expected, RF front-end revenues of $992 million were impacted by the continued weakness of the handset market and channel inventory. IoT revenues were up 24% year-over-year to $1.9 billion on growth across edge networking and industrial IoT. Automotive revenues of $427 million grew 58% versus the year ago quarter due to the broad adoption of our Snapdragon Digital Chassis. QTL revenues of $1.4 billion and EBT margin of 69% reflected the impact of lower handset units relative to our expectations at the beginning of the quarter. Turning to fiscal '22 results. We delivered record non-GAAP revenues and EPS with year-over-year growth of 32% and 47%, respectively. In addition, looking over the past 2 fiscal years, we've more than doubled our non-GAAP revenues and almost tripled non-GAAP EPS from fiscal '20 to fiscal '22, underscoring the strong momentum across our businesses. In QCT, we had records across all revenue streams as well as approximately 500 basis points of EBT margin expansion from 29% in fiscal '21 to 34% in fiscal '22. We are pleased with the continued success of our diversification strategy as we delivered year-over-year combined revenue growth of 38% across IoT and automotive. Lastly, we continue to be disciplined in delivering long-term stockholder value. We executed on our capital return commitments, returning 93% of our free cash flow, including $3.2 billion in dividends and $3.1 billion in stock repurchases. Before turning to first quarter guidance, I'll address how our near-term financial outlook is impacted by the challenges facing the semiconductor industry. As we communicated during the last earnings call, we had started to see a deceleration in demand for mass-tier handsets in consumer IoT. Since then, the further deterioration of macroeconomic environment and sustained COVID restrictions in China have led to broad-based demand weakening across tiers and regions. Given these considerations, we now project 3G, 4G, 5G handset volumes in calendar 2022 to decline by low double digits on a year-over-year basis, including 600 million to 650 million 5G handsets. This rapid deterioration in demand and easing of supply constraints across the semiconductor industry have resulted in elevated channel inventory. Due to these elevated levels, our largest customers have made significant changes to their inventory policy. They are now drawing down on their inventory, negatively impacting our near-term financial performance. Based on our current assessment, we estimate that there are roughly 8 to 10 weeks of elevated inventory in the channel. While the environment is very dynamic, based on the information we have today, we believe this may take a couple of quarters to work itself through with more than half of the inventory drawdown completed in the first fiscal quarter. We are confident in our ability to navigate this environment successfully, and we'll continue to monitor inventory levels and order patterns closely. As Cristiano outlined, while we navigate this downturn, we've already implemented specific actions to manage our spending levels, including the hiring freeze and reductions in handsets, other mature product areas and SG&A. We will remain disciplined and be prepared to take further decisive actions on additional reductions to operating expenses if the macroeconomic environment continues to deteriorate. Turning to guidance for the first fiscal quarter. We are forecasting revenues of $9.2 billion to $10 billion and non-GAAP EPS of $2.25 to $2.45. The midpoint of our guidance includes an estimated impact of approximately $2 billion in revenue and $0.80 in EPS related to the drawdown of channel inventory with the remaining impact primarily due to weaker end-market demand and foreign exchange headwinds. In QCT, we expect revenues of $7.7 billion to $8.3 billion and EBT margins of 26% to 28%. Following the record performance in fourth quarter, we expect our handsets and IoT revenue streams to be down sequentially due to the impacts I just described. On a year-over-year basis, we still expect revenue growth across IoT and automotive. We estimate QTL revenues of $1.45 billion to $1.65 billion and EBT margins of 71% to 75%. This estimate reflects the updated handset forecast, including a muted seasonal benefit for the holiday quarter and approximately $50 million headwind from foreign exchange on a year-over-year basis. Lastly, we now anticipate non-GAAP operating expenses to decrease 3% to 5% sequentially. Before I conclude, I'd like to provide an update on RF front-end revenue stream disclosure and planning assumption for Apple product revenues. We have grown our RF front-end revenues to become the #1 player in handsets due to the breadth and strength of our product portfolio. Looking forward, we expect growth to be driven by our strong design win pipeline for 5G and WiFi 7 platforms across handsets, automotive and IoT. As a result, starting in fiscal '23, we will consolidate RF front-end revenues within handsets, automotive and IoT revenue streams. In addition, we'll continue to provide periodic updates on the combined RF front-end revenues against our Investor Day target. For Apple product revenue, we now expect to have the vast majority of share of 5G modems for the 2023 iPhone launch, up from our previous 20% assumption. Beyond this, there are no changes to our planning assumption, and we are assuming minimal contribution from Apple product revenues in fiscal '25. In closing, while the current backdrop presents near-term headwinds for our industry, we remain confident in our leading technology road map, deep customer relationships and strong balance sheet to help us navigate these challenges and maintain our leadership position. Our diversification strategy and long-term growth opportunities remain intact as we continue to drive our vision to bring cloud connectivity, data processing and artificial intelligence to the edge. Thank you. Back to you, Mauricio. Mauricio Lopez-Hodoyan : Thank you, Akash. Operator, we are now ready for questions. Operator: [Operator Instructions] Matt Ramsay with Cowen and Company. Matt Ramsay: I guess my first question, Cristiano, has really 2 parts to it on the smartphone market. No -- I guess you guys were really clear in the prepared script about what's going on with channel inventory with customers and a deterioration of the macro. I guess that's -- maybe the magnitudes are different, but directionally, no big surprise. So I guess the questions are, are you guys seeing the weakness that's been there in global and low mid-tier Android? Are you seeing that worsen? Or are you seeing that weakness now moving into the high-end, premium tier? And the second part is we get questions from investors about when things do weaken, do some of the ASP -- really strong performance that you guys have had in your wireless business over the last year or 2. Do those ASPs starting rolling over? Or is this a unit dynamic and you're seeing ASPs hold up well? Cristiano Amon: Thank you, Matt. This is Cristiano. I'm going to start the question. I'm going to ask Akash to also add some data. So what we have seen in the smartphone markets, and I think we tried to detail as much as we as we can in the script, it's really -- there is a combination of the weakness of demand, which is related to basically the macroeconomic headwinds and the prolonged COVID in China that has kind of singled out the China market has been also down as the major factor. And it's mostly a handset consumer story. The other issue that we've been talking about, and that's the big issue really, is you have a situation that you had a lot of demand and supply-constrained environment. So companies across the board much higher inventory policies. When supply chain got resolved, then you get that with the macroeconomic uncertainty, you have a drawdown and trying to bring inventory to a different level than it was during the situation of demand constraint. That is starting to hit the premium tier as well as we -- as customers are basically adjusting their inventory levels on premium tier. However, we actually see as we go to next-generation possibilities for ASP to increase because we're actually increasing processor content, and we're very well positioned for the premium tier. If you take the Apple update, I would say every premium-tier device has Qualcomm content on it. Of course, the best story is Snapdragon across Samsung and our Chinese customers. And the content is increasing. We expect to see ASP going up. Akash, anything you would like to add? Akash Palkhiwala : Just maybe quickly, Matt, on your first question. What we saw in the September quarter through our licensee reporting is weakness across tiers and regions. So it was -- it cut across all tiers in that case. And then that's what we are projecting forward in the December quarter as well. And then clearly, on the ASP side, as Cristiano said, the content is increasing and we have opportunity on upside in that case. And also, you've seen us manage through the last couple of years of foundry price increases, and then we'll be able to keep gross margin strong. Matt Ramsay: As my follow-up, Akash, last year -- I guess a year ago on the call at the beginning of the fiscal year, you were a different environment, a lot less volatility obviously. But you talked to us about the next fiscal year maybe having 20% or more EPS growth for the company. And you obviously did much better than that, and I think you came in at 47%. A lot of different variables now, the inventory correction, a change and extension of the Apple business. If you have any thoughts there about how we should think about the next fiscal year, we'd really appreciate it. Akash Palkhiwala : Sure, Matt. So if you look at the first quarter, there are really 2 factors that are kind of inconsistent with current -- recent trend. The first one is this inventory drawdown that we are seeing in the quarter. Impact of that is approximately $0.80 within the quarter. And that's really the primary impact. Of course, there's a little bit of impact that also comes in from the weaker market environment as well. So when you take that impact in the first quarter projected forward for the rest of the year, we were very clear that the OEM inventory drawdown, we see that as a couple of quarter issue. And it's not something that's a long-term challenge for us. It's a short-term cyclical issue. So that should inform how you project it through the year. And then on the market side, given the uncertainty at this point, our planning assumption is that the weakness in the market lasts through the fiscal year. Clearly, if the market improves, we'll see that as upside. But at this point, we're going to plan based on current scale of the market. So if you take kind of current expectations and apply that framework to the year, that should hopefully inform how we do the forecast for the second quarter and also for the full year. Operator: Samik Chatterjee of JP Morgan. Samik Chatterjee: I guess I had two as well. And if I can start on IoT, so smartphone. I guess, Akash, you mentioned smart IoT revenues as well moderating sequentially. And I wanted to see if you can now provide a bit more color. You've broken out the sort of IoT business previously into consumer, industrial and edge networking, calling it roughly sort of 1/3, 1/3, 1/3. Now as we start to sort of see some moderation there, can you now talk about the trends in terms of the different sort of subsegments there? And where are you seeing more resilience versus sort of maybe more weakness? And how should we really be sort of projecting that forward? And I have a follow-up. Akash Palkhiwala : Sure, Samik. So on IoT, we're obviously pretty happy with the way that business has played out for us. So we've gone from $3 billion in fiscal '20 to $7 billion, $6.9 billion in '22. And then the quarter we reported was a record quarter for IoT at $1.9 billion of revenue. So pretty happy with how the business is doing. Now in terms of the macro environment impacting the IoT market overall, and it's less about Qualcomm, it's about the overall macro environment. We're definitely seeing the impact of that on consumer and in some ways synonymous with handsets. Edge networking is holding for us. And we're seeing some minor pockets of weakness in industrial. But overall, I think when you kind of step back and look at where our IoT opportunity exists, for us, it's about digital transformation and about connecting everything to the cloud. And our technology portfolio is perfectly suited to enable various industries to do that. So we feel pretty optimistic longer term. Samik Chatterjee: Okay. Okay. And for my follow-up, I mean, I think Cristiano and Akash both sort of talked about the content opportunity in -- around Snapdragon and even sort of around fiscal '23 in the handset market. A lot of the pushback that we get from investors around that could really drive out, particularly as you think about a weaker macro setup, is OEMs opting to use sort of previous generation Snapdragon chipsets and continue to sort of prioritize price in the market to make it much more affordable for consumers to buy smartphones to -- as to trigger sort of volumes or help volumes in the market. I mean, when you think about sort of the fiscal '23, what are your planning assumptions when it comes to content gains or market share gains and how confident a few of OEMs not sort of sticking to prior generation chips just to be able to optimize the price/cost equation here? Cristiano Amon: Thanks for the question, Samik. Let me start by giving you a direct answer. The design activity we have for next-generation Snapdragon is not showing that. It's showing that, as we expect in the mobile market, especially on the premium tier, it's about a flagship product every year. Soon, I think we're going to announce our next-generation Snapdragon in our Tech Summit in a couple of weeks, and I think design traction is very, very high. I think what we see right now is, structurally, we're very well positioned. If you look of the agreement we have with Samsung, plus the change of OEM landscape in China and how that positions Snapdragon as the premium and high-tier device, I think we're just going to see the fluctuations on the market size and how we deal in the short term of the inventory. But you should assume that the mobile market is going to continue to do its thing and we're going to have a product cycle transition. We expect in the March quarter also to see the benefit of our increased share of Samsung. Operator: Mike Walkley from Canaccord Genuity. Mike Walkley: Just more on the planning assumptions for fiscal '23. Do you expect with the macro environment that the handset market shrinks again by double digits from calendar '22 for fiscal '23? And then as a follow-up, I'll just ask them both now. In terms of OpEx with the down sequentially, is this an area that you expect more OpEx cuts as you get into seasonally slower quarters or kind of flattish off this level? Akash Palkhiwala : Mike, it's Akash. For fiscal '23, our market assumption is that the kind of the weak market we're seeing in the September-December quarter carries on to the rest of fiscal '23. And so we're not using the first half calendar '22 as the basis but really kind of the current, say, scale of the market carrying forward. So that's our base assumption. And clearly, there is unpredictability and variance around it, but that's the planning assumption we're using for now. On the OpEx side, as we deal with the short-term headwinds, we're clearly taking this is of action on things that we control. As Cristiano mentioned, we've implemented a hiring freeze. We're reducing our spend in mature businesses, including handsets and SG&A. And then we're optimizing our R&D investments to increase focus on automotive and IoT, which is obviously the core of our strategy on diversification. And then finally, the way to think about fiscal '23 OpEx is we expect it will come in below fiscal '22 exit run rate. So we're clearly taking action on OpEx from that perspective. Operator: Stacy Rasgon with Bernstein Research. Stacy Rasgon: I want to ask a little bit about March quarter. So you're saying that the inventory flush lasts a couple of quarters. You said more than half of it is done in December quarter. It seems like there's a good chunk that's still coming in March. But at the same time, you also -- Cristiano just talked about the incremental Samsung volume starting to ramp in March. How do we think about the interplay of those 2 things? Is the Samsung volume enough to offset some of that channel flush that we're still seeing in March? I mean you said big customers are changing some of their inventory plans. Are -- is Samsung one of those big customers? Is it -- it doesn't sound like it's just isolated to China. Just anything you can give us about like some of those drivers, both positive and negative, as they're going to the market would be helpful. And then I have a follow-up. Akash Palkhiwala : Sure, Stacy. It's Akash. So from a March quarter perspective, you're right, the benefit from the Samsung launch for the new phone would be in the -- in kind of the second half of the March quarter. So it comes in towards the end of the quarter, but that will be an advantage, whereas our share from 75% in GS 22 goes up to global share in GS 23. In terms of inventory adjustment, I think you're right the way you heard it. You have an impact of $0.80 in the first quarter, and it's more than half. So we do expect to have some impact from that going into second quarter as well. And then your last question on whether it's just the Chinese or Samsung and others adjusting inventory, it's really across the industry. Stacy Rasgon: Right. That's helpful. For my follow-up, I wanted to ask about the QTL run rate. So I get the market is weak. But presumably, Apple should be stronger than the rest of the market into December. And usually, that gives a pretty big lift. It implies that Android must be really bad in the December quarter, unless there's something else going on. Can you just verify there's nothing else going on, no collection issues or anything like that? Is it just purely sort of Android market-related that's driving the run rate down? So I think it used to be around $1.7 billion in December quarter, and you're guiding about 150 million light. Akash Palkhiwala : Yes. Purely driven by market and mix functions. It has nothing to do with any other issue overall. Now just to highlight a couple of things for the QTL numbers in the December quarter. At this point, we are not expecting normal seasonal volume increase into December. So maybe one of the disconnects or questions you might have on the variance between those 2 numbers, $1.7 billion versus $1.55 billion, is driven by that assumption. And then second, I'd say is we do have FX impact that shows up in QTL. I highlighted in my script on a year-over-year basis, that's an impact of approximately $50 million that's included in our guidance. Operator: Ross Seymore from Deutsche Bank. Ross Seymore: Akash, I want to go into the margin side of things. And I know you guys don't guide overtly to the gross margin side, but we can kind of back into generally where it is. So within that $0.80 hit to the fiscal first quarter guidance, is there anything going on with charges on the gross margin side? Because the same sort of question that Stacy just asked on the revenue side for the March quarter will likely apply when people work through their models on the gross margin side. Should we expect a snapback there? Is it a onetime thing? Any sort of progression on the profitability would be helpful. Akash Palkhiwala : Yes. So first, Ross, on your direct question, there isn't a set of charges that are included in the number that's anything significant. So that's the base assumption. The second thing I would say is if you look at where we guided our fourth fiscal quarter and where we came in, we actually did significantly better than our guidance. And then where we are guiding the first quarter is really in line with the guidance we had given for fourth quarter. So nothing specifically to look at there. We're kind of navigating through the environment. And then over the last couple of years, as I said earlier, we are pretty happy with the way we've navigated through foundry price increases as well. So focus for us is staying disciplined on the pricing side and kind of taking advantage of the technology and products we have to improve our market share. Ross Seymore: And I guess as my follow-up, I just wanted to hit on the automotive side. I guess kind of a 2-part question. In the near term, you didn't mention that as being down. So I assume -- is it safe to assume that that's going up? And then there's a general concern across the broader automotive ecosystem that it too will deal with the macro headwinds. I know you guys have a ton of market share gains were all in New York at your auto tech day. So I get that longer term. But are you seeing any evidence at all that the macro conditions might slow that -- the pace of that ramp that you're expecting over the next year or so? Cristiano Amon: So let me give you the first answer. The way you should think about our auto, we have been -- you have the telematics business. Then you have the digital cockpit that was a big component of the design pipeline, and those are turning into revenue. And then the next one after that is ADAS. So we expect the story of Qualcomm automotive has been about the pipeline materializing into revenues and continue to generate growth, less impacted by the short-term markets. I don't know, Akash, if you want to add anything. Akash Palkhiwala : I'll just say kind of as you think about our auto business, it's all about new car launches and how the adoption of our solutions kind of helps our revenue as the cars launch. So that's really the primary driver versus the overall size of the market. Ross Seymore: And it will be up sequentially in the first quarter? Just to clarify your guidance. Akash Palkhiwala : Our guidance was that we said for IoT and handsets, it will be down. We were quiet on auto, which implies it's not going to be down. Operator: Joseph Moore from Morgan Stanley. Joseph Moore: I wonder if you could talk about when you think the inventory built because it seems like you were on allocation until just a few months ago. Like do you think people were able to kind of get ahead of that and build inventory while it was still tight? Or did all that inventory build in a relatively short period of time, which would say that the recent numbers might be kind of overstated relative to demand? Akash Palkhiwala : Yes. So it's Akash. That's a fair question. So if you really think about our last earnings, one of the things we said was we expected customers to be cautious with their purchases in second half '22. But since then, what has happened really is the macroeconomic environment deteriorated, and we went from a period of supply shortages to demand declines. And it's kind of an unprecedented change over a short period of time. And what you're seeing is really OEMs responding to that and making a change in their inventory policy and now drawing down on inventory. So that's the impact that we're seeing in the December quarter that we sized at approximately $0.80. If you also think about the seasonality, you typically expect December quarter to be a growth quarter as people build inventory going into the holiday season. And what we're seeing is the opposite. So it does kind of come as a surprise in terms of how quickly the environment changed. Joseph Moore: Great. And then if I could follow up, what are you seeing on the pricing side in the more competitive markets, particularly in China? Is that the same as you've described? Or is there kind of incremental competition as you come out of a tight supply situation? Akash Palkhiwala : No additional comments to what I just said. I mean gross margin question that I answered kind of really factored. It's more of a pricing question than anything else, and those comments still apply. Operator: Louis Miscioscia from Daiwa. Louis Miscioscia: This is a longer-term question. I guess some news came out a little while ago from Ford and GM that they're closing down Argo. And also one of the big self-driving ADAS pioneers, Levanduski, actually seems to change his view. Realize that you guys just had the auto day, which is great, and you're really looking out to 2026. But just any comments on this and that how difficult it will be actually to stick to the prior time frame that you had originally talked about at the auto day? Cristiano Amon: Very good. Thanks for your question, Lou. The way you should think about our ADAS platform, and it's part of the Snapdragon Digital Chassis, we're really focused on scaling the technology and technology that has commercial applications. We really scale from Level 2 all the way to Level 3 plus. And we're not -- the market, I think, it's still -- for robotaxis, I think, is still a future market. We're really focused on attaching ADAS to every car. I think that's what has been the key driver of our design wins, and that's why we're winning across brands and across tiers for all the ones we announced. And we feel pretty bullish about ADAS materializing from the pipeline into revenues in the next few years. And you have to start thinking about that as they're multi-different levels of ADAS, starting with mandatory in-cap camera all the way to highway autopilot. And we're really focused in that part of the market. That's where scale is. Operator: Blayne Curtis from Barclays. Blayne Curtis: Actually, assuming -- I apologize if you kind of answered this, but I wanted to ask it again. Just in terms of the weakness, clearly, Android has a lot of inventory to work through. Just kind of curious if you're baking in any non-Android softness or there's been concerns about production and such. I know it's a tough customer to answer, but is there a way you can talk about what you're embedding for the handset business, both Android and iOS? Akash Palkhiwala : Yes. I think the adjustment we talked about is primarily Android. So that's how you should think about it. Blayne Curtis: Perfect. And then I was just kind of curious, the thought process on rolling in the RF business. I know this is a big TAM for you guys, and you've made a lot of good progress in kind of penetrating that. So I'm just kind of curious, if you just walk through the thought of rolling that back in starting next year. Akash Palkhiwala : Sure. So when you look at our RF front-end business, it's kind of an end-to-end modem-to-antenna development cycle. And because of that, we've become the #1 player in handsets already. When we look forward, the way we think about the growth in the business is it's driving 5G further into handsets and WiFi 7 but also into automotive and IoT. In one of the new disclosures we gave, and you'll see this in our web slides, in fiscal '22, we had $137 million in auto RF front-end revenue, and we have a design win pipeline of greater than $900 million. And then within IoT, we have RF front-end revenue of $405 million. So those numbers are becoming of scale. And generally, still, it was mostly handsets. We kept it separate. But I think we're getting to a point where there -- it's becoming at scale within automotive and IoT. And so we thought the change in the revenue streams was -- this was the right time to do it. Operator: Timothy Arcuri from UBS. Timothy Arcuri: I had 2. I guess the first one is on Apple. You did update that you now expect the vast majority of the launch in 2023 for you to be in the product. That's not a big surprise, I think, to most people. And you said that by 2025 that you'll be out of the products, but you used the word product. So I just want to clarify that you are still assuming that once they don't need your modem anymore that they will still pay you a royalty for said patents? Cristiano Amon: This is Cristiano. The licensing business is completely independent of whether or not we supply modem to them. So your assumption is correct. We expect to continue to have licensing revenues. And I think consistent with what we said in the past, we're focused on our strategy on long-term customers, and we just can assume that our planning assumption is we don't have any visibility and continue to provide the modem in '25. Timothy Arcuri: Perfect. And then I guess also, Akash, I had a question on the financial model for QCT. I know you gave it a year ago, and things have changed a lot since then. At the time, you were sort of implying if you sort of ran the growth rate out to ‘24, it was sort of implying a $40 billion QCT revenue out in 2024. You’re now down to sort of $8 billion a quarter, so you’re now run rating more like $32 billion. Do you still feel confident that you can get back next year into the $10 billion a quarter that would get you to that $40 billion financial model next year? Akash Palkhiwala : Yes. So as I’m sure you know, we just delivered $30 billion -- $38 billion of revenue for fiscal ‘22 for QCT. And so our strategy is unchanged. We are executing so far well ahead of target. And so really what we’re focused on right now is navigating the current environment. No updates to our Investor Day targets. Operator: Brett Simpson from Arete Research. Brett Simpson: I wanted to ask just the extent to which Qualcomm thinks are under-shipping demand in the December quarter. And maybe just factoring in the weak outlook for December, and I think you talked about the flagship ramp with Samsung in the March quarter. Is it fair to assume the December quarter is a trough for Qualcomm this cycle? I mean any perspective there as we look through that fiscal '23 would be very helpful. Akash Palkhiwala : Yes. Brett, from an inventory drawdown perspective, we definitely see first quarter as the bottom. As we said, more than 50% of the inventory drawdown, we think, happened in the first quarter. And so that hopefully answers the question you were asking. Brett Simpson: Okay. And maybe just a follow-up on China. I mean it's something that certainly is on a lot of investor minds. How does Qualcomm feel about your position in the region, particularly with the geopolitics that's happening right now? Do you see risks here long term to the business? Or is there scope for growth in China? Any perspective there would be much appreciated. Cristiano Amon: Thanks for the question. Look, we -- the latest set of restrictions, we were not in impacted by those. And we have seen our business in China to continue to expand, especially as we grew into auto and IoT. We see corresponding expansion of those business in China as well. I think we have a global position. I think we -- it's one global standard, especially when you think about the mobile market in 5G. And we look at a position that we have in China as one that is pretty stable right now. It's very difficult to predict this environment. But so far, I think, continue to be a strong business from Qualcomm with growth opportunities. And we're hopeful that the extended lockdown will end soon, and that's going to have likely a positive impact on the size of the phone market. Operator: That concludes today's question-and-answer session. Mr. Amon, do you have anything further to add before adjourning the call? Cristiano Amon: Yes. Thank you, everyone, for listening to the call. I just want to say a big thank you to all of our employees and partners that are helping us to the incredible fiscal '22 and how we navigate to fiscal '23. Just a few comments. When you step back from the current short-term macroeconomics and this temporary cyclical inventory drawdown, we feel that Qualcomm is very well positioned. A lot of the trends continue to point to our technology road map. You need connectivity, advanced processing and artificial intelligence at the edge. And as we outlined in the script, we see that everything is on track, including expanding design for our Windows on Snapdragon with our custom CPU. The ability to continue to materialize the auto as well as IoT and industrial IoT and the digital transformation has proven to be overall resilient in the long term. So we will be decisive in managing operating expenses and especially if the downturn gets steeper or more prolonged than we expect. But I would like to remind everyone that the current inventory is a cyclical adjustment that has no impact on the underlying long-term earnings power of the company. And we're have -- we're well on our way, executing our growth strategy and all the fundamentals remain in place. Thank you so much. Operator: Ladies and gentlemen, that concludes today's conference call. You may now disconnect.

Operator: Ladies and gentlemen, thank you for standing by. Welcome to the Qualcomm Third Quarter Fiscal 2022 Earnings Conference Call. [Operator Instructions] As a reminder, this conference is being recorded July 27, 2022. The playback number for today’s call is 877-660-6853. International callers, please dial 201-612-7415. The playback reservation number is 13731134. I would now like to turn the call over to Mauricio Lopez-Hodoyan, Vice President of Investor Relations. Mr. Lopez-Hodoyan, please go ahead. Mauricio Lopez-Hodoyan: Thank you, and good afternoon, everyone. Today’s call will include prepared remarks by Cristiano Amon and Akash Palkhiwala. In addition, Alex Rogers will join the question-and-answer session. You can access our earnings release and a slide presentation that accompany this call on our Investor Relations website. In addition, this call is being webcast on qualcomm.com, and a replay will be available on our website later today. During the call today, we will use non-GAAP financial measures as defined in Regulation G, and you can find the related reconciliations to GAAP on the website. We will also make forward-looking statements, including projections and estimates of future events, business or industry trends or business or financial results. Actual events or results could differ materially from those projected in our forward-looking statements. Please refer to our SEC filings, including our most recent 10-K, which contain important factors that could cause actual results to differ materially from the forward-looking statements. And now to comments from Qualcomm’s President and Chief Executive Officer, Cristiano Amon. Cristiano Amon: Thank you, Mauricio, and good afternoon, everyone. Thanks for joining us today. I’m very pleased with our performance in fiscal Q3 and how we continue to execute on our long-term vision of enabling a world where everyone and everything is intelligently connected. As we continue to scale our One Technology Roadmap across new industries and applications, we are transforming Qualcomm from a communications company for the mobile industry into a connected processor company for the intelligent edge. This quarter, we delivered revenues of $10.9 billion and non-GAAP earnings of $2.96 per share, driven by solid results in both our chipset and licensing businesses. In our chipset business, revenues of $9.4 billion were up 45% year-over-year with record revenues in IoT and automotive, demonstrating the success of our diversification strategy. Before I highlight a few notable milestones this quarter, I would like to update you on an important development in our relationship with Samsung. We’re very pleased to report that Qualcomm and Samsung have entered a new multiyear agreement starting in 2023, expanding the use of Snapdragon platforms for future premium Samsung Galaxy products globally. This validates the Snapdragon is the technology platform of choice for premium Android experiences. In addition to Galaxy smartphones, the agreement includes PCs, tablets, extended reality and more. We have also agreed to a seven-year extension of our patent license agreement with Samsung, taking the license through the end of 2030 with the same royalty terms. The extension encompasses 3G, 4G and 5G technologies and devices and will also include future 6G standards and products. This license agreement is a significant QTL milestone event. Samsung is the world’s largest smartphone supplier by unit volume with a well-developed portfolio of patents. The extended license agreement with Samsung demonstrates the tremendous ongoing value of our patent portfolio, our innovation and our longstanding leadership in driving the important and foundational elements of the mobile road map. The extended Samsung license agreement is an important benchmark for the long term and adds significantly to the stability of the QTL program going forward. Let me now share some of the key achievements from the quarter. In automotive, the Snapdragon Digital Chassis is fast becoming the industry’s platform of choice and is enabling the transition to next-generation vehicles. We are very pleased with the continued traction and design wins across global automakers and Tier 1 partners. Our automotive design win pipeline is now over $19 billion, up approximately $3 billion since fiscal Q2. This includes the design win with the Volkswagen Group’s software company, CARIAD, to power Volkswagen’s future automated driving solutions. In consumer IoT, we continue to execute on our opportunities across tablets, XR, PCs and smart consumer devices. For personal computing, we are continuing to drive the inevitable transition to ARM. We are on track to deliver Windows on Snapdragon compute platforms for next-generation PCs powered by our custom CPUs while redefining mobile productivity and on-device AI. To support the accelerating transition to ARM-based computing, Microsoft recently announced Project Volterra, a new developer kit powered by the Snapdragon compute platform featuring the Qualcomm AI engine. They also announced a comprehensive end-to-end ARM native toolchain for Windows application developers including Visual Studio, Visual C++ .NET and more. In edge networking, we launched four new networking Pro Series Wi-Fi 7 platforms, the world’s most scalable Wi-Fi 7 portfolio, initiating a new era of 10 gigabits per second Wi-Fi for enterprise access points, Wi-Fi mesh, carrier gateways and premium home routers. We also continue to see strong momentum in industrial IoT and recently announced two new 5G connected robotics platforms with enhanced AI capabilities, computer vision, 5G connectivity and a comprehensive customizable SDK, to power next-generation robotics and drones, including autonomous mobile robots, AMRs, highly automated manufacturing robots and more. These achievements demonstrate our ability to continue to grow across automotive in the broader IoT categories in addition to RF front-end and handsets. Our One Technology Roadmap is the cornerstone of the strategy with unparalleled leadership across not one, but multiple technologies required for the connected intelligent edge. This includes on-device AI, low-power, high-performance compute, computer vision, advanced connectivity and more. Importantly, as we expand into new growth areas, we’re driving our technologies to meet the highest performance requirement for each application and serve as the industry design point. For example, our dedicated automotive SoCs and accelerators for Level 3 and Level 4 autonomous driving can deliver up to 700 trillion operations per second, TOPS of AI processing. Our RB6 robotics platform brings advanced edge AI and video processing capabilities support for up to 7 concurrent cameras and up to 200 TOPS. And we believe our upcoming custom-designed CPUs will redefine computing performance for Windows PCs. Of particular note is our significant momentum in AI. We recently launched the Qualcomm AI Stack, which unifies our existing best-in-class AI software solutions into a single package that works across all Qualcomm platforms. The Qualcomm AI Stack is positioned to become the platform for AI at the edge. The Qualcomm AI Stack supports all AI frameworks, including TensorFlow, PyTorch and ONNX as well as AI runtimes such as TensorFLow Lite, TensorFLow Lite Micro and ONNX runtime. We also have a rich variety of OS support, including Android, Windows, Linux, QNX, Ubuntu and others. With this new offering, OEMs and developers can now develop and optimize AI models once, then move the same model across different Qualcomm products and tiers for true develop once, deploy anywhere model. We believe the Qualcomm AI Stack portfolio is a revolutionary step in scaling high-performance, low-power on-device AI processing. These solutions demonstrate how our One Technology Roadmap is transforming Qualcomm from a wireless communications company for the mobile industry to a connected processor company for the intelligent edge. Lastly, as we continue to move forward and execute on our strategy, we’re mindful of the challenging economic environment, and we remain disciplined on investments that drive sustainable differentiation and stockholder value. We are focused on customers and industries that drive stable long-term growth. We believe the industry trends that are driving demand for our technologies remain unchanged and continue to validate our strategy, positioning us well for the long term. We’re still on track to expand our addressable market by more than 7 times to approximately $700 billion in the next decade. Before I turn the call over to Akash, I would like to invite you to join us in New York on September 22nd at our first ever Automotive Investor Day event. Qualcomm is the leading automotive technology platform provider for next-generation vehicles. We will demonstrate how the Snapdragon Digital Chassis is enabling the transformation of the automobile and continuing to drive growth in our design win pipeline. I would now like to turn the call over to Akash. Akash Palkhiwala: Thank you, Cristiano, and good afternoon, everyone. We are pleased to report strong results in our third fiscal quarter despite the impact of the challenging economic environment. We delivered non-GAAP revenues of $10.9 billion and non-GAAP EPS of $2.96, which was above the high end of our guidance. Non-GAAP revenues and EPS grew by 37% and 50%, respectively, versus the year ago quarter, driven by technology leadership, revenue diversification and operating efficiency. QTL revenues of $1.5 billion and EBT margin of 71% were at the midpoint of guidance. These results reflect a decrease in handset volume in mid and low tiers offset by favorable mix. QCT recorded revenues of $9.4 billion and EBT margin of 32%, both at the midpoint of our guidance and reflecting revenue growth of 45% and EBT dollar growth of 67% versus the year-ago quarter. Handset revenues of $6.1 billion increased 59% year-over-year, driven by the strength of our Snapdragon product portfolio, especially in the premium and high tiers. Consistent with our guidance, RF front-end revenues of $1 billion, grew 9% versus the year-ago quarter on increased adoption of our broad product portfolio. IoT revenues were up 31% year-over-year to $1.8 billion. We saw strong performance across edge networking and industrial IP with combined revenue growth of more than 40%. We delivered another record quarter in automotive with revenues of $350 million with year-over-year growth of 38%, driven by launches with our digital cockpit products. Looking forward to global 3G, 4G, 5G handset forecast. We now expect calendar ‘22 global handsets to decrease by mid-single-digit percentage on a year-over-year basis, including 650 million to 700 million 5G handsets. Our guidance reflects the continuation of the trends that adversely impacted handset volumes exiting the June quarter. We expect the elevated uncertainty in the global economy and the impact of COVID measures in China will cause customers to act with caution in managing their purchases in the second half of calendar ‘22. In the fourth fiscal quarter, we are forecasting revenues of $11 billion to $11.8 billion and non-GAAP EPS of $3 to $3.30. The midpoint of our guidance includes an estimated impact of approximately $0.20 due to the macroeconomic headwinds and the reduction in the global handset forecast I just outlined. We are forecasting QTL revenues of $1.45 billion to $1.65 billion and EBT margins of 69% to 73%, reflecting normal sequential unit growth. In QCT, we expect revenues of $9.5 billion to $10.1 billion and EBT margins of 32% to 34%. At the midpoint, this implies year-over-year revenue growth of 27% and EBT dollar growth of 31%. On a sequential basis, we expect growth across QCT handset and automotive revenue streams. In handsets, while Snapdragon premium tier volume remains resilient, our guidance assumes lower demand in other tiers, reflecting the updated global handset forecast. In IoT, we are seeing strength across industrial and enterprise, which is offset by pockets of weakness in consumer products. We anticipate non-GAAP operating expenses to be up 6% to 8% sequentially, with approximately half of the growth due to the inclusion of 2 quarters of expenses for the Arriver acquisition. As a reminder, our third quarter results did not include Arriver since we are reporting one quarter in arrears until the fourth fiscal quarter. Based on the midpoint of our fourth quarter guidance, we’re expecting fiscal ‘22 to be an exceptional year. We expect non-GAAP EPS of $12.55, a growth of $4 for fiscal ‘21. We are forecasting QCT revenues of greater than $37 billion, a year-over-year growth of greater than $10 billion and EBT margin expansion of approximately 5 points. QCT handset revenues are on track to grow slightly below 50% relative to fiscal ‘21, driven by increased processor content and expansion of our addressable market. With our continued focus on diversification, we are forecasting RF front-end, IoT and automotive combined revenues of greater than $12 billion in fiscal ‘22. Lastly, we are pleased to announce we signed a long-term extension of our license agreement with Samsung through 2030 at the same royalty terms. With this agreement, the QTL forecast that we provided at Investor Day remains unchanged. In closing, while we are mindful of the current environment, our long-term fundamentals are intact. We remain focused on driving growth by executing on our vision to bring cloud connectivity, data processing and artificial intelligence to the edge. Thank you, and back to you, Mauricio. Mauricio Lopez-Hodoyan: Thank you, Akash. Operator, we are now ready for questions. Operator: Thank you. [Operator Instructions] Our first question comes from Matt Ramsay with Cowen. Matt Ramsay: Yes. Thank you very much. Good afternoon, everybody. Cristiano, maybe you could give us a little bit of a breakdown in how you’re seeing the handset market right now. And particularly, we’ve -- and you guys just discussed it in your prepared script, some weakness in mid-tier Android. But I’d like to sort of double-click on that a little bit. If you could contrast what you’re seeing maybe with premium, with the mid-tier Android market, specifically in China and then the mid-tier and low-tier Android market globally? And if there’s any differences in the trends that you’re seeing there, that would be really helpful. Thank you. Cristiano Amon: Thank you for your question, Matt. Look, we’re very familiar with this market. We’ve been doing this for years. And this market, it changes with the economy. We look at the combination of the macroeconomic environment and the China lockdowns, we did see the market is likely to be smaller than we originally forecasted. But, on the positive side, I think our strategy of being focused on the premium and high tier is proven to be a resilient one. So, the weakness we saw more in the mid to low tiers, premium tier remained resilient and not only in how we report the results in Q3, but how we think about our guide in Q4. And maybe Akash can add a little bit more color to it. Akash Palkhiwala: Yes, Matt. So to add to that, in the third quarter, what we saw was lower handset units in the mid, low tiers. And of course, there was an impact in China, but the rest of the impact was largely in rest of the world with some limited impact in the developed economies. And what we are forecasting going forward is really that to continue forward in second half of calendar ‘22, the adverse trend that we saw exiting the third fiscal quarter extending forward. So, we are updating the overall calendar year forecast to down mid-single-digits versus ‘21, and we’re also updating the 5G forecast to be in the $650 million to $700 million range for the year. Matt Ramsay: Got it. Thank you, guys. Maybe as a follow-up there, Akash, you’ve been ordinarily kind enough to give us some out quarter views on prior calls and with all the movement in the end market and the fact that you’re lowering the forecast for the full calendar year on handsets, if you have any color that you could give us directionally into the December quarter, we’d be really grateful. Thank you. Akash Palkhiwala: Sure, Matt. As you know, December quarter is seasonally a strong quarter for us, both up for the QCT handset business and the QTL business. So that remains unchanged. We’re still going to see flagship device launches and holiday season increases that will benefit our financial performance. And we’ll see -- we are forecasting growth from third fiscal to fourth fiscal quarter, and we’ll see growth again going into the first fiscal quarter. We do expect it to be calibrated by some of the same factors that we saw impacting us in fourth quarter, but still expect strong growth rates as we look out to the December quarter. Operator: Thank you. Our next question is coming from Tal Liani with Bank of America. Tal Liani: Hi, guys. First question is on balance sheet. Cash and equivalents went down by $4.5 billion, if you can give us some data there? And second, I want to talk about RF. RF on a sequential basis is slowing down. And the question is, it’s basically down on a cumulative sequential basis, it’s down already. And the question is whether the share gain story is over and now it’s going to trend in line with the market. Can you take us through kind of the trends, but also the ASP trends that you’re seeing in the RF segment, RF of QCT, of course? Akash Palkhiwala: Sure. Tal, it’s Akash. I’ll start with the first question and also start the second one and Cristiano can add on top. On the cash balance, as you know, we closed the Arriver acquisition right after the March quarter ended. And so, the change you are seeing is primarily driven by $4.6 billion paid in cash for the Arriver acquisition. Of course, we did have very strong positive cash flow and it was a balance of that being offset by capital return, which we returned $1.4 billion -- $1.35 billion in the quarter. And then, it was also offset by other related expenses on CapEx and tax payments that we made in the quarter. So really, it kind of comes down to the payment we made for the Arriver acquisition. On second one, on the RF front-end. So, the way you should think about the RF front-end growth is, it is something that grows more in line with the 5G market for us. And as you saw, we kind of brought down the overall forecast for the 5G units for the year. And so, that has played a role. Also, generally, it is something that does not scale very significantly when you grow from a low mid-tier to high tier, RF content remains relatively similar, whereas on the processor side, you’ve seen just tremendous scale on our handset business. As we go to premium high tiers, the ASPs are much higher, the content is much higher, and you’re seeing that benefit show up at the top end of the range. Cristiano Amon: So Tal, this is Cristiano, just going to add a couple of things. So, we have been very focused on the entire portfolio continue to drive leadership across every single component. And one thing that we have been very focused now started to bring RF front-end to auto IoT and Wi-Fi. And we’re starting to track that. As an example, the RF front-end design win pipeline, right now, it’s in the excess of $900 million in automotive. We also see opportunity with Wi-Fi. We announced our next-generation Wi-Fi and Bluetooth for RF front-end modules to go over chips as well. So, we expect to be focusing on driving growth in auto and IoT. And as Akash said, it’s an attached story on the Snapdragon. It tracks the mobile market, and we grow faster than front-end in mobile because of processor content. Operator: Thank you. Our next question is coming from the line of Samik Chatterjee with JPMorgan. Samik Chatterjee: I had a couple. Maybe if I can start with the China smartphone market. I know Akash, you referred to assuming that the global smartphone market sort of remains the same way as it is with exiting June. I sort of remember that some of the government data and that regional market data show positive signs in the June month -- the month of June, I think, after the reopening. Any sort of comments given you’re sort of seeing many cycles here, what are you thinking in terms of how to -- when does the market trough rate up to the China smartphone market? What gets it to sort of reach a trough or rebound from there on because at least I think the month of June did show some positive signs? And I have a follow-up. Thank you. Akash Palkhiwala: Yes. Sure, Samik. You’re right. We did see some improvement in the month of June. But the way you should think about the OEMs reacting to the data is headwinds cause these customers to act with caution in how they manage their purchases. And so, it’s really not just kind of standalone what happened in the month of June and projecting that forward. It’s really the overall environment that they are reacting to and that’s what informs our forecast for units going forward. Samik Chatterjee: And just for a follow-up, for the September quarter guide, if I can ask you to unpack that a bit more. You typically have a high-end North American customer launching their product, and you’ve driven sort of double-digit quarter-on-quarter QCT growth in the past on account of that. The more modest seasonality that you’re guiding to now is that primarily then sort of weaker mid-tier Android -- mid and low-tier Android, or are you expecting some softness on the high end as well with your primary North American customer there? Akash Palkhiwala: Sure. So, when you look at our fourth quarter guidance, so we’re guiding midpoint of $3.15 versus June actuals of $2.96. So, we’re still guiding strong growth on a quarter-over-quarter basis in this environment. And on a year-over-year basis, that implies a 24% growth on the EPS side. If you look at the guidance range we gave, we widened the range given the uncertainty and also estimated that our guidance midpoint had an impact of about $0.20 related to the macroeconomic. If you break that down on your direct question, premium tier volume is holding, right? So just from overall Snapdragon and of course, the new launch happens as planned as well. But what we are seeing is the customers buying high mid, low tiers being careful with inventory as they manage and kind of work through the market environment. And so, you’re seeing that factored into our guidance going forward. Cristiano Amon: Maybe if I can just add one thing. This is Cristiano. So, the way to look at our Q4 guide, including the macroeconomic environment that we size at $0.20 of EPS, we see us growing 24% year-over-year. The way I will unpack that is, we have the macro, we have the reduction in the mobile market, but if you break that down, in addition to what Akash said about the premium tier being resilient even as we have less units in mid and low, we have sequential growth in auto. We had record auto Q3. We see sequential growth in QT. And in the IoT, I think consistent what we have been in the conversation throughout this earnings season is any offset in -- any consumer weakness has been offset by strength in industrial and enterprise. And so, when we look at those numbers, a 24% year-over-year growth is actually faster than some of our peers, they have even less consumer exposure than we do because of mobile. Thank you. Operator: Thank you. Our next question is coming from the line of Rod Hall with Goldman Sachs. Rod Hall: I’ve got two questions for you guys. One is going back to kind of the high end and not necessarily September, not that particular high end, but the Chinese high end makers in the back end of the year. I know that as the supply chain, Cristiano, has been kind of short, I think there was some original thinking, those guys might preorder chips, and that might affect your September quarter. And I’m just curious if that is happening, are you seeing some impact on the September quarter from those anticipated Android launches in, I guess, the late October, November time frame? And then I have a follow-up on that. Akash Palkhiwala: Yes. Rod, it’s Akash. We’re not seeing any front-end behavior of people buying sooner than expected that’s impacting our September quarter on the handset side. In the premium tier, the demand is holding. As you know that we have strong relationships, a very strong roadmap in that tier. And so, we are seeing customers continuing to buy as normally they would as we go into the September quarter and then looking forward to December. Rod Hall: So then Akash, just to clarify, most of that impact would probably come in the December quarter. Is that correct, on that comment? Akash Palkhiwala: Yes. So, if you’re talking about Apple’s phone launch, you would see a normalized... Rod Hall: High-end Android launches, mainly in China. Akash Palkhiwala: Yes, exactly. So, we see purchases that happen through the September quarter on a normal basis, but December, end of December is when they start launching phones, both going into holiday season and then going into Chinese New Year. So, we expect to see the seasonal benefit of that. Rod Hall: Great. Okay. Thank you for that. And then, I also wanted to just ask you guys on channel inventory. We’ve had spotty indications of inventory clearance. Verizon is saying they’re going to clear inventory in high end, I think all levels of smartphones as we look into the fall. And there’s a lot of inventory clearance going on in retail. We see some abnormal high-end promotions in China occurring as well. So, I’m just curious what you think the status of inventory is out there, and whether you think some of this inventory clearance might pull some demand forward out of the early part, at least of the fall season? Akash Palkhiwala: Yes. So, on the inventory side, I mean, clearly, with the kind of the end market sides being impacted both from a macro and a China perspective, what we’re seeing is that that has an impact on the inventory cycle that the industry then needs to work through in the second half of the calendar year, both through September and December. And that’s what’s kind of forecasted within the guidance that we gave. And as a result, as I said before, we expect OEMs to act with some caution with their purchases as they work through the inventory balance. Operator: Thank you. Our next question is coming from the line of Michael Walkley with Canaccord Genuity. Michael Walkley: Thanks. Congrats on the Samsung deal extension through 2030 that includes 6G. Just, Akash, for this deal, are there any upfront payments or anything that might impact the cash flow or the model, is it more just an extension of 2030? And then maybe for Cristiano, if you could provide any color just on the Snapdragon commitment? Is there any guaranteed share exclusivity or anything you can share on that? Alex Rogers: Michael, this is Alex. Thanks for the question. On the Samsung licensing deal, the way this works is we have a current agreement that’s been in place since 2009, was set to expire at the end of 2023. Instead, what will happen is we’ve agreed to extend that for seven years through to the end of 2030 at the same royalty rate. So, that’s it, it’s pretty simple, pretty straightforward. We see it as a very, very significant milestone event for the QTL licensing program, validation of our portfolio, validation of our innovation leadership. And it’s a very important benchmark for future renewals as well. It really contributes a lot to the stability of the QTL program going forward. Cristiano Amon: Hey Michael, thank you for the question. Yes. Look, it’s -- besides the record in auto and IoT revenues, the Samsung agreement is probably my favorite thing in the quarter. And here’s the way I would describe the growth opportunity for the chipset business. We would average over the many years of this relationship, if you remember, about 40% share versus their in-house solution with the Galaxy has 22, which was prior to signing this agreement. Our share climb up to about 75%. And now, we’re announcing a multiyear agreement to power the Samsung Galaxy smartphones globally. So, very excited about that. It provides incredible stability for our mobile business. I cannot think of anything better to validate our strategy to be focused on share of wallet in premium and high tier than this agreement. So very, very exciting. I remember -- I would like to remember you all that that’s a very good trade. When I think about the silicon content of a Snapdragon 8 Series, at least equal or better than revenue and earnings of five modem for another OEM. Now, the second part of this multiyear agreement is the opportunity for growth tied up with our diversification. So, it expands beyond Galaxy smartphones to include Galaxy books, Windows PCs, Galaxy tablets, future extended reality devices and other devices. So, a very significant agreement, very excited and really the companies are much closer together. Operator: Our next question is coming from the line of Ross Seymore with Deutsche Bank. Ross Seymore: My first question is on the QTL side of things, remarkably in line for the quarter and guide. And if I think about last year, when you guided for your fiscal fourth quarter, business conditions appeared pretty strong. This year, you’re talking about uncertainties, macro headwinds, et cetera. But you’re guiding to the same QTL amount. So, I guess, the big picture question I’m getting from investors is it seems like Qualcomm has derisked the QCT side, but maybe not the QTL. Can you talk about how we fold the QTL guidance in with the more cautious macro view? Akash Palkhiwala: Yes. Sure, Ross. It’s Akash. As I said in my prepared remarks, the other factor on the QTL side is device mix being stronger and maybe a portion of it is inflation helping the ASPs, but also we’ve seen kind of people upgrade devices as they buy new ones. And so, the mix is what is offsetting the volume on the QTL side. Ross Seymore: And I guess, looking forward and shifting gears a little bit. You guys obviously report and guide and talk about your EBT margins a bunch, but gross margins have been a big tailwind for the Company as well. In this last quarter, by my math, it was supposed to drop per your guidance in the June quarter, but it dropped a little bit more than I was expecting. So, Akash, could you just talk about the puts and takes within the QCT gross margins? What would be generally tailwinds, headwinds, what we should think about as we head into the back half of this calendar year? Akash Palkhiwala: Sure. Happy to. So, when you think about QCT gross margins, the key things for us is, one, our diversification strategy as we use the technology we have created for handsets and apply it to other markets. That helps our gross margin profile and op margin profile as well, but also gross margin profile. The second is, as we sell more premium tier devices, that is also a helpful trend for us. And so, you’ve seen the benefit of that even in the face of increasing pricing from foundries, we’ve been able to do pretty well on the gross margin side. We did see a mix change as we went through the quarter where we ended up slightly lower than we had forecasted at the beginning of last quarter. But when you look forward, our mix is shifting up again, and it’s maybe a balance of the previous quarter that allows us to guide very strong on the gross margin side. If you look forward, really no change. I think, we’re very comfortable with where we are at. We’ve given a long-term operating margin guidance, which contemplates a strong gross margin profile. And we’re comfortable with that guidance, no change there. Operator: Our next question is coming from the line of Joe Moore with Morgan Stanley. Joe Moore: On a similar note, can you talk a little bit about your pricing strategy in the handset part of the business? You saw the gross margin benefit during a period of tight supply. And I think some people have worried that as that period comes to an end, you’ll see more price competition. Can you just generally talk about how you see that dynamic? Akash Palkhiwala: Yes. So honestly, the pricing has been relatively stable on the handset side. It’s obviously a very large market. And there are two players who are participating in that market, and there is sufficient market for both of us. So, that’s how we’re approaching the market, and we have seen them be consistent as well. The other thing I’ll say is on the operating margin side, we’ve -- the way we gave guidance for the greater than 30% at Investor Day, we contemplated some decline in the gross margin profile. But really, what we’re focused on is executing. And as I’ve said this before, we are focused on executing on the upsides to that number. Joe Moore: Great. And then you talked about inventory in the context of the sort of end market retail. Can you talk about component inventory of Qualcomm parts, I mean, the fact that you had a shortage until relatively recently. Does that -- is that the reason why you haven’t had some of the same inventory correction in China that maybe some of the RF guys have? Akash Palkhiwala: Well, from an RF perspective, we’ve seen some of the similar trends that our peers have seen. But when you look at the handset side, which is obviously the majority of our inventory profile, we’ve been chasing supply to get to a comfortable place. And so, as we’ve said before, we always expected demand and supply to reconcile in the second half of calendar year, and we’re really seeing that play out as planned. Operator: Our next question is coming from Blayne Curtis with Barclays. Blayne Curtis: Hey. Thanks for taking my questions. I have two. Maybe I’ll start with my last one, just given the prior question. Just on inventory, I mean, I guess, it is quite a bunch in terms of your inventory in June, 100 days. Can you just comment on do you feel like you finally caught up? I know it’s been a long time coming, but at this point is it still gaining your shipments? Akash Palkhiwala: Yes, Blayne, generally, we feel like we’re in a relatively good place. Now of course, there are pockets of nodes or parts that we’re still dealing with shortage on. But overall, we feel like we’ve reconciled to a reasonable place. I’ll say just when you look at our inventory balance, just we’ve more than doubled our revenue over the last couple of years. And we’re also heading into a stronger seasonal quarters for us, September and December. And so, what you’re seeing on the balance sheet is really a reflection of what’s coming up. Blayne Curtis: Got you. And then just for Cristiano, I wanted to follow up on the question on the Samsung agreement, because you said last quarter, your share was much higher, that 75%. Obviously, they had some struggles with their internal modem. I’m just trying to -- maybe a little bit more color as to what this agreement means? Is there any kind of handset share that’s wrapped around it, or is it more about these other devices? I’m just trying to understand the real punch line on the agreement. Cristiano Amon: Yes. The way you should think about it is Snapdragon low power, they’re Galaxy product line, they are Galaxy flagship products. And what I can say at this point is we were 75% on Galaxy S22 before the agreement. You should be thinking about we’re going to be much better than that on Galaxy S23 and beyond. It’s a multiyear agreement. And it’s -- that’s probably what I can tell you. You should think about us powering their devices globally. Operator: Thank you. Our next question is coming from Brett Simpson with Arete Research. Brett Simpson: Cristiano, I wanted to ask about the Apple guidance that was laid out by Akash at the Investor Day. I think, Akash, you mentioned that new iPhones in the second half ‘23, you would expect about 20% share of those new iPhones. Now that we’re getting closer to that time line, has your view changed at all by that share? And if we were to see more demand for Qualcomm modems at this account, can you secure the foundry capacity? And would you need to negotiate a new long-term agreement for modems? Thank you. Cristiano Amon: Brett, we’re not providing any Apple updates at this time. And we feel pretty good about our modem road map in 5G. And I think you should expect that Qualcomm will continue to be a leader. And especially as modems becoming more difficult it is supporting more than one end market beyond smartphones. Thank you. Brett Simpson: Okay. That’s clear. And maybe just a follow-up for Akash. I just wanted to ask about free cash flow. You’ve had a lot of moving parts, I guess, looking at fiscal ‘22 with prepayments for foundry and some of the working capital increases. But can you talk more broadly about the ability of Qualcomm’s free cash flow margin targets, what’s the business really capable of achieving? And when might we start to see higher levels of free cash flow from the business? Thank you. Akash Palkhiwala: Yes. Brett, you’re right. Over the last couple of quarters or several quarters, we’ve had a few ins and outs, two kind of key ones being acquisitions that we have done, but then also capacity reservations. And then, in addition to that, obviously, a pretty aggressive capital return program. So, it’s really a combination of those factors. When I step back and to your direct question, no change to our strategy that we outlined at Investor Day. We are very focused on returning most of our free cash flow to the shareholders. That’s something that we have prioritized over the last several years. We’ve been very aggressive with it, and we are planning to continue to do that. Operator: Thank you. Our final question is coming from the line of Srini Pajjuri with SMBC. Srini Pajjuri: Thank you. Cristiano, can you talk about your position in the mid to low end? I know you’ve been focused on the premium segment. And the reason I’m asking this question is that if you look at 5G, even with your guidance for a little bit of a decline here, I think most of the premium market is fully penetrated with 5G. And as we think about the next couple of years, the opportunity seems like it’s mostly in the mid and low end. So, I just want to get my hands around what’s your market share today? And how should we think about the growth opportunity for you as the market transitions to 5G in mid-end and low-end? Cristiano Amon: Thank you for your question. Actually, a very good question. Maybe I’ll answer breaking down in two parts. Look, it worked very well for us to be focused on share of wallet and especially in the supply-constrained environment to make sure we secure the sockets and had supply for the sockets, really important for this strategy, which is premium and high. It does not mean that we’re not going to be serving opportunities in the mid and low. And it’s now an environment as supply gets normalized as we predicted for the second half, we have an opportunity to win a lot of the sockets in the mid, low and that’s definitely an upside to our model. Srini Pajjuri: Got it. And then maybe for Akash. Akash, on the discrepancy between SoC growth and RF growth, I think you gave us a pretty good explanation for this year. But as we look out to the next year or two, should we expect the discrepancy to kind of remain, or do you think the handset growth and the RF growth will be somewhat similar? Thank you. Akash Palkhiwala: Yes. Hi, Srini. We’re going to continue to have a discrepancy. I think if you look at a couple of web slides that we included this time around, it shows how the content is increasing at the premium tier for us. And that’s just an example, obviously, that applies to really all tiers. There’s a lot more demand for processor content, whether it’s CPU, GPU, camera, AI, security, audio video, we are increasing content across the board. And so, we do expect that that will drive stronger revenue growth on the handset side. As Cristiano mentioned on RF front-end, of course, we’ll benefit from the transition to 5G, which as markets like India start deploying 5G later this year, we’ll see the benefit of expansion of SAM since 5G is where we really play there, and then also for auto and IoT expansion opportunities there. So different vectors for growth in that area. Operator: Thank you. That concludes today’s question-and-answer session. Mr. Amon, do you have anything further to add before adjourning the call? Cristiano Amon: Yes. I just want to start by thank you to our employees and our partners for really a great quarter. A couple of things that I’d like to message. None of our growth driver has changed. All the fundamentals of strategy are in place. We’re really focused on things we can control, but our strategy is working. We are transforming Qualcomm in a company that was communications for the mobile industry into a connected processor company for the intelligent edge. We’re very excited about the Samsung agreement. It is the way to think about stability and growth in our handset business. And one of the things we mentioned in the script that we didn’t talk much about it is the incredible progress we’re making in AI and really building very a competitive development platform for the edge. That’s where we see a lot of the growth silicon opportunities in the other devices. And don’t forget to tune in for Auto Investor Day. Auto is a success story for the company, continues to be, and we’re going to have some exciting things to share with you in our Investor Day later in the year. Thank you very much for your support, and talk to you also. Operator: Ladies and gentlemen, this concludes today’s conference call. You may now disconnect.

Operator: Ladies and gentlemen, thank you for standing by. Welcome to the Qualcomm Second Quarter Fiscal 2022 Earnings Conference Call. [Operator Instructions]. As a reminder, this conference is being recorded, April 27, 2022. The playback number for today's call is 877-660-6853. International callers, please dial 201-612-7415. The playback reservation number is 13728288. I would now like to turn the call over to Mauricio Lopez-Hodoyan, Vice President of Investor Relations. Mr. Lopez-Hodoyan, please go ahead. Mauricio Lopez-Hodoyan: Thank you, and good afternoon, everyone. Today's call will include prepared remarks by Cristiano Amon and Akash Palkhiwala. In addition, Alex Rogers will join the question-and-answer session. You can access our earnings release and a slide presentation that accompany this call on our Investor Relations website. In addition, this call is being webcast on qualcomm.com, and a replay will be available on our website later today. During the call today, we will use non-GAAP financial measures as defined in Regulation G, and you can find the related reconciliations to GAAP on our website. We will also make forward-looking statements, including projections and estimates of future events, business or industry trends or business or financial results. Actual events or results could differ materially from those projected in our forward-looking statements. Please refer to our SEC filings, including our most recent 10-K, which contain important factors that could cause actual results to differ materially from the forward-looking statements. And now to comments from Qualcomm's President and Chief Executive Officer, Cristiano Amon. Cristiano Amon: Thank you, Mauricio, and good afternoon, everyone. Thanks for joining us today. As we shared at our Investor Day last November, Qualcomm is at the intersection of transformative trends that are generating demand for our broad technology portfolio across virtually every industry. This is creating strong growth and diversification opportunities beyond handsets. These trends, which include the enterprise transformation of the home, convergence of mobile and PC, merging of physical and digital spaces, the digital transformation of industries, connectivity and processing at the edge, the automotive digital chassis and 5G have only continued to accelerate. They are driving our financial outperformance in a greater-than 7x addressable market expansion to approximately $700 billion in the next decade. As you can see from our results, we delivered record revenues of $11.2 billion and non-GAAP earnings of $3.21 per share, representing year-over-year growth of 41% and 69%, respectively, both exceeding the high end of our guidance. In QCT, our chipset business and the growth engine of the company, we saw strength across the entire portfolio. Revenues of $9.5 billion were also a record and reflect our continued diversification. Our automotive design win pipeline is now over $16 billion, up more than $3 billion since fiscal Q1. IoT revenues grew 61% year-over-year with strong growth across all 3 categories of consumer, edge networking and industrial. RF front-end revenues grew 28% year-over-year, and handset revenues grew 56% year-over-year. These results demonstrate that our growth drivers remain unchanged and our strategy is working. Our one technology road map across wireless connectivity, advanced edge processing and power-efficient AI is incomparable across our peer group. In fact, advanced processing and artificial intelligence are the fastest-growing silicon content areas for Qualcomm. As such, we can no longer be defined just as a communications company serving one industry, rather, Qualcomm is a leading connected processor company for the intelligent edge serving multiple new end markets and enabling the growth of the cloud-connected economy. As we continue to expand, we remain on track to meet our Investor Day financial projections, and I will now provide an update on our progress to date. In automotive, our horizontal platform, the Snapdragon digital chassis is a significant driver of our growing design win pipeline and is increasingly becoming a key asset for automakers. Our digital chassis comprises a full suite of open, flexible and scalable platforms for telematics, connectivity, digital cockpit, ADAS and autonomy and cloud services. With leading system solutions expertise and capabilities across multiple domains, Qualcomm is fast becoming the preferred industry partner for the auto industry and is well positioned for continued growth. Since our last earnings call, we significantly expanded our Snapdragon digital chassis capabilities. First, the Arriver acquisition enhanced our ability to deliver open, fully integrated and competitive ADAS solutions to automakers and Tier 1 suppliers at scale. As a result of the acquisition, we are incorporating Arriver's computer vision, drive policy and driver assistance assets into Snapdragon Ride. Second, we recently announced a long-term cooperation with BMW to jointly develop and extend BMW automated drive software to the Snapdragon Ride platform. The co-developed solution is scalable and customizable and can be offered by Qualcomm to other automotive OEMs across all tiers. We also pleased with our multiyear technology collaboration with Stellantis, which will be utilizing our Snapdragon automotive cockpit platforms across the automaker's 14 brands. Upcoming Stellantis vehicles will also be featuring 5G capabilities for telematics systems based on our Snapdragon auto 5G modem RF platforms. In consumer IoT, Android tablets are becoming collaboration tools and increasingly demand is shifting from entry-level commodity tablets to premium connected computing devices, a clear validation of the convergence of mobile and PC. We are pleased that Snapdragon 8 Gen 1 is powering the newest flagship tablets such as the Galaxy Tab S8 series globally. Additionally, we are growing in premium and high-tier devices with OEMs such as Lenovo, HP and Opel. We're also pleased to see the announcement of the first-ever premium Windows on ARM enterprise focus laptop, the Lenovo ThinkPad X13S powered by the new Snapdragon 8CX Gen 3 compute platform. This new ThinkPad features 5G millimeter wave AI accelerated experiences, advanced camera and audio technology, an ultra-slim, fanless design and up to 28 hours of battery life on a single charge. We're encouraged by the broad interest in our upcoming products, utilizing our industry-leading CPUs designed by our NUVIA team. We continue to drive the inevitable transition to ARM-based computing while redefining the future of mobile productivity. In edge networking, we continue to benefit from the demand for global connectivity required for remote work, school and play, and we provide industry-leading solutions, enabling the migration to WiFi 6 and WiFi 6E mesh technologies. We also recently announced the world's first and fastest WiFi 7 commercial solution, which we believe will further extend our leadership position. With multi-gigabit WiFi performance, ultra-low latency and unmatched spectrum versatility, we believe our WiFi 7 solutions will unlock a new era of advanced consumer and industrial applications. Our 5G fixed wireless access solutions also continue to gain traction as a last mile broadband solution. We now have more than 125 fixed wireless access designs announced or in development by more than 40 OEMs. We also introduced next-generation features such as standalone 5G millimeter wave support in our RF sensing suite to enable operators to extend their 5G service offerings to the home and enterprise. Industrial IoT experienced the fastest year-over-year revenue growth within IoT this quarter driven by continued demand for both connectivity and advanced processing at the edge. Notably, this quarter, we saw accelerated demand for ruggedized handheld devices for warehousing, logistics and health care industries as well as for robotics platforms. Going forward, we're actively building an ecosystem of system integrators and channel partners to support the scale of our industrial IoT platforms as they become critical for the digital transformation of multiple verticals. In handsets, we had record revenues of $6.3 billion driven by continued traction with leading smartphone OEMs such as Samsung, Xiaomi, Oppo, Vivo and Honor, where Snapdragon continues to be the mobile technology platform of choice for premium and high-tier Android. We now have approximately 75% of the premium tier processor volume for Samsung's Galaxy S22 smartphones, up from approximately 40% in the Galaxy S21. Samsung's strategy to adopt Qualcomm for the majority of volume is significant and validates our platform leadership as well as consumer preference for the Snapdragon brand. Our Snapdragon mobile solutions continue to define premium smartphone experiences. Let me highlight a few examples from our Snapdragon 8 GEN-1. In imaging, devices enabled by this platform achieved the highest DxOMark ever, making it the best smartphone camera in the world. In connectivity, our solution features the world's first 5G AI processor in a modem RF system, enabling AI-based performance enhancements, antenna tuning, network selection and more. In AI, our 7 generation AI engine doubles the computational performance versus the previous generation. Our handset strategy, as outlined at Investor Day, is enabling share gains and enhancing our ability to capture the most significant portion of the revenue opportunity. In RF front end, we continue to drive 5G modem RF leadership. Our fifth generation modem RF system now implements advanced features such as AI integration, millimeter wave and sub-6 dual connectivity in 5G sub-6 care aggregation with FDD and TDD spectrum. Looking forward, in addition to growth in handsets, we're expanding RF front end into automotive and IoT. In our licensing business, revenues of $1.6 billion were above the midpoint of our guidance driven by the most valuable patent portfolio in the industry, and we continue to develop and patent new essential innovations for future releases of 5G and beyond. Lastly, demand remains strong across all our technologies and continue to exceed supply. We believe our multi-sourcing and capacity expansion initiatives will continue to provide incremental improvements towards supply throughout the year. With our One Technology road map and demand for our products and solutions across virtually all industries, we are in an incredible position to continue providing high-performance, low-power computing on-device intelligence and everything wireless. Our plan remains on track, and I'm very excited for the future of Qualcomm. I would now like to turn the call over to Akash. Akash Palkhiwala: Thank you, Cristiano, and good afternoon, everyone. We're extremely pleased to report strong second quarter results. We delivered non-GAAP revenues of $11.2 billion, our third consecutive quarter of record revenues and non-GAAP EPS of $3.21. These results reflect year-over-year increases of 41% and 69%, respectively, driven by strength across all QCT revenue streams. QTL revenues of $1.6 billion and EBT margin of 73% were above the midpoint of guidance, reflecting a slight decrease in lower-tier units, offset by a favorable mix. This was another record quarter for QCT with revenues of $9.5 billion and EBT of $3.3 billion, an increase of 52% and 111%, respectively, versus the year ago quarter. We have now doubled QCT EBT dollars on a year-over-year basis in 6 of the last 7 quarters. Additionally, QCT EBT margin of 35% surpassed the high end of our guidance and increased 10 points year-over-year driven by revenue growth and diversification. Handset revenues of $6.3 billion increased 56% versus a year ago quarter. The upside relative to guidance was driven by increased volume in premium tier and improved supply. We gained share in Samsung's flagship device, the Galaxy S22, demonstrating leadership of our Snapdragon processor technology and our ability to compete with internal chipset initiatives. RF front-end revenues of $1.2 billion grew 28% versus the year ago quarter on increased adoption of our products across major OEMs. We saw accelerated growth across IoT and automotive as we align supply to better meet the demand for our products. IoT revenues were up 61% year-over-year to $1.7 billion primarily on increased demand for our chipsets for connected intelligent edge devices. We saw strong performance across consumer, edge networking and industrial with each of these categories growing by more than 50% compared to the year ago quarter. We achieved record automotive revenues of $339 million, a growth of 41% versus the year ago period, driven by launches with our digital cockpit platforms. With the strong adoption of our Snapdragon digital chassis, we have now increased our overall design win pipeline to greater than $16 billion. Lastly, during the quarter, we announced a 10% increase in our dividends and returned $1.7 billion in dividends and stock repurchases. Our strong free cash flow has positioned us to deliver attractive capital returns that are among the highest in the semiconductor industry while maintaining flexibility for strategic investments. Before turning to guidance, I will provide an update on the Arriver acquisition. On April 1, SSW Partners acquired Veoneer for $4.6 billion with substantially all of it funded by Qualcomm. SSW Partners then transferred Arriver to Qualcomm and now plans to sell the remaining non-Arriver businesses over the next several quarters. We expect that Qualcomm will receive most of the cash proceeds from the sale. We estimate Arriver non-GAAP operating expenses of approximately $50 million per quarter. However, our guidance for the third fiscal quarter does not include this impact since we plan to report Arriver 1 quarter in arrears until the fourth quarter. Further details of the transaction are included in our 10-Q and earnings presentation posted on our Investor Relations website. Turning to financial guidance for the third fiscal quarter. We are forecasting revenues of $10.5 billion to $11.3 billion and non-GAAP EPS of $2.75 to $2.95. We estimate QTL revenues of $1.4 billion to $1.6 billion and EBT margins of 69% to 73%. Our guidance contemplates global handset units consistent with the exit rate from the second fiscal quarter and assumes the end of COVID-related impact in China by the end of the quarter. In QCT, we estimate revenues of $9.1 billion to $9.6 billion and EBT margins of 31% to 33%. At the midpoint, this implies year-over-year revenue growth of 44% and EBT dollar growth of $1.2 billion. On a sequential basis, we expect mid-single-digit revenue growth in IoT and automotive and a seasonal reduction in handsets and RF front end. Our strong forecast for QCT is driven by the same factors which benefited our second quarter, including gains in handset premium tier volume, strong demand in IoT and automotive and supply improvements. We anticipate non-GAAP operating expenses to be up 5% to 7% sequentially, reflecting select investments in product road map. In closing, we are pleased with our financial results and strong execution as we manage to supply constraints in the current macroeconomic environment. Our QCT handset revenues are on track to grow by greater than 50% in fiscal '22. And we are well positioned for fiscal '23 as we continue to benefit from increased processor content and share gains. While we strengthen our mobile leadership, diversification is the top priority for the company as evidenced by increasing design win pipeline in automotive and accelerating revenue growth in IoT. Thank you. Back to you, Mauricio. Mauricio Lopez-Hodoyan: Thank you, Akash. Operator, we are now ready for questions. Operator: [Operator Instructions]. Our first question comes from Matt Ramsay with Cowen. Matthew Ramsay: Congrats, guys, on the strong results. Cristiano, my first question comes on the automotive business. Obviously, there's a lot going on with the Arriver acquisition, the Stellantis deal and you guys talking about a $16 billion pipeline now. I wonder if we could go back and revisit some assumptions from the Analyst Day. I think you guys had talked about getting to $3.5 billion in revenue on sort of a 5-year basis. You're running maybe 1/3 of that now, but the pipeline is expanded dramatically. So maybe you could talk a little bit about the visibility on revenue and how you're thinking about the numbers that you laid out at the Analyst Day for that strong automotive growth. Cristiano Amon: Thanks for the question, Matt. No, look, I think the simple answer to your question, it's looking really good. The way you should think about that is as the cars are really becoming connected computer on wheels, the digital chassis assets of Qualcomm is really resonating with carmakers. And we're probably winning ahead even of our original projections. So we feel pretty good about ability to meet what we outlined at Analyst Day. Matthew Ramsay: As a follow-up, just on the handset business, I think it's notable that the significant, I guess, share expansion that you guys are highlighting at Samsung. And if you go back to the Analyst Day, I think you guys talked about growing QCT handset revenue sort of in that 12% range either -- even while Cupertino came out of share in the 2023 phone in a pretty significant way. So I guess there were some questions at that time about the ability to grow through the next 2 or 3 years Android revenue in such a significant way. So Cristiano, are you thinking about the content and share expansion at Samsung as being sustainable? And how is the RF attached on that expansion and share at Samsung trending? Cristiano Amon: Great question, Matt. Look, I wanted to point it out. It's a pretty good trade actually. Instead of providing a modem, we provide an entire Snapdragon platform with AI, GPUs, CPUs and a lot of silicon content plus RF front end. It's a pretty positive trade, if I can say it that way. This has been consistent with what we said before. You probably saw that in the making as a lot of the new form factor from Samsung, both the fold and the flip was Qualcomm globally. And I think the GS-22 kind of outlined the strategy of a deeper partnership with Qualcomm. And going forward, we expect our relationship with Samsung only to increase. So we're very pleased. And I think it reflects that the strategy is working. We've been focused on premium and high, and that's the value share of the Android market and technology investments, our differentiation and even Snapdragon brand matters. And I think that's reflected in what happened with GS-22. Operator: Our next question is coming from Mike Walkley with Canaccord Genuity. Thomas Walkley: Cristiano, building on Matt's question, just on the smartphone market. There's some investor concern or just industry concern about slowing 5G or Android demand. But it sounds like you're still trying to meet demand with your ability to supply. Can you talk about kind of your design wins into the back half of the year? And how you feel about the supply-demand environment for premium tier Android? Cristiano Amon: Thanks for the question, Mike. There's a lot in there. I think both how we think about the design as well as supply. So in handsets, it is a good story. I think Akash outlined, we're growing year-over-year for fiscal '22 in the order of 50%. We grew 56% in the quarter. And it's a story of share gains with Samsung as well as if you look at fiscal '22 compared to fiscal 2021, share gains in China as well. And it's -- and we continue to see Snapdragon as probably the synonymous with premium and high Android flagship. The design pipeline is very strong. We've been reporting that as we talk about the number of designs. And I'll let Akash talk about the market. Even though the market -- it is a little bit more soft, we're not that exposed to lower-tier units because of our strategy to be really focused on premium and high and in the value share of the market. Maybe Akash, if you can comment? Akash Palkhiwala: Yes. Mike, from a market perspective, we saw some softness relative to our previous expectations in the March quarter in the lower tier units. But as Cristiano said, a lot of the driver for our revenue growth and our value proposition is very strong at the premium high tier. And you're seeing the benefit of that show up. Cristiano Amon: So the second question, Mike, on supply. The supply situation is going as we planned. I think contemplating our guidance contemplated into our projections that we made back in Analyst Day. Having said that, you're going to hear the same thing that you're probably hearing from us consistently. We still have more demand than supply across all business. Operator: Our next question is coming from the line of Samik Chatterjee with JPMorgan. Samik Chatterjee: Congratulations on a great quarter here. I just want to start with Cristiano and Akash, you both mentioned the 50% QCT handset growth for the year. If you can put that in context, we all know the overall market is either flat or down for handsets this year. Just wondering if you can quantify how much of that 50% growth is share versus content growth on apples-to-apples basis. I'm just trying to think about how you would try to sort of capture what -- how much of that growth is sustainable into next year. Then I have a follow-up. Akash Palkhiwala: Samik, it's Akash. So maybe I'll address the question at a higher level in terms of the key drivers there. So first is we talked about Samsung share increase. And so that has helped us at the premium tier. Second is as supply has improved, we've been able to meet more of the demand in China as well. So that's the second key driver. As we've said in the past, as the OEM mix has changed, it has opened up a larger portion of the market for us. And so being able to access that portion of the market is also beneficial. And then finally, it's -- just the thing to remember is only 20% of the global handset units come from China, right? So the rest of the market, you're still seeing strong demand at premium high tier. And so we've been able to participate in that. And then finally, from a content perspective, as you know well, when you look at one generation to the next of phones, the amount of computing that consumers are demanding keeps going up. And that provides an opportunity for us, not just from a competitive differentiation perspective but also additional content per phone. And so even if you look at one generation 5G phone to next-generation 5G phone, because of the increase in content on the processor side, you're seeing the benefits show up in our numbers. Samik Chatterjee: And my follow-up, Akash, maybe how you're thinking or sort of baking in the impact of the China lockdowns here, both in relation to demand and any impact on supply that we should think of? Akash Palkhiwala: Yes. So we've looked at it both from a demand and supply perspective. On the demand side, as I mentioned earlier, relative to our expectations, we saw some slight decrease in lower-tier units in China. So we are projecting that forward into the June quarter and where our numbers assume a recovery in COVID-related impact in China by the end of the quarter. But obviously, that's an evolving situation and we're going to continue to closely monitor it. But as I said earlier, China is 20% of the global market. You still have the remaining 80% where we're seeing a lot of positive trends from a consumption perspective with a strong demand for premium high-tier devices. Operator: Our next question is coming from Stacy Rasgon with Bernstein Research. Stacy Rasgon: I guess, first, in this environment with China and COVID and everything, we've been hearing some players in the market talk about conservatism in their outlook. And I mean this doesn't feel conservatism, but maybe that's wrong. I guess the prior quarters, the original outlook look really strong and then you've been crushing it. So I guess can you just give us some feeling for the degree of conviction you have in this outlook. And I know you've given us a little bit, not just into June. You even gave us a little bit on some of the end markets into September as well. It sounds like the drivers are there, but can you just maybe give us a little more color on where your conviction levels are as we're sitting here today? Akash Palkhiwala: Sure. Stacy, it's Akash. We obviously take a consistent approach when we guide the quarters going forward. So we've taken the same approach as we have done in the past. Certainly, there is more things that we don't do, given the situation in China and then macroeconomic situation as well. But the demand signals are strong and supply is improving and a lot of the upside that you're seeing is those 2 factors coming together. Stacy Rasgon: Got it. So my follow-up, you gave us some color on handsets. If handsets are up just 50% linked in the second half, that would put them, as you said, down a little bit in June. And you'd probably be up 20% in September sequentially if you just applied 50% year-over-year. So we have a little more color on that in September. Is there any outlook you can give us either qualitative or quantitative for the rest of the business into September? Akash Palkhiwala: Yes. From a September quarter perspective, as you know well, it's kind of the quarter where we start seeing the second inflection point of the year for us, where we have flagship launches late in the August, September time frame going into holiday season. So we still expect that to happen, and that's going to help our performance as we go into those 2 quarters. Also, if you look at the September quarter, we're seeing strong demand across our diversification plan. So that's playing out as or better than we had expected. And so IoT, automotive and RF front end, we also expect strong year-over-year growth in those areas into the September quarter. Operator: Our next question is coming from Tal Liani with Bank of America. Tal Liani: I have two questions. One is on margins. It's -- last quarter was record margin. This quarter, again, much better than expected. Can you discuss the puts and takes of margins and what we should expect going forward? That's number one. And number two, I just want to understand -- just kind of a follow up on China. Entering the quarter, we thought China is going to be weak. We are also hearing, and I want you to correct me if I'm wrong, that Huawei share loss in China is not materializing, meaning Huawei is still selling in the high end and many miles away from China. So I would like to know what are the kind of share dynamics in China and what is the overall demand and if you can just elaborate a bit on the Chinese market. Akash Palkhiwala: Sure, Tal. It's Akash. So on the operating margin side, we're obviously very pleased with our margin performance. We guided 32% to 34% and came in at 35%, pretty strong performance. We're guiding 31% to 33% going forward as well. And it's really a combination of the 3 drivers we have discussed before. Revenue forecast with diversification, that's really helping us. Gross margins, as I'm sure you'll see through the numbers. We're doing well there. And then being able to leverage the handset technology into these new markets also make it accretive to diversify. So it's the combination of those things and consistent with what we've said before. The story is playing out as we would have expected. From a China perspective, you should think of we are participating in the revenue opportunity across all OEMs in China. And so if there's a particular OEM that's winning, Qualcomm would be participating in that as well. Cristiano Amon: So Tal, this is Cristiano. I just want to add a couple of things. So first of all, the strategy for handsets for us, it's different. We're really focused on premium and high tier. We have been very disciplined how we think about pricing. And we're really building on our technology differentiation, preference for Snapdragon brand. And I think that has had a contribution on the gross margin on the handset business. But also, we pointed out that in China its represented 20% of the market. The premium tier devices, whether Vivo, Oppo, Xiaomi, Honor, Huawei for 4G as well as devices such as Samsung, they're all powered by Qualcomm. And that is why we've been benefiting of growth in a richer mix of premium and high. We're not that much impacted by the low-tier units. And we've been less interested in commodity units in the handset business. Having said that, regardless of what's happened in the China market, I think the story on IoT is strong. The story on auto is strong and all of the new business are accretive to margins that Akash outlined. Operator: Our next question is coming from Rod Hall with Goldman Sachs. Roderick Hall: I wanted to come back to the 50% growth in handsets. When we calculate what that implies for Q4, it's about $1 billion more than we had anticipated for QCT revenues. And I think we were above Street, so a very strong number there. I guess I want to try to ask the visibility question again, maybe in a different way, which is do you -- how much of that revenue is committed? And I'm assuming this would be mainly high-end Android buyers that would be interested in shipping new units at the end of the year given your prior commentary about Apple exposure and so on. But I wonder if you could just confirm that is Android and then talk a little bit about how much of that revenue is in the bag now and how much still needs to be kind of developed in the order book. And then I have a follow-up. Akash Palkhiwala: Rod, it's the driver of the September quarter is typically consistent with what you would have seen in the past, right? So flagship launches that happen, not just in Android but Apple as well. we see the benefit of that show up in our numbers in that quarter and then going into December quarter. So that's a factor. Android demand continues to be strong. We have obviously significant demand and visibility in terms of the information we're getting from all of our customers, even with reconciling their demand signal for the market changes. So we're pretty confident as we look forward. Roderick Hall: Okay. Great. And then for my follow-up, I just wanted to -- you haven't touched on Europe at all. You talked about a little bit of weakness in China. We picked up some developing weakness in Europe. But I'm just curious what you're seeing there from a demand point of view. It doesn't sound like anything, but maybe give us a little bit of color on what you see going on in the European market from a demand perspective. Akash Palkhiwala: Yes. I think maybe the only -- really thing to highlight that's inconsistent with the way we had seen the market before and the way we had outlined it at Investor Day is the weakness at the lower tier when you kind of step back from that and look at the rest of the market. On a global basis, it's playing out consistent with our expectations. Operator: Our next question is coming from Ross Seymore with Deutsche Bank. Ross Seymore: A couple of questions. Congrats on the strong results. I wanted to get back to the handset growth and the sustainability of it. The 50% number in this fiscal year is great, significantly above my estimates, just like what Rod just said about his. But as you think about the moving parts that drove that, how much of, say, the $10 billion SAM opportunity you talked about in China will already have been addressed? And if you've gone from 40% to 75% penetration than the Samsung GS 22, how much more is there? So really, what I'm getting at is how long can you outgrow the handset market by content and market share gains if you're doing so well now? Akash Palkhiwala: Yes. Ross, it's Akash. So when we look forward on the handset side, we still think that there is opportunity to gain share, especially as supply improves. So that would be one driver. Second is 4G to 5G transition. We have some ways to go on that for the rest of the market. So we should see that play out, and that should benefit us as well. The third driver is what we discussed earlier, where the amount of processing that's needed. And this is whether it's CPU or GPU, AI camera, audio, video security, each of these vectors are being pushed hard in terms of performance and the competitive landscape between the OEMs. It is demanding that all these capabilities get added to the handset. So that is also helping us from a content increase perspective. And then those are the drivers as we look forward. Ross Seymore: I guess the follow-up would be on the margin side of things. You guys have done a great job expanding both the gross and the operating margins, especially on the QCT side of things. But I'm a little curious in the near term with your guidance. The overt guidance on EBT is down a couple of points, both on QCT and QTL. But more precisely, it looks like you're guiding the gross margin down a little bit in QCT. Given the moving parts within that, is there something unique going on? Because I would have thought kind of the diversifying engines would have actually brought the margins up. But it seems like the gross margin is going down 1.5 points, 2 points, something like that. Akash Palkhiwala: Yes. So I think in the quarter that we just reported, we guided gross margin at a certain level, and we came in even stronger than that. And so as we look forward, we're guiding kind of in line with our recent history, more in line with the way we had guided the March quarter as well. So that -- we could have a potential opportunity based on a mix of products. But the insight that we have right now based on the mix, we think that's a good number. Operator: Our next question is coming from Joe Moore with Morgan Stanley. Joseph Moore: Great. Obviously, you've seen this really healthy environment in the premium to your handset market. But you've also had a shortage. And I wonder, has the shortage contributed to the pricing and margin strength that you've seen in any way as that shortage eases? Do you see more competitive market? And you talked about as your supply gets better, you can take share. Does that imply the more price aggressive? Or are the prices going to be sticky and mix shift is the element to watch? Cristiano Amon: Yes. Thanks for the question, Joe. This is Cristiano. I think what you have to watch is the amount of processing content that is increasing. It's now beyond a 5G story, just on the premium tier for the next generations of Snapdragon coming up. It's a significant increase in GPU, in artificial intelligence and CPU. So content on the processor side has been the biggest driver of higher ASPs and gross margin in handsets. The other thing I want to continue to point it out, which is as we leverage our one technology road map to grow in the other business. And in the quarter, 61% growth in IoT. In automotive, we added $3 billion to the design win pipeline. That's all accretive to margin, highly leveraged from the R&D that we do in mobile. Joseph Moore: Great. And if I could follow up on the royalty side. Nice to see that those numbers are solid in the first half of the year. Can you help us put that in the context of the overall supply chain issues that your customers are dealing with? And does that imply if they have pent-up demand, could that end up being better than seasonal royalty strength and just how should we correlate that with what we're seeing on the supply side? Akash Palkhiwala: Yes. So the easiest way to think about that already business is really aligning it to the total handset market and then mix within that. So as you'll recall at Investor Day, we had forecasted 2022 calendar units as flat to calendar 2021. And what we're seeing play out is slightly lower units at the low tier but offset by a stronger mix. And that's the combination of factors that's impacting both the actuals for QTL and our guidance for the next quarter. Operator: Our next question is coming from Chris Caso with Raymond James. Christopher Caso: I just want to go back to the Samsung commentary and the share gains that you've had there. And of course, at Samsung, your competition is an internal competition there. Can you speak to your level of conviction that now that you've achieved this new level of share within the Samsung Galaxy series that is sustainable, that what allows you to keep this business as you go forward with Samsung? Cristiano Amon: Condition is very high. And I'll point you to something that I would encourage, I think, you all to observe what's happening in the market. In many of those markets that are now new markets to Qualcomm, Samsung is actively advertising Snapdragon as an ingredient brand with the Galaxy S22. And I think that's a very significant data point. And as I said earlier, I think we're very confident that Samsung relationship is going to continue to be an expanding relationship for us. Christopher Caso: And as a follow-up, I wanted to revisit the notebook market and your intentions on penetrating that with Qualcomm silicon. It's something you spoke about quite a bit at the Analyst Day. Could you give us an update on that and perhaps when would we be able to hear more on that and start to see some impact on that into the results? Cristiano Amon: No, absolutely. Thanks for the question. We are on track. We have been working with Microsoft for many years. I think Windows 11, as I mentioned before, is for the first time, you'll have full support, including 64-bit emulation on ARM. It's the first time that you actually have a platform, which is ready for commercial and enterprise deployments. We did -- within the quarter launched with Lenovo, the first enterprise ThinkPad. And we have a number of designs with our 8 CX generation 3. As we think about the next generation, we have been developing our own CPU that's been designed by the NUVIA team. And we are going after the performance tier for focus about high scale in the enterprise. And development is on track, and we expect to have that in late 2023. Operator: Our next question will come from the line of Blayne Curtis with Barclays. Blayne Curtis: I wanted to ask you, if you look at the first half of the year, I think the 50% growth in handsets, it's pretty much all higher revenue per chipset through your filings. So I'm just kind of curious, as you look at the second half, obviously, the compares on kind of the content get harder. Just how are you thinking about that mix between unit growth, which I think Android units probably went positive this quarter but were down as you -- you're starting with supply. But how are you thinking about the second half in terms of the kind of pull there to grow revenue units, i.e., share or more content? Akash Palkhiwala: Blayne, it's Akash. So as I mentioned earlier, we're seeing growth in content, which is a driver for us. We're also seeing the share that we picked up at Samsung that we've discussed the strength in China and the improving supply. All of these are combinations that help us in the second half of the year. Also to keep in mind that typically, the new Apple phone launch happens in the fall time frame, and that would be a driver as well. Blayne Curtis: Got you. And then maybe just as a follow-up, IoT, just curious the mix tailwinds you're seeing there, I mean assuming stuff like WiFi 6 is helping, but any color on the tailwinds within the IoT segment? Akash Palkhiwala: Yes. So as we reported, IoT grew -- total revenue grew by 61% year-over-year. So of course, very happy about that. When you kind of unpack it a bit and you look at enterprise, consumer and edge networking, each of those portions of IoT grew by greater than 50% individually. So it's not something that's concentrated in an area. It's very broad growth. As Cristiano mentioned in his prepared remarks as well, that the strongest growth came from the enterprise channel, which was really good for us. I think that's an area that the SAM is effectively unlimited. There's a lot of digital transformation that needs to happen. And our ability to expand our presence there and participate in it is a tremendous driver for us long term. Operator: That concludes today's question-and-answer session. Mr. Amon, do you have anything further to add before adjourning the call? Cristiano Amon: Yes. Thank you. Thanks, everyone, for joining us on the call today. I also like to take this opportunity to thank the hardworking, dedicated brilliant Qualcomm employees, thank all of our partners. And I just wanted to say why we love all the questions about handsets and handsets always going to be a very big part of our business. I wanted to point you all that the Qualcomm is changing from a communications company for the mobile industry into really a connected processor company for the intelligent edge. Even how we think about handsets no longer about modems. And in the quarter, we're super pleased that IoT alone was $1.7 billion. If you look at the IoT plus auto combined plus our RF business in excess of $3 billion, and we're just busy executing on one of the biggest opportunities in our history. Thank you very much. Operator: Ladies and gentlemen, this concludes today's conference call. You may now disconnect.

Operator: Ladies and gentlemen, thank you for standing by. Welcome to the Qualcomm First Quarter Fiscal 2022 Earnings Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session. [Operator Instructions] Please limit your questions to one question and one follow up. As a reminder, this conference is being recorded, February 2, 2022. The playback number for today's call is 877-660-6853. International callers, please dial 201-612-7415. The playback reservation number is 13726028. I would now like to turn the call over to Mauricio Lopez-Hodoyan, Vice President of Investor Relations. Mr. Lopez-Hodoyan, please go ahead. Mauricio Lopez-Hodoyan: Thank you, and good afternoon, everyone. Today's call will include prepared remarks by Cristiano Amon and Akash Palkhiwala. In addition, Alex Rogers will join the question-and-answer session. You can access our earnings release and a slide presentation that accompany this call on our Investor Relations website. In addition, this call is being webcast on qualcomm.com, and a replay will be available on our website later today. During the call today, we will use non-GAAP financial measures as defined in Regulation G, and you can find the related reconciliations to GAAP on our website. We will also make forward-looking statements, including projections and estimates of future events, business or industry trends or business or financial results. Actual events or results could differ materially from those projected in our forward-looking statements. Please refer to our SEC filings, including our most recent 10-K, which contain important factors that could cause actual results to differ materially from the forward-looking statements. And now to comments from Qualcomm's President and Chief Executive Officer, Cristiano Amon. Cristiano Amon: Thank you, Mauricio, and good afternoon, everyone. Thanks for joining us today. Based on our performance over the past several quarters and the strong fiscal second quarter guidance, it is clear that our strategy is working. Demand for our products and solutions continues to accelerate, as our one technology road map is driving the growth of premium Android smartphones, as well as enabling the connected intelligent edge, which is driving digital transformation for the cloud connected economy. As you can see from our results today, strong performance in our chipset and licensing business led to record fiscal first quarter revenues of $10.7 billion and record non-GAAP earnings per share of $3.23. Our chipset business had its second consecutive quarter of record performance with revenues of $8.8 billion, EBT of $3.1 billion and EBT margin of 35%. Notably, QCT revenues exceeded those of any fabless semiconductor company. These results demonstrate the continued success of our diversification strategy. In IoT, we continue to see strong momentum, with revenue growth of 41% year-over-year in the first quarter across consumer, edge networking and industrial. In consumer IoT, our early investments, collaboration with Microsoft and the recent acquisition of NUVIA, uniquely positions us to drive the PC industry transition to ARM-based computing for next-generation connected laptops. We recently introduced two new platforms, the 8cx Gen 3 and 7c+ Gen 3. And at CES, we highlighted broad support from ecosystem partners, including Acer, ASUS, HP, Lenovo and Microsoft as well as 200 enterprise customers currently testing or deploying Windows on Snapdragon laptops in 2-in-1 devices. We're also seeing strong growth in premium and high-tier Android tablets, further highlighting the convergence of mobile and PC. Notably, we have already doubled the total number of premium tier and/or tablet design wins launch or in the pipeline versus all of fiscal '21. Additionally, as the Metaverse opportunity materializes, we continue to build on our industry leadership position in VR and AR devices with key ecosystem players, including Meta and Microsoft. At CES, we announced a collaboration with Microsoft to expand and accelerate the adoption of augmented reality in both the consumer and enterprise sectors. This partnership includes custom AR chips to enable a new wave of power-efficient, lightweight AR glasses to deliver rich and immersive experiences as well as plans to integrate our Snapdragon Spaces XR developer platform into Microsoft mesh. We're also very pleased that Time Magazine named our Snapdragon XR2 platform as one of the best inventions of 2021. And we're seeing strong support for our VR and AR platforms from virtually all ecosystem providers, OEMs and content creators. In edge networking, we continue to lead in current and next-generation high-performance Wi-Fi 6 and Wi-Fi 6E solutions, which now make up more than 80% of our Wi-Fi access point revenues. Recently, we launched the world's first quad-band Wi-Fi 6E mesh system with NETGEAR, which was rated the best-in-class mesh platform by PC Magazine. Additionally, our Wi-Fi 6 immersive home platforms continue to gain momentum across regions, with significant growth now expanding into China, one of the fastest-growing markets for Wi-Fi 6 for both retail and carrier deployments. 5G as wireless fiber continues to gain scale and expand globally. In addition to our extended range millimeter wave platforms, we recently expanded our portfolio to include 5G fixed wireless access solutions with extended range sub-6, and we're seeing strong traction. In industrial, we're still in the early phases of digital transformation across many industries. And demand for our solutions continues to accelerate. As an example, combined smart utility meter, tracking robotics and retail revenues more than double over the last year. In robotics, specifically, we expect total fiscal '22 product launches using our platforms to increase by over 50% year-over-year, spanning applications from warehouse automation to public safety, delivery services and in-home assistance. The diversity of vertical segments and applications reflects our ability to provide a common platform that integrates advanced computer vision, on-device AI, high performance in low-power computing and industry-leading connectivity technologies. In RF front end, we successfully launched our latest 5G modules, which now include our ultraBAW technology. Our modem-to-antenna strategy is working, enhancing power and performance with average generation of Snapdragon. Notably, virtually all our Snapdragon 8 Gen 1 design wins now include Qualcomm ultraBAW filter technology. Building on our success in handsets, we're seeing traction with our modem-to-antenna solution across automotive and IoT. As examples, we're well positioned to address up to $30 of 5G RF content per vehicle, and we're also intersecting our RF front end road map with Wi-Fi 7. In automotive, Qualcomm is becoming the technology partner of choice for the industry, and we're enabling the transition of the automobile to a digital cloud-connected platform. Our innovative Snapdragon digital chassis is an open and scalable cloud-enabled platform for telematics, connectivity, digital cockpit and ADAS, and uniquely position us as the leading system solution provider for silicon, software, systems and services across multiple domains. As a reminder, General Motors, BMW and now Renault Group are cornerstone customers for our platform, including ADAS. At CES, we announced an addition to our ADAS and autonomy platform, the Snapdragon Ride Vision System, a new modular computer vision solution that combines our Snapdragon Ride SoCs with the next-generation vision perception software from Arriver. It supports the various compute functions needed for enhanced perception around the vehicle, and it scales across applications from entry-tier in-cap front camera to comprehensive front and surround view camera for enhanced autonomy. We expect the Snapdragon Ride Vision System to be available in production in 2024. In handsets, we recently announced our most advanced 5G mobile platform for flagship smartphones, the Snapdragon 8 Gen 1 at our annual Snapdragon Tech Summit. The announcement was viewed by more than 50 million people worldwide. The news Snapdragon 8 Gen 1 leads the way to a new era of premium mobile technology with category-defining enhancements across modern RF, camera, AI, gaming, security and more. Snapdragon 8 Gen 1 is the world's first 5G modem RF solution to reach 10 gigabit download speeds. It's the first to include commercial 18-bit mobile image sensor and the world's first platform compliant with the Android-ready Secure Element Alliance. We also announced new mobile platforms in every Snapdragon series to address global customer demand across every smartphone tier. In our licensing business, first quarter results reflect a favorable mix in the strength of smartphone shipments. With over 150 5G license agreements, QTL is well positioned for the future, and we continue to expect 5G to have a longer life cycle than prior generations due to its broad application across multiple industries. Lastly, demand remains strong across all of our technologies and continues to exceed supply. Despite ongoing challenges across the global supply chain, our multisourcing and capacity expansion initiatives will provide incremental improvements to our supply throughout the year. I would now like to turn the call over to Akash. Akash Palkhiwala: Thank you, Cristiano and good afternoon everyone. We are extremely pleased to report strong results to start our fiscal year. We delivered our second consecutive quarter of record non-GAAP earnings, with revenues of $10.7 billion and non-GAAP EPS of $3.23. These results reflect year-over-year increases of 30% and 49%, respectively, driven by strength across both QCT and QTL. For QCT, this was another record quarter with revenues of $8.8 billion and EBT of $3.1 billion, up 35% and 62%, respectively versus the year ago quarter. QCT EBT margins of 35% surpassed end of our guidance range and increased six points versus the year ago quarter driven by revenue scale and operating leverage. Handset revenues of $6 billion increased 42% year-over-year due to greater than 60% growth in revenues from Snapdragon chipsets for Android devices. RF front-end revenues of $1.1 billion grew 7% versus the year ago quarter, reflecting the previously mentioned pull-in of demand into the fourth fiscal quarter. Our RF front-end revenues for Android devices grew by greater than 25% versus the year ago quarter as we continued to see strong traction across all major OEMs. IoT revenues were up 41% year-over-year to $1.5 billion on continued demand for our cloud connected intelligent edge devices. Each of the consumer, edge networking, and industrial categories grew by at least 30% compared to the year ago quarter. Automotive revenues of $256 million grew 21% year-over-year on the strength of our design wins across our Snapdragon digital chassis. We recorded QTL revenues of $1.8 billion, an increase of 10% year-over-year, and EBT margins of 77%, which was above the midpoint of the guidance. These results reflect a favorable mix and slightly higher handset shipments. Turning to global handsets and our guidance for the second fiscal quarter. For calendar 2021, consistent with the previous guidance, we estimate global 3G, 4G, 5G handsets grew 7% year-over-year, including approximately 535 million 5G handsets. For calendar 2022, there is no change to the forecast provided at our Investor Day with greater than 750 million 5G handsets. For the second fiscal quarter, we are forecasting revenues of $10.2 billion to $11 billion and non-GAAP EPS of $2.80 to $3. In QCT, we expect revenues of $8.7 billion to $9.3 billion and EBT margins of 32% to 34%. At the midpoint, this implies year-over-year revenue growth of 43% and EBT dollar growth of $1.4 billion. For handsets and RF front end, we expect revenues to be in line sequentially as seasonal decline in Apple revenues is offset by continued growth in revenues from Android devices. Within handsets, the increase in Android revenue is driven by the launch of our new Snapdragon premium chipset and additional shipments across high and mid-tiers due to our second sourcing efforts. Additionally, we expect strong year-over-year and sequential growth in our IoT and automotive revenue streams. We estimate QTL revenues of $1.45 billion to $1.65 billion and EBT margins of 70% to 74%. This reflects the normal pre-COVID trends following the strong holiday quarter. We anticipate non-GAAP operating expenses to be up 7% to 9% sequentially on normal seasonality, including calendar year resets for certain employee related costs. The remaining increase reflects select investments in long-term growth initiatives that we outlined at our Investor Day. Looking forward to the third fiscal quarter, we are forecasting year-over-year non-GAAP EPS growth of greater than 30%. For QCT, this reflect the seasonality following Chinese New Year purchases and the launch of our new Snapdragon premium chipset in the second quarter. We expect the next inflection point in QCT to be in the second half of the calendar year, with launch of new 5G handsets across several major OEMs. Lastly, we published our annual corporate responsibility and ESG report yesterday, which outlines progress against our company wide targets, including environmental sustainability, diversity and inclusion, and power efficiency of our Snapdragon products. We are pleased to have been recognized by several organizations, including making the Dow Jones Sustainability Index and Newsweek's most responsible company list for the third consecutive year. Thank you. Back to you, Mauricio. Mauricio Lopez-Hodoyan: Thank you, Akash. Operator, we are now ready for questions. Operator: Thank you. [Operator Instructions] Our first question is from the line of Samik Chatterjee with JPMorgan. Please proceed. Samik Chatterjee: Thanks for taking my questions, and congrats on the results. I guess, if I can start with -- you talked about the strong launch with Android customers that you've had in both phones and tablets. And I think you mentioned doubling the pace of launches with Android. As we look to the -- beyond the first half, that is your fiscal first half December and March, how should we think about how much of the Android share gains for you or launches for you is already in the run rate? And how much of that is like weighted for the remainder of the year beyond sort of this first half of the year? If you can share some color on how to think about share gains continuing for the remainder of the year with Android. And then I have a follow-up, please. Cristiano Amon: Hi, Samik, this is Cristiano. Look, Android is a success story for us. This quarter continues to validate what we said before. OEM shared in shifts in China is benefiting Qualcomm, and we saw significant growth of Qualcomm share within the market as we have this new 10 opportunity. And we've seen that reflected in the growth we've seen in premium and high tiers. So it continues to be a story. It was the highlight of what happened in the handsets within the quarter. Akash outlined 60% year-over-year growth on Android. And I'll shift over to Akash to talk about seasonality. Akash Palkhiwala: Yes. Samik, I think this is something that'll sustain for us going forward. We are in a very strong position as you see in the numbers. Our product portfolio is very strong as well. So as we keep -- go forward, we continue to expect to see this benefit in our financials. Samik Chatterjee: Yes, got it. And just for my follow-up, I know you talked about the second source helping in terms of, obviously, in terms of realizing better revenues. But if you can talk about what you're seeing in terms of the cadence of the improvement there. Do you get to where you want to be with supply during the year? Or does it take longer? If you can just give us an update on how you're thinking about supply here? Akash Palkhiwala: Sure. So overall, the demand, as Cristiano mentioned in his prepared remarks, extremely strong across the board. And so we are continuing to see demand outpacing supply. As you rightly mentioned, we had put plans in place very early in the process, anticipating some of these challenges. And you're seeing the benefit of that, right? We have three second sourcing parts, especially in the mid high tiers that are shipping at scale now, and that shows up in our financial performance. And we have additional parts coming up as well. So that's definitely something that's helping us. The second is we're seeing capacity builds from some of our suppliers, and that's playing a role as well. As you look forward, we expect supply to continue to improve gradually through the year, in addition to where we are at now. And this entire picture, obviously, as you'd expect, is factored into our guidance. Cristiano Amon: Look, it's Cristiano. Nothing more to add, other than, in simple terms, we see supply improvements. Our forward guide, it contemplates the visibility we have in supply. And -- but we still have more demand than supply. We'll ship more, if we could. Operator: Thank you. Our next question is coming from Chris Caso with Raymond James. Please proceed with your question. Chris Caso: Yes. Thank you. Good evening. I wanted to ask about the commentary about the June quarter and the second half of the calendar year, your commentary there. Can you give a little more color on that? It's not typical for you to provide color two quarters in advance. So I imagine it's purposeful of why you're doing that. And maybe talk a little bit about the second half of the calendar year. Is that really a function of more supply coming on, allowing you to perhaps balance supply and demand as you get to the second half of the calendar year? Akash Palkhiwala: Sure, Chris. Thanks for the question. So, overall, when you look at our fiscal year, we are tracking well ahead of plan. We're very, very happy with how the year is playing out for us. And that obviously puts us in a very strong position to meet and exceed our long-term Investor Day targets. If you look at the first half outperformance, beyond that, as we go into the third fiscal quarter, we are projecting EPS growth of at least 30%, an opportunity beyond that. And then as you get into the September quarter, as you know well, that's kind of the next inflection point for us with launches -- additional phone launches in -- across several major OEMs. So we're going to -- we're expecting very strong year-over-year growth in the September quarter as well. Also, when you look beyond handsets and we look at second half of fiscal 2022, RF front end, IoT and automotive all are poised to continue to show very strong year-over-year growth as we go through the year. So, generally, when you step back, we had a very strong second half fiscal 2021. Fiscal 2022 is shaping up just like that, very strong year-over-year growth rates. Chris Caso: That's very helpful. Thanks. In addition to the longer-term goals you presented at the Analyst Day, you also talked about fiscal 2022 guidance for at least 20% EPS growth. Based on what you're saying for June, again, it seems like you're well ahead of that as well. Any commentary update on that fiscal 2022 guidance? Akash Palkhiwala: Yes. Chris, that's the right conclusion. We're tracking well ahead of it. We're not updating that number yet. But I think based on the guidance that you have for second fiscal quarter and third fiscal quarter and the comments I gave on the fourth, what you're drawing is a very reasonable conclusion. Operator: Thank you. Our next question is coming from Rod Hall with Goldman Sachs. Please proceed with your question. Rod Hall: Yes. Thanks, guys. Appreciate the question. I was just taking a look and we've been looking at this for a while, the quarter-on-quarter marginal contribution. So the QCT marginal contribution, if I look at the change in EBT and the change in revenue, I'm calculating 58% there in this quarter. And I know some of that is scaling, but I wonder if there's any way you could maybe at least give us some color on how much of that is the new marginal sales in QCT being higher margin and how much of it is just scaling effect on the revenue? Thanks. And then I have a follow-up. Akash Palkhiwala: Rod, just to confirm -- and this is Akash. Just to confirm, your question was about the actuals for the December quarter? Rod Hall: Yes. So Akash, what all I've done is taken the EBT of the December quarter less the EBT of the September quarter and put it over the revenue difference. Akash Palkhiwala: Correct. Correct. Great. So I think it's a great story. You're seeing a combination of all three drivers, right? You have revenue scale benefiting us. Gross margin strength quarter-over-quarter also benefiting us. And then operating leverage of the business. So it's a combination of all three. And we're pretty excited that not just gross margin performance was great. When you look at operating margins as well, 35% is really a great benchmark for us. It's the highest margin in a long time for us. So pretty excited about where we are at and where we're going with it. Rod Hall: Great. Thanks. And then on my follow-up, I wanted to ask you, Cristiano, if you could maybe comment on the -- there's been a lot of noise in the high-end Android chip market about upcoming competition and so on. And I just wonder maybe could you comment on the competitive environment a little bit there, what you're seeing -- what you anticipate seeing in the next six or nine months? Thanks. Cristiano Amon: Happy to do it. Before I answer that question, I just want to add one thing to the prior question that Akash answered. Look, we've been talking about our one technology roadmap that really scales, and this is exactly what you see as our diversification strategy unfolds and more or more of the revenue coming towards QCT from non-handset business, it gives us scale to the business, is all accretive to margins, and I think that's reflected in the numbers. And I think that will continue to be the story as we are able to leverage the road map. Now back to your question on competition, we're very happy where we are. Look, I provided a metric that we not usually do that in my prepared remarks. When we launched the new Snapdragon 8 series, we had 50 million views in -- of the launch event. And we have done that simultaneously both in the United States as well in 2 different locations in China. Snapdragon is becoming the preferred brand for premium tier Android. Not a single one of our customers think about flagship without thinking of Snapdragon 8 series. It's a very strong position to be in. As our customers move to the premium tier, we're seeing that turn into gains of share of the market for Qualcomm. That's why Android is the story of our handset business right now. And the reality is, as we look at the OEM share shift that happened in China, there's plenty of opportunity for us to grow and our competitors to grow. And I expect that we'll continue to have good results, and more and more our customers will be betting on the Snapdragon brand. Operator: Thank you. Our next question is coming from the line of Mike Walkley with Canaccord Genuity. Please proceed with your question. Mike Walkley: Thanks. Congratulations on the results also. I guess question for me on the $10 billion SAM opportunity within Android that you've previously highlighted, how do you think much of that benefiting this first half of the year guidance? And how much further you think you have to go in penetrating that SAM? Akash Palkhiwala: Yes. Mike, this is Akash. What's really happening with the $10 billion SAM opportunity is with the OEM mix change in China, all of our customers, Xiaomi, OPPO, Vivo, Honor, they're all picking up share. And as they pick up share and also go up tier, going into the high and the premium tier, as Cristiano just outlined, it gives us a tremendous opportunity to tap into it. So we've done a lot of it through, obviously, our products being great, but also working on the second sources that we mentioned in our prepared remarks. We still think that there is an opportunity to continue to expand into that SAM going forward. Mike Walkley: Right. And just my follow-up question. I think you previously highlighted to start the first half of the year, you've kind of prioritized the strong Android premium tier handsets. And you talked about demand outstripping supply. Is it get to maybe a softer handset quarter in the June quarter? Should we see maybe automotive and IoT start to close that supply-demand balance and those businesses maybe accelerate in terms of a sequential growth trend? Akash Palkhiwala: Yes, Mike. We're definitely -- that's a decision that we definitely make where if we can bias the supply in certain directions based on the market demands, we take advantage of that. And so it's something that we'll definitely do as we get to the June quarter. Cristiano Amon: This is Cristiano. Let me just add one thing. I want to -- hopefully, this will explain. We're seeing demand for all of our product lines. We're seeing more demand than supply right now. I think demand continues to be up, but I think we're a very fortunate position to be in. When you think about the handset business, and you did see this very high growth rate on Android, 60% growth of Android within the quarter, we prioritize supply, as we said in the prior quarters, for the Chinese New Year launches. We will still have more demand than supply in all the growth business. As we go through the next quarter, you're going to see the growth business, and a lot of the non-handset business could growing, and then the next inflection point for handsets is the holiday season, which is our September quarter. And as we expect supply improvements throughout the year, I think we'll be able to continue to drive growth in all business. We're very happy with how the year is unfolding. And as I said, our supply picture is reflected in our forward guide. Having said that, demand continue to go up, and it's a good thing. Operator: Thank you. Our next question is coming from Stacy Rasgon with Bernstein Research. Please proceed with your question. Stacy Rasgon: Hi, guys. Thanks for taking my questions. First, I wanted to ask about chipset gross margins in the quarter. I know you don't report them. But if I sort of stare at it, I think they probably were up a couple of hundred basis points. And I find that interesting just given the relative strength of handsets versus the adjacencies, which I think do have higher margins. Was that just the Android strength that you talked about that drove that margin in the quarter? And then how should we think about that into March as sort of the mix reverses? But you should have some of the higher margins of the adjacencies actually growing sequentially into March. I mean is there room for more margin expansion as we go into the next quarter? Akash Palkhiwala: Yes. Stacy, it's Akash. So it's a combination of, obviously, the adjacent outside non-handsets businesses helping the gross margin. Within handsets, you're seeing the benefit come through, especially as premium and high-tier devices at the high end of Android are being consumed, and we're selling into that market. And as you'll see in the guidance that we gave, we are still continuing to be optimistic with the gross margin picture. Stacy Rasgon: Got it. That's helpful. For my follow-up, I wanted to ask about the buyback. You bought back quite a bit of stock, I believe, in the quarter. And I think at the Analyst Day, you talked about buybacks is only really being anti-dilutive. But it looks like we are seeing share counts come down. I guess how should we be thinking about the buyback going forward given the cash generation? And I noticed this quarter, you didn't guide the share count on a more structural level. It does look like it's down a little lower. Should we be thinking about share count continue to go down through the year given the capital return that we're seeing? Akash Palkhiwala: Stacy, no change on the framework that we've given on buybacks before. We're continuing to focus on prioritized anti-dilutive buybacks and opportunistically look for -- on top of that, if we can do additional buybacks. And so what you're seeing in the quarter is a portion of that showing up, but fundamentally, our framework doesn't change. Operator: Thank you. Our next question is coming from the line of Tal Liani with Bank of America. Please proceed with your question. Tal Liani: Hi. I have two questions. The first one is other suppliers of Apple noted that orders for March in -- were strong, but then at least one of them said that the guidance for June is very weak because there's going to be a reversion to the mean. And the question I have is, is there any concentration of QCT handsets this that gives you some concerns over any big customer that might be reducing orders that there is any abnormal behavior this quarter might be reducing orders later on? That's my first question. Akash Palkhiwala: Sure. Yes. Tal, nothing to look there. I mean there isn't a story. We're going -- Apple is going to have their buying pattern across the quarters. And so that will flow through. But really, our focus is on the Android market, and there isn't a specific story that we're worried about there. Our position is good, and design traction going forward looks great. Tal Liani: Okay. The second question, and I don't know how to look at it, but when I look at handset revenues, we are well above the consensus estimates. But RF, auto and IoT, you reported below -- slightly below consensus estimates for the quarter. And I'm just wondering, is there any -- first of all, can you discuss the quarter for these non-handset markets or maybe RF as part of handsets? And then can you discuss seasonality? What -- these are new markets, relatively speaking. What should we think about seasonality here? Akash Palkhiwala: Yes. Sure. So, Tal, as we had said at previous earnings call, December being a strong quarter for the handset business. We definitely prioritized business over some of the other new opportunities. Still great demand in those areas. And as we go forward, you'll see that growth rates ramp in each of those businesses. It's reflected in our guidance. As I said in my prepared remarks, we expect auto and IoT to see strong sequential growth in the second quarter and also a strong year-over-year growth. As you look at the second half of the year, you're going to see the same trend, strong year-over-year growth across the board. Operator: Our next question is coming from the line of Ross Seymore with Deutsche Bank. Please proceed with your question. Ross Seymore: Hi guys. Thanks for letting me ask a few questions. Whether it's Cristiano or Akash, I'm not sure who this is better aligned to, but I wanted to see what your strategy is on the pricing side of the equation. Costs are increasing. Everybody is trying to get more supply. Are you passing along those costs? Is it margin accretive? And how are you using price on the revenue side of things as a tailwind? Should we be assuming that some of the goodness that we're seeing year-over-year is coming from the price side of the equation or not? Cristiano Amon: Thanks, Ross. This is Cristiano. Thanks for the question. Here's how you should think about it. One thing that probably separate us, we've been very focused in premium and high-tier devices, high-value devices, a lot of new technology. And, therefore, it's -- we're kind of less impacted by semiconductor cost increases. It's more about the value of the platform we offer. The second part of the answer is what we said, I think, earlier. Our one technology roadmap really scales. And as we use the technology in our R&D to serve more markets, we gained scale with our application processor in premium Android, and Android becomes the key story of mobile, not the modem. It's really the application processor. And the Snapdragon 800 is the key story. Plus, we have the processing and connectivity into automotive and IoT. It is accretive to margins. The business gains scale, and those are highly profitable, I think, product offerings. So those two things have a factor, and it's reflected in the QCT 35% operating margin. Ross Seymore: Thanks for the color. I guess as my follow-up, one probably for Akash, on the OpEx side of things. It looks like the March quarter is doing what it typically does in your guidance, up seasonally. Any puts and takes for the rest of the year that would be different than your traditional seasonality in that line? Akash Palkhiwala: Not really. It will be consistent with our historical seasonality. The one thing to keep in mind is as we closed the Veoneer transaction, they'll become a factor in our OpEx trend going forward. But overall, there's -- you should expect the trend to be consistent with historical. Operator: Thank you. Our next question is coming from Matt Ramsay with Cowen. Please proceed with your question. Matt Ramsay: Thank you very much. Good afternoon everybody. Cristiano, I wanted to -- a lot of the conversation here has been focused on supply versus demand for your products and the wafers and et cetera that takes to make your products. But a lot of the calls we all do in semis, we're hearing about match [ph] set issues and kitting issues for your end customers making devices. And what I've heard more about in the last six months and I expect to going forward is, is maybe a push by Qualcomm to use your scale to help your OEM customers get the remainder of the kit to make phones, pushing people more closely to be strictly aligned around the reference design where you can control more of the components in those reference designs. I wonder if you're finding your scale to be an advantage, one. And number two, does that have implications on attach rates of RF and other types of components that might generate revenue for Qualcomm in those designs? Thanks. Cristiano Amon: Thanks for the question. Here is -- it's a complicated thing here. I'll try to provide a simple answer. Look, when we talk, for example -- and I was just going to pick this product an example. We talked about Snapdragon 8 Series Generation 1, and it's a leading node SoC, but it has a lot of attach. Yes, yes. The transceiver has entire front end attach. It has power management IC. And at the end of the day, when we provide a chipset solution to our customers, we need capacity across a number of different nodes. So when we think about multi-sourcing our products and put capacity expansion plans in place, so we have supply to support both our handsets in the growth business, we have been building capacity across all those different technologies. And as an example, when you think of things like a power management IC or even transceiver, we work with four or five foundries. So in the semiconductor supply chain shortage, it is across everything. Now having said that, the second part of the answer is, scale has been very helpful. Two things have been very helpful for Qualcomm. One is the high predictability we have on our demand. We can bet on ourselves, and therefore, we have the ability to make long-term capacity planning and get long-term capacity commitments from our vendors. And also, the scale that we have to be able to utilize multisourcing, that has put us in a good position to navigate through this. Now having said that, so I'll repeat what I said before, we still have more demand than supply, even though we're very happy with the growth rates and how good was the quarter, the guide how we've been managing, I think the seasonality between handsets and the growth business. But -- and as we said, supply is going to get better as we get to the second half of 2022. Matt Ramsay: Very helpful. Thank you for that. Just as a follow-up. On the auto business, you guys presented a very compelling story around ADAS at the Investor Day, but I was a bit surprised that the Ultra Cruise announcement so quickly. Congrats on that. Maybe if you could give a little bit more details behind that relationship with GM and if you have other irons in the fire of similar profile. Thanks. Cristiano Amon: Thanks for the question. Automotive is really an incredible opportunity for Qualcomm. We're super excited about everything is happening automotive, has happened in a very short period of time. And I think we have something that is very unique. It's separate us from everybody else. So it's not about having a component. It's about creating a digital chassis with capabilities in all domains, from connecting the car to the cloud, telematics, the entire immersive digital cockpit experience and, of course, ADAS and autonomy, plus a service platform. GM is, as we said, a cornerstone customer that is not only looking into the capability of ADAS, and we're super proud of the work with them, on both the Super Cruise and Ultra Cruise, but also the ability to look of the entire chassis. BMW was another one, which we announced towards our Analyst Day. At CES, we announced Renault as an addition to the digital chassis. We -- you should expect that we have a lot of other irons in the fire. And overall, automotive is a good story for Qualcomm. It's something that we can actually take a platform approach and take some of the things we have done in mobile, it's take the technology to scale up and down to every tier of automobile. And I think we're just in the beginning of having more ADAS design wins and having the chassis be recognized as a key platform going forward. Operator: Thank you. Your next question is coming from Joe Moore with Morgan Stanley. Please proceed with your question. Joe Moore: Great. Thank you. I wonder if you could talk about RF for the year, the RF businesses ability to keep pace with handsets overall. And kind of what are the metrics we should look at as millimeter wave roll out kind of more broadly an important factor? Or is it content growth in the sort of next 200 million 5G handsets, just how are you thinking about overall RF for the year? Akash Palkhiwala: Sure. Joe, its Akash. If you go back to what we said at Analyst Day and the target that we set for the RF business, really, no change there, '22 is playing out as we expected. It's on-track to position us to achieve the target that we laid out. You should also think of RF as not just handsets. And today, most of the business is handsets, but we're going to have RF opportunities with 5G and automotive, with 5G and IoT and then WiFi RF as well. So tremendous growth opportunities outside of handsets that's in front of us. On millimeter wave, the guidance that we gave at Analyst Day did not have any heroic assumptions of growth of millimeter wave globally. We think of that as an upside opportunity. Joe Moore: Great. Thank you. Operator: Thank you. Our final question is coming from the line of Brett Simpson with Arete Research. Please proceed with your question. Brett Simpson: Yes, thanks very much. I have a question for Cristiano. You talked a lot about Android strength this year. But I guess on China smartphones, we've seen some volatility in sort of sell-in versus sell-through last quarter. Is this sort of typical kind of buildup ahead of Chinese New Year that we should expect? And I guess when you look at new product launches in China, last year, we didn't get any new premium Android launches in the June quarter. Nothing meaningful from Chinese customers. So I'm just keen to get your perspective around demand from Chinese customers in the March and June quarters as things look a little bit more volatile than we'd expect? Cristiano Amon: No, it's a great question. And I think as we've been trying to talk about on this call, when you think about the handset Android revenue for us and the growth for having in Android, you see a lot of growth right now. You saw that 60% year-over-year growth of Android, and we also have sequential growth. That's because of the Chinese New Year. And we're more skewed towards premium and high tier. And then we have -- the next inflection point will be the holiday season. And I think this is all contemplated in our guide. And the market -- we continue to see demand high. And because I think we're more concentrated in the premium and high tiers, we have been a little bit less impacted by some of the puts and takes that you see towards in the mid and the low tier of handsets. Brett Simpson: Great. Thanks Cristiano. And maybe just a follow-up on Windows and ARM. I mean this is something you guys have led over the last, I don't know, 3 or 4 years, but can you talk a bit about your share ambitions? I mean what do you think that an ARM platform and Windows ecosystem can command on a sort of 2 or 3-year view with -- especially with the NUVIA asset you've got now and the McKenna [ph] project? Any sort of market share ambitions you can share with us, just to give us some perspective on how you see this opportunity playing out? Thanks. Cristiano Amon: Great question. Look, let's talk about short term, and then let's talk about midterm. The way we look at this -- and we have been very clear and very consistent with our vision. At the end of the day, for Qualcomm, it's inevitable that you're going to have a big portion of the PC market moving towards the connected ARM platform. I think you saw that happening already with Apple, when you think about the Apple devices. And then when you think about the use cases of PC, PCs are changing at least for the workhorse of a laptop. It's about cameras. It's about connectivities. It's about multimedia. It's about streaming with 5G, including streaming of gaming, etcetera. So our view is very clear. There's going to be a big portion of the market is going to transition to an ARM architecture. And when you think of everybody else in the industry, we are the best positioned company to do that for the Windows ecosystem. I think that's reflected not only in the developments and the partnership we have with Microsoft for the years, but also the acquisition of NUVIA. Short term, as we prepare for Windows 11, Windows 11 is really the time that you have the ARM ecosystem able to support 32-bit, 64-bit. You have things like the Android apps coming to Windows. Our new partner we just announced, the 8cx Gen 3. We talk about CES about having now the device being tested in 200 large enterprises. And it's a step function. We'll continue to work with our partners on that transition. But I think every OEM that you're going to talk to, especially on the PC Windows side, they believe there's going to be a room for ARM-based laptop, and that's what Qualcomm is doing. Operator: Thank you. That concludes today's question-and-answer session. Mr. Amon, do you have anything further to add before adjourning the call? Cristiano Amon: Yes. First of all, I would like to thank everyone for joining on the call today. I'm really excited for what 2022 will bring. Demand for technology is accelerating across virtually every sector, and we remain at the beginning of one of the largest opportunities in our history. Our one technology road map with -- in comparable capabilities in wireless communications, low-power advanced computing and on-device AI extends from mobile to automotive and IoT, expanding our addressable market by more than seven times to approximately $700 billion in the next decade. In closing, we have the vision and the execution capabilities that will ensure we are at the forefront of innovation. As the world transforms, we will continue to move early and quickly to address these new opportunities and deliver technologies that enable industries and communities to advance. Most important, I would like to thank our 45,000 employees worldwide. I'm incredibly proud of the significant achievements we made. Thank you. Operator: Ladies and gentlemen, this concludes today's conference call. You may now disconnect.

Operator: Ladies and gentlemen, thank you for standing by. Welcome to the QUALCOMM Fourth Quarter and Fiscal 2021 Earnings Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session. If you would like to ask a question during this time, press star then the number one on your telephone keypad. To withdraw your question press star, then the number two. If you are using a speakerphone, please pick up your handset before pressing the numbers. Please limit your questions to one question and one follow up. As a reminder, this conference is being recorded November 3rd, 2021. The playback number for today's call is (877) 660-6853. International callers please dial 201-612-7415. The playback reservation number is 13723721. I would now like to turn the call over to Mauricio Lopez-Hodoyan, Vice President of Investor Relations. Mr. Lopez - Hodoyan, please go ahead. Mauricio Lopez-Hodoyan: Thank you. And good afternoon, everyone. Today's call will include prepared remarks by Cristiano Amon and Akash Palkhiwala. In addition, Alex Rogers will join the question-and-answer session. You can access our earnings release in a slide presentation that accompany this call on an Investor Relations website. In addition, this call is being webcast on qualcomm.com and a replay will be available on our website later today. During the call today, we will use non-GAAP financial measures as defined in Regulation G. And you can find the related reconciliations to GAAP on our website. We will also make forward-looking statements and clean projections and estimates of future events, business or industry trends, or business or financial results. Actual events or results. It could differ materially from those projected in our forward-looking statements. Please refer to our SEC filings, including our most recent 10-K, which contain important factors that could cause actual results to differ materially from the forward-looking statements. And now to comments from QUALCOMM's President and Chief Executive Officer, Cristiano Amon. Cristiano Amon: Thank you, Mauricio, and good afternoon everyone. Thanks for joining us today. As the pace of digital transformation of industries accelerates and as devices become connected and more intelligent, our broad portfolio of technologies and solutions is creating a significant long-term growth opportunity for us. As you can see from our results, the performance in our chipset business led to record fiscal fourth-quarter non-GAAP revenues of $9.3 billion and record non-GAAP earnings per share of $2.55. Notably, this is our fifth consecutive quarter of greater than a 100% year-over-year EBT growth in our chipset business. We also demonstrated revenue diversification with combined, our RF Front end, automotive and IoT fiscal '21 revenues exceeding $10 billion, an increase of 69% year-over-year. Going forward, our chipset business represents the largest growth engine for us, as virtually all devices at the Edge adopt mobile technologies. We have the relevant technologies required that continued to lead the mobile and the connected intelligent Edge. And as the Edge gains scale in connectivity and adopts own device artificial intelligence, we're well-positioned to become a leader in AI processing. Let me now briefly highlight the strong momentum we continue to see in IoT across consumer, edge networking, and industrial. In consumer, we're pleased that our XR platforms are powering over 50 commercial devices and gaining scale with the leading VR and AR ecosystems. Our early investments have established Snapdragon XR as a device platform of choice for connecting physical and digital spaces. And recent market developments position us as one of the key enablers of the Metaverse opportunity. Additionally, the ongoing conversions of mobile and compute continues to drive demand for Snapdragon power premium tablets, two-in-ones, and laptops. We are pleased with the strong market validation of ARM-based personal computing in the industry transition to a new SoC architecture. We're more confident than ever in the connected computing opportunity, our upcoming solutions powered by our NUVIA CPUs, and our collaboration with Microsoft. We're also seeing increased traction in consumer electronics. Our advanced technologies are powering category-leading devices, such as the Peloton Bike Plus and Tread, as well as the Astral, Amazon's recently announced household robot. In Edge networking, we are a leader in current and next-generation high-performance Wi-Fi 6 and Wi - Fi 6E access point solutions. And we continue to see high demand for our products driven by home and enterprise upgrade cycles. We expect this trend to continue as productivity increasingly requires video collaboration, as well as Cloud processing and storage. 5G, as wireless fiber is now a reality in gaining scale in the United States, Verizon recently announced 5G home Internet service availability in 57 markets, including more than 2 million households covert on millimeter wave. In addition, T-Mobile is leveraging their 5G network to target 7 million to 8 million home broadband customers over the next 5 years. We're seeing demand increase globally, making 5G wireless fiber, one of the fastest-growing last mile broadband technologies. In industrial, we have expanded our Qualcomm IoT services suites to more than 30 verticals. As an example, in retail, our solutions are powering digital signage, payment, and self-checkout devices from companies like Square and Clover, as well as solutions from Honeywell, Pennisonic, Zebra, and others to enable new customer experiences, help empower store associates and improve operational efficiencies. We also continue to lead the way on product innovation, with new launches like the Qualcomm Flight RB5, the world first 5G AI drone platform. In RF Front End, we expanded our product portfolio with our recently announced ultraBAW RF Filter Technology that supports frequencies from 2.7 gigahertz to 7.2 gigahertz. This is the new industry benchmark for performance in this range. ultraBAW Technology also supports Wi - Fi bands, including 5 gigahertz, the newly adopted 6 gigahertz band for Wi - Fi 6E and future Wi - Fi standards. This creates a new growth factor for RF Front End. As we attach RF Solutions to Wi - Fi. Our RF Front End portfolio, combining ultraSAW, and ultraBAW Technologies, is now best in class from 600 megahertz to 7 gigahertz. And with the addition of millimeter wave, we are the only RF front-end provider with a comprehensive solution for all bands. As Cellular expands beyond handsets, we're focused on extending our modem to antenna platform to automotive and IoT. In our automotive, we're creating a leading horizontal and open platform with our Snapdragon Digital Chassis, which includes our Telematics, digital cockpit, card to cloud service, ADAS, and autonomy solutions. Taking the same approach we used to make the smart phone, the world's largest computing and developer platform, we're currently working with automakers and Tier 1s to create a joint roadmap to build multi-tier, multi-generation, scalable, and upgradable platforms for long-term sustainable business. The strength of our digital chassis strategy is reflected in both our results, as well as a strong design pipeline and it's creating a platform for innovation, for Auto. We are also very excited about Arriver. Upon closing, Snapdragon Ride, ADAS Solutions will be complemented with Arriver 's computer vision, drive policy in driver-assistant assets, enhancing our ability to deliver on an open and competitive ADAS platform for automakers in tier-1s at scale. In handsets, we're successfully executing on our strategy. Our premium tier Snapdragon solutions continue to gain traction with OEMs. In fiscal Q4, devices announced or shipped with our Snapdragon premium-tier products increased by 21% year-over-year. Notably, all leading 5G Android smartphones OEMs, by volume, continued to power their flagship devices of Snapdragon. Snapdragon continues to be the preferred choice for premium and high-tier Android smartphones in all regions. As a result, we're benefiting from the changing OEM landscape and Android SAM expansion. Lastly, our licensing business achieved fiscal '21 revenues in excess of $6.3 billion. QTL remains the most successful licensing business in the industry, reflecting the strength of our innovation in seller technology, the value of our extensive patent portfolio in our execution in securing long-term agreements with key OEMs, as well as over 150 5G agreements to date. As we have noted throughout the year, we continue to see incredibly strong demand across all our technologies as the current environment, is accelerating the scale of connectivity and processing at the edge. We still expect material improvements to our supply by the end of the calendar year, and our second sourcing initiatives remain on track. Before I turn the call over to Akash, I would like to highlight that, we recently announced a goal to achieve net 0 global emissions for scopes 1, 2, and 3 by 2040. We also look forward to enabling a more sustainable future with 5G through its impact on greenhouse gas emissions reduction, energy and water use optimization, green jobs creation, and more. I would now like to turn the call over to Akash. Akash Palkhiwala: Thank you Cristiano and good afternoon, everyone. We are pleased to announce record fourth fiscal quarter results with non-GAAP revenues of $9.3 billion and non-GAAP EPS of $2.55. Reflecting year-over-year growth of 43% and 76% respectively. For QCT, this was another record quarter with revenues of $7.7 billion and EBT margin of 32%, both above the high-end of our guidance. QCT EBT of $2.5 billion grew by 143% versus the year-ago quarter on revenue growth of 56% and 12 points of EBT margin expansion. We also delivered record revenues in each of QCT revenue streams, handsets, RF Front End, IoT, and automotive. Handset revenues of $4.7 billion increased 56% year-over-year on strong demand across all major OEMs. RF front-end revenues of $1.2 billion grew 45% year-over-year, and included the benefit of full enough demand in advance of certain holiday launches. IoT revenues were up 66% year-over-year to $1.5 billion as digital transformation continues to drive higher demand across our diversified customer base. Automotive revenues of $270 million grew 44% year-over-year on the ramp of digital cockpit launches and continued strength in telematics. QTL revenues of $1.6 billion and EBT margins of 72% were in line with guidance. These results reflect slightly lower-than-expected units offset by favorable mix. Lastly, we delivered GAAP EPS of $2.45, $0.47 above the high-end of our guidance, driven by record non-GAAP earnings and approximately 500 million of gains in our QSI investment portfolio. Now, I would like to highlight some key achievements in fiscal '21. We are exceeding all targets we set at our 2019 Analyst Day, which is a year earlier than forecasted. We delivered year-over-year revenue growth of 26% in QTL and 64% in QCT. And more than doubled non-GAAP EPS to $8.54. In QCT, we had greater than 50% year-over-year growth in each of our revenue streams. And EBT margins expanded from 17% in fiscal '20 to 29% in fiscal '21. Within handsets, our Android revenues for our Snapdragon chipsets were approximately 40% higher than our primary competitor. With our focus on diversification, RF Front End, automotive, and IoT, accounted for 38% of total QCT revenues. Lastly, we returned 74% of our free cash flow to stockholders, including $3 billion in dividends and $3.4 billion in stock repurchases. Turning to our guidance for handset units and the first fiscal quarter. For calendar 2021, we are narrowing the range for 5G handsets to 500 to 550 million units. We're now forecasting mid to high single-digit growth in global 3G, 4G, 5G handsets, relative to Calendar 2020. For the first fiscal quarter, we are forecasting revenues of $10 to $10.8 billion and non-GAAP EPS of $2.90 to $3.10. In QCT, we expect revenues of $8.4 billion to $8.9 billion, an EBT margins of 32% to 34%. At the midpoint, this implies year-over-year revenue growth of 32% and EBT dollar growth of 49%. The sequential revenue growth is driven by handsets due to higher demand primarily for our Snapdragon chipsets in Android devices. Following the record performance in the fourth quarter, we expect non-handset revenues to remain in line sequentially. Consistent with our previous guidance, we expect QTL revenues of $1.6 billion to $1.8 billion, and EBT margins of 74% to 78%. This forecast assumed sequential unit growth in line with historical trends. Lastly, we anticipate non-GAAP combined R&D and SG&A expenses to decrease 2% to 3% sequentially. As a reminder, operating expenses are typically higher in the second fiscal quarter, as it includes calendar year resets for certain employee-related costs. Looking forward, fiscal '22 will be another exciting year for Qualcomm, with year-over-year EPS growth expected to exceed 20% driven by strength across all QCT revenue streams. In handsets, we are positioned to benefit from the 10 billion SAM expansion due to the changing OEM landscape. A portion of this benefit, is reflected in our first-quarter guidance. And we also expect it to contribute to the rest of fiscal '22. Before I finish my prepared remarks, I would like to thank our employees for their leadership and contributions in making 2021 successful. Finally, we look forward to seeing you at our Investor Day on November 16, where we will provide additional detail about our growth strategy. Thank you, and I'll now turn the call back to Mauricio. Mauricio Lopez-Hodoyan: Thank you, Akash. Operator, we're now ready for questions. Operator: Thank you. To queue a question, press star than the number one. To withdraw your question, press star two. If you're using a speakerphone, please pick up your handset before pressing the numbers. Our first question comes from Chris Caso with Raymond James, please proceed with your question. Chris Caso: Yes. Thank you. Good evening. For my first question, perhaps you could help us out with what was different from your expectations heading into this quarter. I know that you were struggling with supply constraints like everyone else in the industry. Was it that the supply came on better than you expected? Was it the demand, was it a combination of both? Akash Palkhiwala: Hi, Chris, this is Akash. It was really a combination of both. We were -- we had lots of strength in QCT really across all of our revenue streams with handsets, IoT and RF Front End, those are the three areas that did really well. Relative to our expectations. And we were able to work through the supply constraints to address the demand that came up. So it was really a combination of both. Chris Caso: Great. And maybe you could expand on your comments, you spoke about -- and I think I have this right, EPS growth expected to exceed 20% as you go into next year. Can you give us some details? I'm sure that's something that, you're planning on hitting as you go into the Analyst Day. Cristiano Amon: Yeah, absolutely. I mean, just to clarify, what we guided is non-GAAP EPS growth of greater than 20%. And the key driver for that is really across all QCT revenue streams. So you're seeing the strength exiting the year, and that's the strength that's playing out both in our first-quarter guidance and also the full-year. The one thing I would highlight is within handsets, we're really in a strong position to benefit from the 10 billion SAM expansion we've previously discussed from the changing OEM landscape. And a portion of this benefit is reflected in our first quarter guidance, and that's also contemplated in the greater than 20% EPS growth we are suggesting. Akash Palkhiwala: Given that, we expect handsets to grow faster than non-handsets in fiscal '22. But really across-the-board, we'll have very strong growth rates and really set up to do well in the year and beyond. Operator: Thank you. Our next question is coming from the line of Matt Ramsay with Cowen, please proceed with your question. Matt Ramsay: Yes.Thank you very much. Good afternoon, guys. And congrats on the results. Cristiano, I wanted to dig a little bit with you into the guidance for the December quarter in QCT. I think you guys mentioned in the script that that was primarily going to be driven by your Android business and increase supply. So I just wanted to make sure that I got that right. Obviously, that's a seasonally strong quarter for Cupertino, but I just wanted to dig a little bit more into the dynamics that are driving the fourth-quarter and Android. Thank you. Cristiano Amon: No, thanks Matt for the question. Look, I think what you're starting to see exactly the correlation is going a different direction. You're correct, is a seasonally stronger quarter for our modem only shipments, but the sequential revenue growth is primarily driven by Android handsets. And demand for Snapdragon mobile platforms, both across premium and high tier. And consistent why we said, we see an incredible opportunity to grow way faster than the market. And Android is the primarily growth driver in our handset business right now. Matt Ramsay: Very clear. Thank you. Akash is my follow-up, 33% QCT op margins in the December quarter.Obviously, there was a settlement with Apple and some things changed there, but that number I think was 13%, 2 years ago. So I guess it's pretty remarkable progress. I wonder if you might talk a little bit more and maybe this is something for a couple of weeks from now at the Analyst Day, but, the puts and takes and drivers of the QCT op margin going forward and where are we? Is this this a seasonal peak or is this a new trend? Thank you. Akash Palkhiwala: Matt, thanks for the question. Yeah, we're very pleased by the operating margin performance as well. So maybe I'll point to a couple of drivers, but really, we're planning to address this in a lot more detail in a couple of weeks. I'll ask you to hold until then. If you see our gross margin performance in the September quarter that we just reported, very strong gross margins. And we are forecasting in similar range going into the December quarter. And then year-over-year, if you look at the full-year, so abstract back from the seasonality, we went from 17% in fiscal '20 to 29% in fiscal '21. And so, we feel, obviously, very comfortable with that number, and in a couple of weeks, we'll talk about how the combination of revenue growth and gross margin percentage and R&D leverage will take us going forward. Operator: Thank you. Our next question comes from the line of Samik Chatterjee with JPMorgan. Please proceed with your question. Samik Chatterjee: Thank you. Hi, thanks for taking my question. I guess, Cristiano, Akash both of you are sounding great on -- and great adoption of your premium chipsets going into the December quarter. I just wanted to see if I can get some more color about how you're thinking about adoption of millimeter wave with the Android customers. I know there has been some investor conversation or disappointment around the primary customer not deploying a more widely rolling out millimeter wave this year. So just wanted to get what you're seeing in the pipeline, we're talking millimeter wave, and how our Android customers are sounding about that. And I have a follow-up. Cristiano Amon: Hi Samik, thanks for asking the question. Our position on millimeter wave remains unchanged, and will remain unchanged. There are 2, I think, answers your question, the first one is continue to track exactly as we'd expected. We have millimeter wave in United States, is now commercially available in Japan across all carriers, DOCOMO, SoftBank, KTDI, even a new carrier, Rakuten. And we continue to be optimistic about the opportunity of millimeter-wave becoming commercial overtime in China, the first milestone is the millimeter-wave for the Winter Olympics early 2022. Akash Palkhiwala: Japan is moving for a millimeter wave. And nothing has changed the carriers plans to continue to build the technology. And there are a number of commercial millimeter-wave smartphones in Japan that's include the Galaxy Note, the Gal -- GS21, and Galaxy Fold, and Sony. And from our perspective, just knowing what we know of wireless and how the growth of data is going in the spectrum efficiency, millimeter wave is inevitable, it's just a matter of time. And it's just different markets will deploy at different speeds, but that's how we get more Spectrum and our position of millimeter wave remains unchanged. Samik Chatterjee: Thank you. For my follow-up, if I can ask you right where you've got some investors asking about how to think about the opportunity with Arriver and how should we think about OEM customers that are looking for a full stack solution versus OEMs that look for more of just the hardware piece of that stack and leveraging Qualcomm from that aspect. And then if you can provide any updates. I think you've updated us on the purchase price along with SSA partners, but what -- any more details around the closing as well as the price for Qualcomm standalone for the Arriver assets? Cristiano Amon: We're very excited about the Veoneer acquisition and Arriver Technology. As we said before, with the natural owners of that asset, we were -- believe we're on track to get the ability to get all the approvals and close on this transaction. And more important, as we had a business preparation in place with Veoneer, prior to the acquisition, that remains unchanged and allow us to continue to progress towards our ADAS platform. We're getting incredibly positive feedback from the market, from the ability to provide truly open horizontal platform for ADAS and I highly encourage you to be at our New York Analyst Day, we have a lot more details to provide about what we're doing in ADAS on autonomy. Operator: Thank you. Our next question is coming from the line of Stacy Rasgon with Bernstein Research. Please proceed with your question. Stacy Rasgon: Hi, guys. Thanks for taking my questions. For my first one, I was curious just given the current state of the handset market, what kind of handset growth you have embedded in your more than 20% EPS forecast for 2022? Are you are looking for recovery, or is it all around content? How are we thinking about our unit growth in the market to drive that? Akash Palkhiwala: Yes, Stacy, for the guidance that we gave, there are no heroic assumptions on market growth. We are assuming similar scale to this year. And within that, we feel comfortable that we have the opportunities in front of us to grow. Stacy Rasgon: So it feel like mid to high single-digit? Akash Palkhiwala: That's right. Stacy Rasgon: Thank you. For my follow-up, I know you've had supply issues, I know they're resolving by the end of the calendar year. Are you still under-shipping what you could ship, if you had supply and is that supply eases up, does that have any impact on how we might think about typical seasonality in the March quarter? Akash Palkhiwala: Stacy, it's Akash. So we do have constraints really across-the-board and you have to figure out how the demand would have played out if there was supply across the industry. But we feel pretty comfortable that the overall supply picture is playing out exactly as we had planned. We saw this coming early and we've been talking about it for the last couple of quarters. And we have put in place plans both for dual sourcing for certain parts. We've now announced three parts that are dual sourced, that are available. And then also capacity expansions with our suppliers that were previously being planned. Anyways, come in towards the end of the year. So that's definitely something that we are very excited about. On your question on the second quarter, we're obviously not guiding the quarter at this point, but it's a reasonable assumption to think that, as we launch our new Android premium-tier chip in the first quarter of the calendar year, that will offset some of the decline you would see in the handset market naturally within QCT. And then of course we also expect non-handset to grow from first quarter to second quarter. Operator: Thank you. Our next question comes from the line of Tal Liani with Bank of America. Please proceed with your question. Tal Liani: Hi, guys, I have 2 questions, so I'll just ask them together, what are the trends in China, meaning the headset market is weakening, and we heard it throughout the quarter? And on the other hand, there is Huawei share loss and your share gains. I'm wondering if you can share with us the trends within China and your outlook for the market. And the second question is not related, but it's the second question I'm getting from investors, which is, you always say that the -- when Apple starts using their motives, the surface area Apple is big and there are other opportunities. Can you elaborate what are the other opportunities? What are the -- and maybe give us scenarios. What are the scenarios that you can still manage the transition of Apple using their own motive? Thanks. Akash Palkhiwala: Tal, It's Akash. I'll take the first one, and Cristiano will address the second one. So what we saw in the September quarter and the market was weakness in units in China and emerging markets, but developed markets volume remained very resilient. So that's really the jumping off point for the December quarter. We are forecasting normal seasonality on top of what we saw in September. I'll say that a portion of the weakness was driven by supply imbalances at certain OEMs. And so, that did impact the demand to a certain extent, but that's one of the key factors we saw happening. Within the market though, 5G continues to be very strong, so we are seeing two trends in China. First, is the transition to 5G, there's a variance month-to-month, but very, very strong in the high 70% has already transitioned to 5G. And so we are raising the guidance -- the midpoint of the guidance for 5G to now, 525 million units. And then within that, we're also seeing higher tier of devices, so OPPO, Vivo, Xiaomi, Honor, all of our customers are moving up tier and, as they move up tier, that creates an incremental opportunity for us. So pretty positive market trends for us. Operator: Thank you Cristiano Amon: So the Second question - Operator: I apologize, Cristiano Amon: The second -- Okay. So I'm just going to answer the second question. So the second question, we're very focused right now on our contract with Apple, which is focused on providing modem for their products. We're very happy with their relationship, but anything beyond our contract with them is an upside to our model. And as I continue to say, what I said before, we have a lot of technologies, they have a large number of devices. And if there are opportunities, we'll be very happy to engage with them and supply, we just don't want to speculate at this point. And we've been very clear that our assumptions in our model is just focused on our contract. Everything else is upside. Operator: Our next question is coming from the line of Ross Seymore with Deutsche Bank. Please proceed with your question. Ross Seymore: Hi, guys. Thanks for letting me ask a question. Congrats on the strong results and guide. Akash or Cristiano, just wanted to talk a little bit about the pairing of the handset in the RF side of things. I know you said that there was a little bit of a pull-in into your fiscal fourth quarter on the RF side of things. But with the Android market share gains that you're talking about heading into the December quarter, why is the RF side not coming along for that ride? And is that pairing something that it's just a transition period, and as we look further out, those are going to be more linked together? Akash Palkhiwala: Ross, it's Akash. It's the exactly the right question that, we expect that two to move together in concert. As I mentioned in my prepared remarks, and that's why we highlighted that, we did see some pull-in from December quarter to September quarter within RF Front End. And it was really where supply was available, our customers chose to take it sooner than receiving the chipset. And if you normalize for it, the two would have moved together. So we definitely see the growth in the Android opportunity as a tremendous growth factor for us within RF Front End as well. Ross Seymore: Thanks for that color. I guess -- Cristiano Amon: No. Just to be crystal clear, all of this growth opportunity that we've seen in Android, especially the premium high, is coming with RF. I want to make that statement clear. Ross Seymore: Okay. Thank you for that, Cristiano. I guess, it's my follow-up. If I talk about QCT X handsets and X RF Front End. It sounds like, Akash, you said those would be relatively flat in December, but then you thought it would actually grow again in March. What's going on in those markets? And then I guess the higher-level question is given the supply constraints, there's a big debate going on in broad-based semis between the investors worried about increased selectivity from customers, changing behaviors, are you seeing some digestion period here? Why is it slowing and then why is it re-accelerating? Akash Palkhiwala: Yeah. So as you saw, we're tremendously strong results both in auto and IoT and record results in both in the fourth fiscal quarter. You're right. Going into the first quarter, we are forecasting in line sequentially. And one of the key factors there is still we are supply constrained, and we're making certain decisions given the strong handset market in that quarter, to allocate supply a little differently based on profitability. But really when you think about the raw demand from the customer continues to be very strong. And so we are confident that when you look at second fiscal quarter or look at fiscal 2021 going to fiscal 2022, both those businesses will grow in a very strong fashion. Operator: Our next question is coming from the line of Joe Moore with Morgan Stanley. Please proceed with your question. Joe Moore: Great. Thank you. I wonder if you could just talk about the overall supply chain and smartphone. And are you seeing bottlenecks at some of your customers where they're unable to procure parts that aren't from Qualcomm that might lead to inventory buildup of Qualcomm parts? It seems like, overall, the handset sell-through numbers are a little weaker because of those constraints, but it doesn't seem like to supply chain has changed at all. Can you just describe that dynamic? Akash Palkhiwala: Sure Joe. So we're definitely seeing some mismatch of parts in the short-term at some of our customers. But you should think of those as, really timing issues. The other thing to keep in mind is that, Cristiano outlined earlier in the call that, we're focusing really on the premium and high-tier units, and so when our customers have supply mismatch, they actually end up supplying the premium in high-tier devices. So our chips and our devices are still being used and it's not something that's a big factor for us in the short-term. Joe Moore: Great. Thank you very much. Operator: Thank you. Our next question comes from Rod Hall with Goldman Sachs. Please proceed with your question. Rod Hall: Yes. Thanks for the question. I wanted to come back to this idea of supply versus demand in the Q1 quarter. I'd heard earlier -- someone mentioned that they were assuming that that supply would be meeting demand. That it seems to -- I just wanted to check that with you. Is that a good assumption or do you think that we'd see supply continuing to rise to meet demand on into the fiscal Q2? And then I have a follow-up. Cristiano Amon: Hi, Rod. This is Cristiano. Look, if you remember, we had said, if I believe, two earnings calls ago that we had put -- we act early, we put a lot of things in place, multi-sourcing, capacity expansions, and we said that we expect to see material improvement in our supply towards the end of the calendar year. That's reflected in the Q1 guide, our ability to have supply. We continue to have pockets of areas that we would ship more, if we had more, but we see a lot of improvements, we see at least three announced products of multi-sourcing had been shipped. And we've been executing on that increased supply. And different companies are going to have different outlooks. We, look at the first half of 2022, we still have some shortage. But as we get to the second part the year, in general, supply and demand are going to be aligned. Rod Hall: Just, I guess, my question was just aimed at the idea that, this seems like it could continue to be a little bit of a tailwind for you, as you move into the beginning of next year and it's not just magically resolved here at the end of this year. My follow-up is regarding the Android opportunity, I wonder if you guys could comment on content there versus the other big high enhanced that maker you supply. We calculate a substantial increase in content, but I'm just curious, do you agree with that, with -- if you sell a high-end Android phone in January, is that phone going to have materially more content for you than another type of phone might? Cristiano Amon: Absolutely. Look, we are very pleased with the strength of our Snapdragon 800 Series. The Snapdragon 800 Series became synonymous with premium Android Flagship smartphones. There's a lot more silicon content besides the RF Front End that's attached to the modem. There's GPU, there's CPU, there's all the multimedia, and it's a lot more richer platform than just selling a modem. And it's a multiple times in terms of revenue and earnings contribution. And when we look of the sum available to us -- when we look at the consolidation of a Snapdragon 800 being the chipset for every Flagship, that's no surprise that we actually grow faster in the Android segments. Operator: Thank you. Our next question is coming from the line of Harsh Kumar with Piper Sandler. Please proceed with your question. Harsh Kumar: Hey, guys. First of all, congratulations on tremendous execution and diversification. Had a question. Cristiano, you talked a lot about Android and how positive you are on that. I know you were supposed to get additional supply in the December quarter. You seem to be benefiting from units. Are you benefiting from units primarily or are you also going back and taking share that you were expecting to take from your competitors? Cristiano Amon: Look, there's plenty of opportunity with the changing landscape for growth between us and our competitors. I think what's important to highlight, is that Qualcomm has been concentrated into premium and high. There's very high demand for premium and high Snapdragon mobile platforms, both the 700, 800, and it is a share gain of Snapdragon in Android premium. And we're very happy with the opportunity to capture actually the higher value share of the market. Akash Palkhiwala: And then maybe hard to answer that. I'll just draw your attention to product announcements that we had a couple of weeks ago where we announced a whole new set of 5G products across tiers. Harsh Kumar: Great guys and for my follow-up, I wanted to follow up on a question that was asked about the March quarter. You talked about some benefits coming from your premium chipset you'll be launching in the March timeframe, which is seasonally weak. Now, Apple for one, talked about leaving, I think it was $6 billion plus worth of revenues behind on the table. Do you think you might get a benefit from all the handset OEMs that are leaving revenue behind on the table along with your premium? Or you think it's just again, your own chipsets that are getting benefit from launch of new chipsets. Akash Palkhiwala: Well, what I said about the March quarter was really you have a seasonal decline in the handset market, but given the launch of our new chipset, and really, all the other chipset launches we've done over the last month, we feel like we will be in a very strong position to expand our units within the Android market. And then, the second thing I said is non-handset growth. We expect non-handsets, all three to grow within the quarter as well. Operator: Thank you. Our final question is coming from the line of Timothy Arcuri with UBS. Please proceed with your question. Timothy Arcuri: Thanks a lot. I had two questions. The first Akash was on the RF business. I think you said at the Analyst Day that, you were targeting more than 20% share of an $18 billion TAM next year, but you're now annualizing to almost $5 billion. So either the market's a lot bigger or your share's a lot higher. Can you just comment on that? And then secondly, I had a question on the contract with the big customer. Can you just level set us? Cristiano, you just alluded to it. So can you level set us? I think it goes through 2024, but can you just help us on the timing of that? Thank you. Akash Palkhiwala: Tim, on your first question on the math, $3.6 billion is right, and were reported results at $4.1 billion, I think. So we have definitely exceeded the target we had set. And as Cristiano said earlier in the conversation, we're really confident that, we have several more vectors of growth left in the RF business, not just within handsets, but also as 5G expands into Telematics in IoT. And then also within Wi-Fi. There's some ways to go and we'll definitely plan to address that at Analyst Day in a couple of weeks. Cristiano Amon: Hi, Tim. It's Cristiano. The only thing we can disclose is what we've disclosed before. It is a long-term agreement and it's a multi-year agreement. We unfortunately cannot say anything more than that. Operator: Thank you. That concludes today's question-and-answer session. Mr. Amon, do you have anything further to add before adjourning the call? Cristiano Amon: Thanks, everyone for joining us on the call today. We are at the intersection of key trends, their accelerating Edge connectivity, efficient processing, and own device artificial intelligence. This is driving demand for industry-leading roadmap of relevant technologies creating a significant opportunity for growth and continued diversification. In addition to driving the mobile industry to 5G, we will power the connected intelligent Edge. I look forward to outlining our strategy and vision for the future at Investor Day on November 16, and sharing our next generation Snapdragon platforms at our Annual Tech Summit in December. I also want to take a moment to thank our employees for an incredible fiscal year. They are truly the best of QUALCOMM and there is no better time to be part of this great Company. Operator: Ladies and gentlemen, this concludes today's conference call. You may now disconnect.

Operator: Ladies and gentlemen, thank you for standing by. Welcome to the Qualcomm Third Quarter and Fiscal 2021 Earnings Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session. [Operator Instructions] As a reminder, this conference is being recorded, July 28, 2021. The playback number for today's call is 877-660-6853. International callers, please dial 201-612-7415. The playback reservation number is 13720943. I would now like to turn the call over to Mauricio Lopez-Hodoyan, Vice President of Investor Relations. Mr. Lopez-Hodoyan, please go ahead. Mauricio Lopez-Hodoyan: Thank you, and good afternoon, everyone. Today's call will include prepared remarks by Cristiano Amon and Akash Palkhiwala. In addition, Alex Rogers and Don Rosenberg will join the question-and-answer session. You can access our earnings release and the slide presentation that accompany this call on our Investor Relations website. In addition, this call is being webcast on qualcomm.com, and a replay will be available on our website later today. During the call, we will use non-GAAP financial measures as defined in Regulation G, and you can find the related reconciliations to GAAP on our website. We will also make forward-looking statements, including projections and estimates of future events, business or industry trends, or business or financial results. Actual events or results could differ materially from those projected in our forward-looking statements. Please refer to our SEC filings including our most recent 10-K, which contain important factors that could cause actual results to differ materially from the forward-looking statements. And now, to comments from Qualcomm's Chief Executive Officer, Cristiano Amon. Cristiano Amon: Thank you, Mauricio, and good afternoon, everyone. Thanks for joining us today. This is an amazing time to be part of Qualcomm. The need for our technologies and products has never been more evident. We're seeing demand across virtually every industry, because our products and technologies are essential ingredients that enable digital transformation in the cloud economy. We are leading and expect to continue to lead in mobile. In addition, we also expect to lead the evolution of the connected intelligent edge by transforming connectivity and processing in cars, the enterprise, the home, smart factories, next-generation PCs and tablets, XR, wearables, and many more. This is the foundation of a revenue diversification strategy. The strong performance in our business has led to fiscal third quarter revenues and earnings per share that exceeded the high-end of our guidance. Most importantly, we are on track to realize approximately $10 billion in combined revenues across IoT, RF front-end and automotive in fiscal year 2021, validating the positive financial impact of our revenue diversification strategy. Let me provide you now with some additional details. The foundation of our IoT strategy is edge connectivity and processing for the growing cloud base economy. In consumer, we're seeing strong demand, driven by a consumer electronics upgrade cycle and growth in emerging product categories, such as XR and wearables. In edge networking, we had another great quarter, with continued momentum driven by the enterprise transformation of the home in this second wave of enterprise demand, driven by return to the workplace. We're also seeing rapid adoption of Wi-Fi 6 and increased demand for both 4G and 5G mobile broadband devices. In industrial, our product offerings are purpose-built for key verticals, such as transportation and logistics, warehousing, video collaboration, smart cameras, retail, and more. We are at the forefront of enabling this new ecosystem and also making 5G for industrial applications a reality. We are becoming the connected intelligent edge partner of choice. As demand for automotive solutions increase, we're pleased to report that our automotive revenue design win pipeline has reached approximately $10 billion. And based on our third quarter results, our annualized automotive revenue run rate is now over $1 billion. This reflects continued traction across global automakers and Tier 1 customers. Our automotive telematics and connectivity platforms, digital cockpit and C-V2X solutions are at the intersection of key automotive industry trends, such as the continued growth of connected vehicles, the transformation of the in-car experience and vehicle electrification. As the digital chasses become one of the most important assets of automakers, we remain well-positioned for continued growth as a leading technology partner for the industry. In RF front-end, we believe we are on track to become the largest smartphone RF front-end supplier by revenue. Looking forward, we expect to have technology leadership across virtually all handset RF front-end components, while continue to lead in modem-to-antenna system performance. Now, I will provide an update on two key drivers for handset revenues. First, we continue to be positively impacted by the growth in 5G and changing OEM landscape, resulting in the expansion of our addressable handset opportunity. Our Snapdragon 8 Series mobile platforms have shown significant design win momentum. More than half of our 5G smartphone design wins to date are using our 8 Series and total design wins for Snapdragon 888 increased more than 20% quarter-over-quarter. We're also seeing strong traction with our Snapdragon 7 Series mobile platforms, with nearly 40 new devices shipped or announced during this last quarter alone. Based on our design win traction and performance of our customers, we have increased confidence in growing our handset revenues. Snapdragon premium and high-tier solutions remain synonymous, with Android flagship mobile experiences. Second, we're still on track to materially improve supply by the end of the calendar year. We're securing incremental capacity across both leading and mature nodes and optimizing the allocation of our products across the global supply chain. We're also making progress with our multi-sourcing initiatives. In fiscal Q3, the Snapdragon 778 G, the first of several products from our multi-sourcing initiatives, was commercialized in record time and is now shipping in volume. Additional products from our multi-sourcing initiatives will be commercialized in the coming months. I would like to thank our employees, our suppliers, and our customers for helping us navigate the challenging supply environment. In our licensing business, our third quarter results reflect the strength of our patent portfolio and the stability of our licensing program. We are a global 5G IP leader with more than 150 5G license agreements signed to date, up from more than one-third at last quarter. We continued to develop and patent new essential innovations for future releases of 5G. And we expect 5G to have a longer lifecycle than prior generations due to its broad application across multiple industries. I would now like to turn the call over to Akash. Akash Palkhiwala: Thank you, Cristiano, and good afternoon, everyone. We are pleased to report another exceptional quarter in a challenging environment, as we continue to execute on our priorities, including 5G adoption, revenue diversification, and operating leverage. Our third quarter results were above the high-end of our guidance, with non-GAAP revenues of $8 billion and non-GAAP EPS of $1.92. These results reflect 63% year-over-year increase in non-GAAP revenues and more than doubling of EPS, driven by strength across QCT and QTL, including a partial recovery from the impact of COVID in the year ago period. QTL revenues of $1.5 billion and EBT margins of 71% were about the midpoint of our guidance. These results reflect the impact of a stronger mix offset by lower than expected units in China and India. QCT revenues of $6.5 billion and EBT margins of 28% were above the high-end of our guidance. EBT of $1.8 billion nearly tripled versus a year ago period on revenue growth of 70% and 12 points of EBT margin expansion. Handset revenues increased 57% year-over-year to $3.9 billion, driven by the adoption of 5G products in premium and high-tier devices across all major OEMs. Combined RF front-end, IoT and automotive revenues accounted for approximately 40% of total QCT revenues within the quarter and grew 1.6 times faster than handset revenues year-over-year. RF front-end revenues of $957 million more than doubled year-over-year on the strength of our broad product portfolio and customer traction. As a reminder, our RF front-end revenues include power amplifiers, trackers, antenna tuners, filters, diversity and millimeter wave modules, and excludes revenue from RF transceivers. IoT revenues grew 83% year-over-year to $1.4 billion, an increase of approximately $100 million versus guidance. The outperformance was driven by demand across consumer edge networking and industrial platforms. Automotive revenues of $253 million grew 83% year-over-year on the adoption of connected cars and expansion of digital cockpit revenues. Our increasing design win pipeline now puts us on track to exceed the 2024 revenue target outlined that last Investor Day. Turning to our guidance for handset units and fourth fiscal quarter. For calendar 2021, we're maintaining our forecast for high single digit growth for global 3G, 4G, 5G handsets, including 450 to 550 million 5G handsets. Given the strong adoption of 5G in developed regions in China, we have a bias towards the high-end of our 5G forecast. In the fourth fiscal quarter, we are forecasting revenues of $8.4 billion to $9.2 billion and non-GAAP EPS of $2.15 to $2.35. In QTL, we expect revenues of $1.45 billion to $1.65 billion and EBT margins of 69% to 73%. In QCT, we expect revenues of $7 billion to $7.5 billion and EBT margins of 29% to 31%. At the midpoint, this implies year-over-year revenue growth of 46% and EBT dollar growth of 114%. The strength of our QCT forecast reflects sequential growth across all revenue streams, including premium and high-tier device launches and operating leverage benefit from extending our mobile technology and investments across IoT and automotive. Lastly, we anticipate non-GAAP combined R&D and SG&A expenses to grow 2% to 3% sequentially. Based on the midpoint of our fourth quarter guidance, I would like to emphasize some key metrics for fiscal 2021. We expect non-GAAP EPS of $8.24, nearly doubling relative to fiscal 2020. Within QCT, we expect year-over-year revenue growth of $10 billion and operating margin expansion from 17% in fiscal 2020 to 28% in fiscal 2021. With our continued focus on diversification, we're forecasting RF front-end, IoT and automotive combined revenues to grow from $6 billion in fiscal 2020 to $10 billion in fiscal 2021. We expect to exit the fiscal year with a strong product roadmap, expanded design win pipeline, and increased customer traction. Before I finished my prepared remarks, I'd like to highlight a couple items. As part of our ongoing ESG efforts, we recently started purchasing 100% renewable solar energy for our San Diego headquarters, which will significantly reduce our annual greenhouse gas emissions. Lastly, we'll be hosting our Investor Day in New York on November 16th, where we will provide an update on our long-term strategy and financial outlook. Thank you. And I'll now turn the call back to Mauricio. Mauricio Lopez-Hodoyan: Thank you, Akash. Operator, we are now ready for questions. Operator: Thank you. [Operator Instructions] Our first question is coming from the line of Mike Walkley with Canaccord Genuity. Please proceed with your question. Mike Walkley: Great. Thank you. Congratulations on the strong results. Just wanted to focus on the QCT margins. While June is seemingly a softer quarter, with Apple back in the model, the margins came in above your guidance and you’re guiding to a 30% sequentially. Could you, Akash, maybe provide any estimates, or supply constraints or expedited shipments? Did that adversely impact guidance at all? And is 28% EBT margins, is that now good to think of it as a floor? And if not, what are some puts and takes that might move it lower over time? Akash Palkhiwala: Sure. Mike, thanks for the question. Really, when you look at our operating leverage performance in the year, we were pretty happy with the way we've seen the operating margin expansion with revenue growth. If you look at what happened in the third quarter, we had a guidance midpoint of 25%. We came in at 28%, and so that's on the strength largely of revenue coming in higher and then strong gross margin performance as well. And then, now we are forecasting a midpoint of 30% in the fourth fiscal quarter. So, really, when you think about it going forward, we plan our margins around revenue scale and R&D investments, and the trick really for us is to optimize those two. As we mentioned in our prepared remarks, as we exit the fiscal year, we feel like we're in a very strong position from a design win perspective to continue to grow revenues. And as we optimize investments against it, I think, we have an opportunity to continue to expand our operating margins. Mike Walkley: Okay. Thanks. And just for my follow-up, maybe for Cristiano. Just focusing on the IoT business, the impressive 83% year-over-year growth. You – maybe you're going to say this for the Analyst Day, but how should we think about -- what's a reasonable CAGR for this business? And how much of the business today is 5G, and what could 5G do in terms of growing the IoT business? Cristiano Amon: Thanks Mike. That's a great question. We're very excited about this business for a number of reasons. First, is very diversified. There's a lot of things in our IoT segment. It has consumer, it has networking and it has industrial. And what we see is really secular growth trends, which is all based to an accelerated digital transformation. And we are going to provide a lot more details about how we think about growth rates of this business in our Analyst Day. It is one of the largest SAM expansion opportunity for Qualcomm. It is highly diversified and it has not only higher growth rates than handsets. I think Akash outlined a 1.6 times our non-handset growth rate, but also is accretive to more -- to margins and create operating leverage. So, stay tuned for more, but we're very happy about what we see with IoT right now. Operator: Thank you. Our next question is coming from Chris Caso with Raymond James. Please proceed with your question. Chris Caso: Yes. Thank you. Good afternoon. I guess for the first question, maybe you could talk about what generated the upside in the quarter as compared to your expectations. Was it a matter of getting more supply? Because I know supply constraints were a big concern coming in. And then if you could talk to us about the status of those supply constraints going into the end of the year? You talked about getting some additional supply. Does that benefit the December quarter, or where does that supply come farther out in time? Akash Palkhiwala: Hey, Chris, it's Akash. So, let me try to answer both of your questions and I'm sure Cristiano can add comments to it. For the third fiscal quarter, as you know, our guidance midpoint was $1.65. We came in at $1.92 and really most of the upside was driven by QCT. We did come in a slightly stronger than QTL, which was really just a trade-off between slightly lower units on -- in India and China, the low tier, but offset by stronger product mix, especially with 5G in various regions. So that helped us. Going over to QCT, what we really liked about the growth that we saw in the quarter is really we saw strength across all the different revenue streams. So, it's not just handsets, but also IoT and RF front-end and auto. And within that, we had a stronger mix, product mix that helped us. And as we just discussed on the IoT side, significant upside, $100 million higher than the revenue guidance we had given. So that helped as well. And then maybe the last thing I'll highlight is gross margin performance. We're pretty happy with the gross margin performance in the quarter. So, those were kind of all the key factors that contributed to it. Turning over to supply. As we said in Cristiano's prepared remarks, consistent with what we provided last time, we continue to expect that supply will improve materially by the end of the year. And it's really a combination of two drivers. We're seeing multi-sourcing initiatives that we've put in place over the last several months. We're seeing the benefit of that as we can use available capacity across the foundries. And then the second is really, previously planned capacity builds with some of our suppliers that comes online towards the end of the year as well. So both of those initiatives that we have previously discussed are in play and that's helping us. The first one of our multi-sourcing product, we'd recently commercialized and we have a couple more coming up. So, that's really -- you're seeing some of the benefits of those initiatives in our September quarter guide and we'll see even more benefit in the December quarter guide. Cristiano Amon: Chris, this is Cristiano. And only thing I would like to add is, in spite of having great results, both revenue and EPS, all exceeding the right end of our guidance. We still have demand outpacing supply. We're -- we have more demand and supply across all of our business. And as you look up our guide in the next quarter, it's consistent with the statement we made that we see material improvement in supply to Qualcomm by the end of the year. And that's great news. And -- but overall, we continue to see a strong demand in every single business outpacing supply. Chris Caso: That’s very helpful. Thank you. For my follow-up, I wanted to address one of the investor concerns to give you the opportunity to address it. And that's the modem socket at Apple. And of course, Apple has expressed that they're also working on their own modems. So that's a concern to investors. I know that getting Apple, it's limited -- you're limited in what you can say on that, but I guess I wanted to hear what you could say on it. And perhaps if you could talk about perhaps the magnitude of that risk, if Apple were to take that path, what would it mean for Qualcomm? Cristiano Amon: Thanks for your follow-up question. Two answers for you and not any different than what you would expect from Qualcomm. I think, the very first one, yes, we're very happy with relationship with Apple. We're just on their first phone. We have other phones to go and we're very happy with it, the way things are progressing. At the end of the day, you should always think of Qualcomm. We have always been really focused on seller technology, the first with every new generation of wireless. And as long as modem continued to be relevant, there's always going to be a place for Qualcomm in this business. The second part of the answer, which I think is the most important and an opportunity to address investor concerns is the biggest opportunity for Qualcomm in mobile is the changes that are happening in the mobile landscape right now. As a matter of fact, this quarter, Xiaomi is now the number two OEM in award and shipments. And we see the shifts in OEM market share create an incredible opportunity for us. Snapdragon became synonymous with Android premium and high-tier. That is how are we going to go faster than the market and incredible opportunity for revenue and earnings, looking at the whole value of the Snapdragon platform. We're super focused on executing on this opportunity, and it's going to be one of the key drivers of growth in Qualcomm handset strategy going forward. Operator: Thank you. Our next question is coming from the line of Samik Chatterjee with JPMorgan. Please proceed with your question. Samik Chatterjee: Hi. Good afternoon. Congrats on the results. Hi, Cristiano. Hi, Akash. Just -- maybe I wanted to start off here on the RF -- results on the RF side and really great progress there. Does sound like you're on track, and targeting to become one of the largest RF suppliers. Just if you can give us more of an update. I know you do it more annually, but update on where you stand in terms of share relative to some of the incumbents there? And what's driving the conference here, particularly as you go into heavy period of design wins and launches, what's driving the confidence about getting to that pole position in that market. And then I have a follow-up as well. Akash Palkhiwala: Hey, Samik. It’s Akash. Thanks for your question. Overall, on the RF front-end side, the starting point for us obviously always is, having the right product portfolio. And so, over the last three years, we've been investing in the breadth of the portfolio and we are in a very good place. I think, as you look forward, not only are we the leaders in the modem to RF end-to-end system solutions, but also each individual component within RF front-end. We feel like we're in a very competitive and strong product position. The second is just the design win pipeline that we have in front of us. We have great relationships with the OEMs in the mobile industry. And so that relationship then extends into providing an end-to-end solution for them. And so, as we look forward and based on our conversations to commitments we have from the OEMs on the designs, we feel very confident that we have an upward trajectory going forward. And then finally, in terms of scale, really when we look at the scale within handsets, we already feel like we're maybe the largest player in the industry in RF front-end. And the opportunity for us is as 5G expands outside, how do we take our position in the handsets while we continue to grow within handsets, but also take it outside and grow in other areas. Samik Chatterjee: For my follow-up, Akash, you talked about the growth in handsets, just kind of thinking a bit more longer-term and into next year, how should we think about what's the primary driver here is? Is it still content increase as you get more on 5G phones, or is it really the $10 billion Huawei TAM that you've talked about? And in that context, can you talk about MediaTek products and the competitive landscape there and how that's evolving? Akash Palkhiwala: Yeah. So maybe I'll address the first part and then Cristiano can address the MediaTek competitive landscape. Overall, I think the answer to your question is all of the above, right? We clearly have a long ways to go within 5G. We're at the front-end of it. And we're going to see the rest of the tiers transition over as well. And as that happens, we still think the metric that we gave previously of a 1.5 X multiplier on our revenue and margin opportunities still holds. In addition to that, as you're seeing the changing OEM landscape is benefiting us with our customers winning share. And as that happens, when you combine that with our product portfolio within 5G and design commitments from our customers, especially in the premium and high-tiers, that positions us to grow significantly as we move into fiscal 2022. Maybe a quick data point to give on Honor, they are in the process of launching three phones with us. One is a premium-tier Snapdragon 888 phone, and then two in the high-tier. And so, it's just an example of how we are expanding our customer base. Cristiano Amon: Hi, Samik. So, really simple answer, not to talk about MediaTek, but we think that there's plenty of opportunities for growth for us in other companies in the changing landscape. What is really important for Qualcomm, and I'll give a couple of metrics. One outlined by Akash, not only we have a strong roadmap, but we have customer commitments to premium and high-tier designs for Qualcomm. The total design wins for Snapdragon 800 increased 20% quarter-over-quarter, and all for total 5G design wins, half for the design is Snapdragon 8 Series. So that -- it's the clear indication about Qualcomm opportunity into premium and high, where we can capture the majority of the value of the market. And we look at the growth of handset segment -- I know we talk a lot about a growth upside handset, but handsets up 6 billion year-over-year. Q3, 2021 handset revenue up 57%. So that's a clear indication that we're in the good position. We see that as one of the largest growth opportunities we have for the handset business, and we'll continue to be executing into this new TAM with a premium and high-tier devices. Operator: Thank you. Our next question is coming from the line of Ross Seymore with Deutsche Bank. Please proceed with your question. Ross Seymore: Hi, guys. Thanks for letting me ask you a question. I guess this is my first one. I wanted to ask a question on gross margins to Akash. It's impressive that you guys grew your gross margin 70 basis points sequentially, despite the QCT side of the equation dropping in your mix. So, I just wanted to get into a little bit about what's driving that upside in gross margin in the quarter. And more importantly, structurally going forward, given the new markets you're entering into the position you guys have in the market, is there anything structurally that would keep you from getting a gross margin more aligned to kind of even the mid-fifties range where a lot of your fabless [ph] peers currently reside. Akash Palkhiwala: Hey, Ross. Thanks for your question. Yeah. As I said earlier, I think pretty happy with how we did on the gross margins. It's really a combination of a couple of things. One is just having a stronger mix of products. And so, as we see more adoption of our solutions at premium and high-tier, that helps our percent gross margin profile in addition to the dollar margins. The second is really mix of businesses and it leads into your second point is as we grow into these other areas, automotive and IoT, our margin profile at the gross margin level help is -- that growth helps the gross margin profile. And so, that's a key factor for us going forward, as you rightly noted. Ross Seymore: Great. Thanks for that color. And yeah, I should have clarified that the mid-fifties gross margin would be for the QCT side, not overall. But I guess as my follow-up question separately, whether it's Cristiano or Akash, how should we think just pluses and minuses for the calendar fourth quarter, you have a lot of different dynamics, the timing of premium launches, new launches from the Huawei, Honor, China ecosystem supply coming on board. So just a lot of different puts and takes that could make historical seasonality really be thrown out the window. So, any sort of just even directional color there on those puts and takes would be helpful. Akash Palkhiwala: Sure. So, as you know, well, it's a seasonally strong quarter for the company overall. And let me just maybe quickly hit the two businesses. Within QTL, we've said in the past that we expect the holiday quarter to be around $1.7 billion range. So, at this point we're not seeing anything different at this point to give separate data points. On the QCT side, we expect the seasonality to be a favorable thing for all of our businesses. So not just handsets, but RF front-end, IoT and auto. And so, we'll see a typical seasonal benefit. Within handsets, obviously we're getting the benefit from the launch of new handsets that happened during that time, especially in the premium and high-tier, and then, some supply improvements coming into the picture as well. The one thing to keep in mind as a reminder last year, we had a higher than normal sequential increase from September to December quarter. And that was obviously because of two reasons that we would not have this time. First is Apple coming back as a customer to Qualcomm. And so that exaggerated the seasonality. And then also, there was a delay in their phone launch. So, those are two key factors. If you compare to last year, that'd be -- would not be factors that would imply this year. Operator: Thank you. Our next question is coming from the line of Blayne Curtis with Barclays. Please proceed with your question. Blayne Curtis: Hey, good afternoon. Thanks for taking my question and appreciate the detail on the IoT business that you released. Obviously, a very broad business. So I'm wondering if any way you can dial it in and maybe by the three sub-segments to where you've seen the strength, obviously the business nearly doubled since you started breaking it out. I know there's a lot of segments in there. I know it's pretty diverse. So, I was just curious, how you would answer the question as to -- within these segments, where are you seeing the most strength? Akash Palkhiwala: Yeah. Blayne, it's Akash. Let me take a crack at that. If you look at what happened in our IoT business this year, we were somewhere in the $1.1 billion range -- revenue range for March. We grew to $1.4 billion. And as I mentioned earlier, we feel like we're in a strong position to continue to grow that revenue stream. So, pretty interesting trends for us. When you break down the business and we broke it down in the slide you're referring to in three buckets. We had edge networking, consumer and industrial. Neither of those are dominant category. So, you should think of all three as contributing very materially to the total amount of revenue. Maybe I'll highlight a couple of things. Within edge networking, both the Wi-Fi access point business and the 5G fixed wireless business, they’re both very strong for us. And especially when you think about the 5G fixed wireless business, we're really at the very front-end of that having very material impact for us. So, we're looking forward to the growth that that offers to us over the next several years. In the consumer business, clearly there is a very broad set of products we have. The revenue is split between several products. But then also as you look forward, the opportunity within the next-generation PCs and AR/VR are very material things that could be growth -- material growth drivers going forward. And then within industrial, that’s a very broad field and we are really not even in the first innings on that market. So, long ways to go for us. And we're excited all these markets are looking for technologies from us. Operator: Thank you. Our next question is coming from Matt Ramsay with Cowen. Please proceed with your question. Matt Ramsay: Yeah. Thank you very much. Good afternoon. I guess, my first question goes back to the TAM, that is you guys outlined $10 billion from what Huawei is exiting and your customers are going to go into. We've been all trying to track as Huawei has kind of depleted their own inventory and now yourselves and MediaTek are growing into that business again some supply constraints. So, of that $10 billion TAM, that’s out there for you, just ballpark about how much do you think you can realistically address in the September quarter? And how much of that TAM is still ahead of you guys as you go into fiscal 2022? Thanks. Akash Palkhiwala: Thanks Matt for that question. We will stay away from kind of breaking down that TAM. I don’t think we have that level of precision in kind of estimating our opportunity going forward. What gives us confidence that we will get a portion of it in the September quarter, but really this is a big tailwind for us going into fiscal 2022 is our conversations with the OEMs, commitments from them on designs, and really the supply improvements that we will get at the end of the year. And so, those are the three kind of factors that play into our confidence as we go into fiscal 2022. Matt Ramsay: Got it. Thanks. And as my follow-up, I wanted to ask a question, Cristiano on your automotive business, it seems really well positioned and you guys have talked about the pipeline growing with 5G connectivity being a fulcrum, and then the ability to do Wi-Fi, GPS, Bluetooth, in-dash display, et cetera, on the same integrated platform. I guess, what's the competitive landscape like that across those sockets for Qualcomm right now. And what kind of ASPs are you guys envisioning for that business, if as you would sell it as an integrated solution including RF? Thanks. Cristiano Amon: Thanks Matt for the question. Look, we really like our position in this space, especially because the trends of connecting the car to the cloud. It’s just the first step where you can do within the telematics or to connect the communications box in the car. You can add to that Wi-Fi, Bluetooth as you outlined, but also Cellular-V2X capabilities. So, a long roadmap. I think we have a very strong position given our understanding of the market, and the ability to provide a very modular solution. I think, we're highly differentiated in the space, and it's really showing based on our design wins. Also, you're starting to see digital cockpit becoming more material in the revenue, which is really a much richer silicon opportunity for us. As we look at dashboard, the infotainment, rear seat entertainment, heads up display, smart mirrors, smart side view mirrors and so forth. And there is a completely redesign of the in-car experience. I will argue today, Qualcomm is now winning the absolute majority of premium-tier car RFPs. We are engaged with 23 of the 26 brands, highly differentiated in the space also because we can take a system approach connecting all those different systems together. You should start thinking about our automotive business, as there are going to be a digital chassis than automotive company will have to build. And we are differentiated, because we have capabilities across multiple domains and it's starting to reflect in the magnitude of our contracted pipeline. Operator: Thank you. Our next question comes from the line of Joe Moore with Morgan Stanley. Please proceed with your question. Joe Moore: Great. Thank you. I wonder how the end of kind of supply chain tightness and shortages affects your EBIT margin in QCT. And is there kind of an active process of thinking that through, can we trade off some of that 30% EBIT margin to retake some share, that maybe we lost? Or is it sort of -- just how are you approaching that? And is there an ambition to achieve a certain EBIT margin, or a certain market share and what's the trade-off between those two things? Akash Palkhiwala: Joe, it's Akash. Our framework on margins really is unchanged from the way we outlined it at Analyst Day last year. It's really a combination of two things. It's optimizing the gross margins and the way we do that is a combination of the mix between premium high-tiers where the gross margins are lot more attractive in handsets versus the lower-tiers. And then second is focusing on diversification outside, and so that adds scale to the margin profile. The next point I'd maybe highlight is a lot of the technology that funds the growth in IoT and auto is coming from mobile. So, mobile technology is being reused in these areas in very large scale and that allows us to really get the operating leverage benefit that we were planning for. And then, of course, we are balancing that with R&D investments and making sure we're investing in the right things that position us to continue to win in these exciting areas in the long term. So, it's a combination of those factors. Joe Moore: Great. Thank you. Operator: Thank you. Our next question comes from Rod Hall with Goldman Sachs. Please proceed with your question. Rod Hall: Yeah. Hi. Thanks for the question. I wanted to dig into millimeter wave a little bit. Last quarter you said, it was about 20% of RFFE revenues. I wonder if you could tell us what it was this quarter. And then, if you might be able to indicate whether you expect that to continue. I mean, assuming it’s risen, do you expect to continue to rise where did that end the year, the calendar year for you? That’s my first question, and then I have a follow-up. Akash Palkhiwala: Yeah. Hi, Rod. It's Akash. I'll give you the metric on it and then I'll defer to Cristiano to add color on top of it. From a percent of total RFFE revenue, this quarter was not that different than last quarter in pretty similar range. When you think about it very long-term going into next year and the following year, as millimeter wave gets deployed, we expect that to be a vector for growth within RF front-end, so it will become a larger percent of the total pie. Cristiano Amon: Rod, on the second part of your question, here is how millimeter wave is tracking. Everything aligned over expectations commercial networks, United States, Japan, Italy and Singapore. The upcoming one is South Korea, Germany. There are some countries in Western Europe, Southeast Asian, and Russia, as well. And during the MWC Barcelona, the recent trade show, 150 carriers around the world indicated they are investing in millimeter wave technology. So, we’re excited about that. And we continue to highlight what we think could be an incredible upside opportunity to the model, which is millimeter wave going to China. We are continued to be engaged in -- for the Winter Olympics in early 2022, and if there becomes a broader deployment in China, you should expect a lot of upsides to our model. Rod Hall: Great. Okay. And then, I wanted to dig into the China weakness a little bit more. I know that you guys called it out in your comments, there is the Huawei opportunity I got. But curious if you could just comment on the wider market there, the weakness that we are seeing in handsets. Do you think this is just consistent with the maturity of that market? Do you think there are macro factors that are coming into play here? Could you just give us a little bit more color on what you think is going on in China? And maybe what the outlook there is in the next six months or so? Thanks. Akash Palkhiwala: Yeah. Rod, it's Akash. I think, as I mentioned in my prepared remarks, we did see some weakness within the quarter relative to your expectations in China and in India. A lot of the weakness we saw was at the low-tier. So, the phenomena we saw is really kind of weaker low-tier, but then mix shift towards the high-end in these markets. And so, that’s a key trend that we are monitoring, which obviously on net/net, the mix shift is a very positive thing for us. The impact in India that we saw in the June quarter, obviously was related to the COVID situation there. And so, as that improves and has improved materially already, we would expect that some of those units come back into the September quarter and that's been factored into our guide. Operator: Thank you. Our next question is coming from the line of Timothy Arcuri with UBS. Please proceed with your question. Pradeep Ramani: Hi. This is Pradeep Ramani for Tim Arcuri. I had a couple of questions. Maybe the first one, just given the recent Intel announcement where you're partnering with Intel or IFS, what sort of commitment is this on your part? Is that sort of a volume commitment at this point? I realize it's some ways out, but it would be fair to say that it's going to service the U.S. customer? Cristiano Amon: Hi. Thanks for the question. Look, it's exactly very simple. Qualcomm, we are probably one of the few companies that given our scale is able to have multi-sourcing at the leading node. We have two strategic partners today, which is TSMC and Samsung. And we're very excited and happy about Intel deciding to become a foundry and investing in leading node technology to become a foundry. I think that’s great news for the United States, fabless [ph] industry. We are engaged. We are evaluating their technology. We don't yet have a specific product plan at this point, but we're pretty excited about Intel entering into this space. I think, we all determine that semiconductors are important, and resilient supply chain is only going to benefit our business. Pradeep Ramani: Okay. And for my follow-up, can you provide some more color on how the licensing -- the 5G related licensing agreement work for the non-smartphone adjacency? Is there sort of a price cap, or is it revenue based? Or can you provide some color on the arrangement? Akash Palkhiwala: So, what you see with QTL right now is in the top line numbers that you're seeing result of executing on long-term agreements with the major handset OEMs. On the non-handset side, we've had license agreements in place for a long time. Some of those agreements are on a percentage basis. Some of the agreements are on a dollars per unit basis. We don't break out those individual agreements or the collective non-handset revenue, but we're moving forward successfully with 5G in the automotive space and then the IoT space, as well. It’s just the overall revenue is a relatively smaller part of -- the overall non-handset revenue is relatively smaller part of our overall licensing revenue, so we don't break it out. Operator: Thank you. Our next question comes from Brett Simpson with Arete Research. Please proceed with your question. Brett Simpson: Yeah. Thanks very much. Cristiano, you made a lot of references to the Snapdragon 888 in your prepared remarks. And I wanted to ask more broadly about the Android flagship opportunity you see ahead. And I guess, historically, Huawei and Samsung has kind of dominated this segment, and that’s limited your share to some extent in flagship. But can you just share with us just your perspective on how you think this market plays out for Qualcomm? And what sort of market share you think you can attain? And what sort of timeframe do you think it takes to fully supply this segment of the market? Thanks. Cristiano Amon: Great question. Look, the market right now is a lot more favorable. And I want to take a minute to outline this. It used to be highly concentrated. If you look at the opportunity right now we have, we have a great relationship with Samsung, which is expanding. We have a relationship with Xiaomi, OPPO, Vivo, all in the premium-tier. We have a relationship with Honor. In record time, we launched Snapdragon 888 with Honor, the Magic3 device. So, if you look, it’s a much healthier market. You have at least five companies at scale that driving the premium-tier, and that creates an incredible opportunity for us. And as you know, the Snapdragon premium-tier devices, there are lot more revenues and earnings compared, for example, to just a modem technology alone. And the last comment I want to make into this, we're just at the beginning of this opportunity. We're showing with 5G a much better mix across the devices. The market is moving towards premium and high. We're very well-positioned in this space. And over time, we find investments we have been doing in CPU with NUVIA. We expect to take the differentiation to a whole another level. Thank you. Brett Simpson: Thanks Cristiano. Maybe just a quick follow-up on automotive, because obviously with the backlog growing to $10 billion, what sort of silicon content do you think Qualcomm can address in autos? I mean, you talked about digital cockpit, and there are obviously 5G, and there is RF. When you add it all up, what sort of total silicon can Qualcomm address say by the middle of the decade in integral cars? Cristiano Amon: There is a lot of silicon opportunities for Qualcomm, and not to make an ASP disclosure. We will provide a lot more color in our Analyst Day, especially how all of the different elements of the digital chassis is evolving. But you see in the automotive business an opportunity for a lot more silicon content and much higher ASPs that we see in other business. Operator: Thank you. Our final question is coming from the line of Srini Pajjuri with SMBC. Please proceed with your question. Srini Pajjuri: Thank you. I have a clarification and a question. First, on the RF business in the quarter that you reported, Akash. Historically, I've seen kind of handset and RF move hand-in-hand. But this quarter I think RF grew about 5% or 6%, and the handsets declined about 4% or 5%. Just trying to understand what explains that discrepancy? Akash Palkhiwala: Yeah. Hi, Srini. There are couple of reasons. One is, you will see some differences in purchase timing for various things within our portfolio. So, sometimes RF components are purchased earlier that are not explicitly tied to a specific handset, so sometimes you see a timing difference that impacts these things. And then second is design wins, right? While RF is largely thought of as an attach business for our Qualcomm baseband, we do have business outside of Qualcomm baseband. So, we do attach to other devices and so that also becomes a different factor. Srini Pajjuri: Got it. And then on the QTL side, I think you said for the Q4, the run rate should be about $1.7 billion in the peak quarter. Just trying to understand, how we should think about growth in this business, Akash, because obviously you're guiding for handset units to grow high single digits and obviously 5G is potentially doubling or even more than that. And some of the adjacencies are adapting 5G. So, as we look into next year or two, can you talk about some of the potential growth drivers? I mean, whether it's in low end or mid end smartphones adapting 5G, or some of their adjacencies. I'm just curious as to why we are not seeing a bit more pronounced growth here. Thank you. Akash Palkhiwala: Yeah. Srini, I'll reiterate what we said at the Analyst Day a couple of years ago. When you look at our licensing business, we kind of have a base case for the business and we think of it other things as upside opportunities. The way to model our business is really, you have our June quarter numbers and then we are forecasting September and then we gave a data point for December. So, those are reasonable data points to project forward to get to an annual number for the licensing business. There are few things that could drive upside on top of that, but again we think of it as upside opportunities. The growth outside handsets is a factor. Second is, as I mentioned earlier in the call, we're seeing a mix shift, that's very positive for us. And so, as mix shift continues, we will see the benefit in QCT, but we'll also see the benefit in QTL. And so that would be another upside driver and especially with 5G penetrating the lower tiers, there will be a factor for QTL as well. And again, it would show up through better ASPs and as a result better revenues. So, hopefully that helps in framing the forward path for it. Operator: Thank you. That concludes today's question-and-answer session. Mr. Amon, do you have anything further to add before adjourning the call? Cristiano Amon: Thanks everyone for joining us on the call today. Once again, I would like to say thank you to our employees who are staying focused and delivering results. I look forward to leading Qualcomm, leading in 5G and building on the success of our diversification strategy. Operator: Ladies and gentlemen, this concludes today's conference call. You may now disconnect.

Operator: Ladies and gentlemen, thank you for standing by. Welcome to the Qualcomm Second Quarter and Fiscal 2021 Earnings Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session. [Operator Instructions] As a reminder, this conference is being recorded, April 28, 2021. The playback number for today’s call is 877-660-6853. International callers, please dial 201-612-7415. The playback reservation number is 13718356. I would now like to turn the call over to Mauricio Lopez-Hodoyan, Vice-President of Investor Relations. Mr. Lopez-Hodoyan, please go ahead. Mauricio Lopez-Hodoyan: Thank you, and good afternoon, everyone. Today’s call will include prepared remarks by Steve Mollenkopf, Cristiano Amon, and Akash Palkhiwala. In addition, Alex Rogers, and Don Rosenberg will join the question-and-answer session. You can access our earnings release and the slide presentation that accompanies this call on our Investor Relations website. In addition, this call is being webcast on qualcomm.com and a replay will be available on our website later today. During the call, we will use non-GAAP financial measures as defined in Regulation G. And you can find the related reconciliations to GAAP on our website. We will also make forward-looking statements, including projections and estimates of future events, business or industry trends, or business or financial results. Actual events or results could differ materially from those projected in our forward-looking statements. Please refer to our SEC filings including our most recent 10-K, which contains important factors that could cause actual results to differ materially from the forward-looking statements. And now to comments from Qualcomm’s Chief Executive Officer, Steve Mollenkopf. Steve Mollenkopf: Thank you, Mauricio, and good afternoon, everyone. Thanks for joining us today. When we reported Q2 just one year ago, we were in the early stages of the pandemic. Much has happened since then, including many things that will define our future well beyond this past year. One of the undeniable things we have experienced and at an accelerated pace is the importance and reliance global citizens have on robust connectivity and the need for low power, high-performance devices. This has reinforced and amplified our mission. Sitting here in San Diego today, we are optimistic about what we see on the horizon. Yet while the pandemic impacted nearly everyone at the same time last year, the experience today is very different depending on where you are in the world. In particular, I want to acknowledge our employees, customers, and partners in India. You and your families are in our thoughts and we are here to support you through this very challenging time. Of the many things that have impressed me during my 26-year career at Qualcomm, at the top of the list is how our company mobilized in the past year leading to strong results like we reported today. Our fiscal second quarter non-GAAP earnings of $1.90 per share exceeded the high end of our guidance, driven by higher licensing revenues and solid performance in our chipset business, representing non-GAAP revenue and EPS year-over-year growth of 52% and 116%, respectively. Despite the backdrop of a challenging environment, these results and our guidance reflect the strength of the company and the importance of our technologies, not only to the mobile industry, but across many industries. Several years ago, we put in place a strategy to lead in 5G, which today is delivering results beyond our expectations. Even this fiscal year, with all the unusual challenges, we are on track to deliver results better than what we expected when we started the fiscal year. As exciting as our current performance is, I cannot underestimate the long-term opportunity for Qualcomm and how well-positioned the company is, where we have a unique opportunity to exceed our success in handsets as industries adopt the wireless roadmap. This enviable position is what I find most rewarding when looking back over the past seven years. Undeniably over my tenure as CEO, I dealt with and overcame unprecedented challenges, which I always put in perspective. Our mission and singular focus of inventing breakthrough technologies, transforming how the world connects, computes and communicates is important and hard to do. Our challenges tightened our focus on this mission and at the core innovation was always the solution. As a result, Qualcomm enters the 5G era with our whole company stronger and more resilient. Most importantly, we never lost focus on the impact and opportunity digitization will bring to our customers, partners, governments and consumers worldwide as a result of our collective efforts. Speaking as a soon-to-be former CEO, I believe there is virtually no limit on where Cristiano can lead Qualcomm, the industries he can enter and the role the company can play in the global ecosystem. I am very excited to watch this play out. To all our employees, I thank you for your tireless devotion and commitment to our strong culture and core values. I know it is very exciting for everyone at Qualcomm to witness how our inventions change the lives of billions of people around the world as we know they will. Thank you. I will now turn the call over to Cristiano. Cristiano Amon: Thank you, Steve, and good afternoon, everyone. Thanks for joining us today. The quarter-end guide reflect the great execution across the company in a very challenging environment and reinforces the significance of our technologies. Our Snapdragon premium and high-tier products, along with our modem-to-antenna RF front-end, are the foundation of our 5G handset strategy now and into the future. The expansion of our addressable market in this smartphone tiers has positioned the Snapdragon 800 tier as synonymous with Android flagship mobile experiences. We continue to be the mobile technology platform of choice for these tiers, and this is reflected both in our product performance as well as our traction with leading smartphones OEMs such as Samsung, Xiaomi, Oppo, Vivo and now Honor. Our latest generation Snapdragon 888 5G mobile platform has now more than 40 device shipped or announced globally and we expect to see more than double this number come to market in the coming months from future product announcements. Our highly differentiated position in premium and high tiers, our modem-to-antenna leadership and the continued transition of Huawei volume to OEMs using our solutions have positioned us to grow faster in smartphones, while being able to capture the most significant portion of the revenue opportunity. In RF front-end, we continue to see broad and growing adoption of our solutions. 5G leading performance at the component and system level, ease of design and global reach continue to be key differentiators of our modem-to-antenna solutions. As a reminder, virtually all of our 5G design wins continue to be powered by our RF front-end solutions whether they support 4G, 5G sub-6 or 5G millimeter wave. Beyond smartphones, we’re extending our RF front-end solutions in automotive, PCs, mobile hotspots, fixed wireless access in the broad IoT category. Of note, given our design win pipeline and revenue run rate, we are on track to exceed our Analyst Day RF front-end revenue target of $3.6 billion by fiscal year 2022 with 5G sub-6 and 4G representing the majority of our RF front-end revenues. Additionally, as 5G millimeter wave technology expands into other geographies, we expect significant expansion of our opportunity due to increased silicon content and value. At Mobile World Congress Shanghai in China and in collaboration with China Unicom, ZTE and the GSMA, we worked with 39 Chinese industry-leading companies to showcase the high-performance and rich applications on a live 5G millimeter wave network. This level of collaboration underscores the significant attention to millimeter wave in China and the opportunity ahead beginning in 2022. In automotive, we’re growing across telematics, C-V2X, digital cockpit, ADAS and autonomy, and we’re also well positioned for upcoming general computing in Car-to-Cloud platforms. We expect to lead in the segments as cloud connected business models evolve and electrification of the car accelerates. As the digital chassis become one of the most important assets of automakers, we are becoming a leading technology partner for the automotive industry with capabilities across all this domains. Our automotive design win pipeline is up over $1 billion since the end of fiscal 2020 to approximately $9 billion today. Along with auto, IoT is becoming a significant growth engine with better-than-anticipated performance across all categories, namely consumer, networking and industrial. We achieved our second consecutive quarter of over $1 billion in revenue. Trends such as the enterprise transformation of the home, expansion of broadband, the conversions of personal computing with mobile, the intersection of physical and virtual spaces, and the ongoing digital transformation across many verticals are driving growth in one of the largest SAM expansions opportunities for us. In consumer, as the industry redefines personal computing, we’re confident about our growth in Android, Chrome OS in Windows and Snapdragon where we expect new products with leading NUVIA’s CPUs by the end of the next calendar year. We’re also seeing our early investments in XR platforms reaching scale. And in the growing category of wearables, we believe Snapdragon Sound and Snapdragon Wear will become the leading technology solutions within the Android ecosystem. In networking, we are a leader in Wi-Fi access points in 5G broadband. We’re benefiting from the global connectivity required for remote work, school and play, and the migration to Wi-Fi 6 and mesh technologies. Our 5G fixed wireless access solutions are seeing broad adoption globally. Going forward, we also have an opportunity to expand into upcoming private 5G networks and public open RAN. In industrial, we have seen continued adoption of our technologies across the broad industry segments. Key growth areas to name a few, includes smart energy, tracking, metering, industrial handhelds, retail, automation and autonomous drones. As connected IoT edge devices get scale and provide access to the data and contextual information that is fuelling the exponential growth projections of cloud ecosystems, we’re increasingly confident in the long-term growth opportunity for our IoT business. Turning to our licensing business. Our second quarter results reflect the strength of our unmatched patent portfolio value. We are the global 5G IP leader with more than 130 5G license agreements signed to-date, up from over 120 last quarter with all major handset manufacturers around the globe licensed. We continue to develop and patent new essential innovations for future releases of 5G, which we expect to have a longer lifecycle than prior generations due to its impact on multiple industries. We believe that our model of early research and development, consistent with standard leadership, flexible licensing, and global implementation support will continue to add value to our partners and stockholders for years to come. Overall, we continue to see unprecedented demand across all of our technologies and businesses as the current environment is accelerating the scale of connectivity and processing at the edge. Despite the industry-wide semiconductor supply shortage, we’re utilizing our scale and working across our entire global supply chain to maximize our ability to capture this opportunity. We expect material improvements by the end of the calendar year due to planned capacity builds and multi-sourcing initiatives. As one of the leading drivers of advanced semiconductor technology platforms, we’re also excited to see more foundry investment in the United States consistent with the United States government’s strategic priorities. Finally, we’re extremely proud of our collaboration with NASA’s jet propulsion laboratory on Ingenuity, the Mars helicopter powered by Snapdragon. Snapdragon made it to Mars and helped power the first-ever autonomous flight on another planet. This is yet another example of our ingenuity. I would now like to turn the call over to Akash. Akash Palkhiwala: Thank you, Cristiano, and good afternoon, everyone. We are pleased to report strong second quarter results with non-GAAP revenues of $7.9 billion and non-GAAP EPS of $1.90, which was $0.15 above the high end of our guidance range. These results reflect year-over-year increases of 52% and 116% in revenue and EPS respectively, driven by strength across QTL and QCT. In QTL, we recorded revenues of $1.6 billion and EBT margins of 74%, both above the high end of our guidance range. The outperformance was primarily driven by stronger handset shipments, especially in China. In addition, our results include a benefit of approximately $80 million from adjustments to prior-quarter royalty estimates. In QCT, we delivered revenues of $6.3 billion and EBT of $1.6 billion. On a year-over-year basis, revenues were up 53%, while EBT grew 137%, delivering on our commitment to increase operating leverage. We achieved the high end of our guidance range with EBT margins of 25%. This reflects our strong operating performance driven by favorable product mix and gross margins, which more than offset a reduction in the orders within the quarter by a global handset OEM. RF front-end revenues increased 39% year-over-year to approximately $900 million on the strength of our product portfolio across 4G, 5G sub-6, and 5G millimeter wave. 5G millimeter wave products accounted for less than 20% of our second quarter RF front-end revenues. We expect millimeter wave deployments in other regions such as China to be a tailwind for long-term revenue growth. Automotive revenues of $240 million grew 40%, and IoT revenues of $1.1 billion grew 71% on a year-over-year basis as we continued to see strong momentum for our differentiated product portfolio. During the quarter, we completed the acquisition of NUVIA for a purchase price of $1.4 billion before working capital and other adjustments. This acquisition provides us with a strong CPU team with industry-leading expertise in high-performance processors and SoCs. Lastly, we returned approximately $2.3 billion to stockholders during the quarter, consisting of $734 million in dividends and $1.5 billion in stock repurchases. Turning to our global 3G/4G/5G handset forecast for calendar 2021. Based on the strength in the first quarter, we have an upward bias relative to our prior estimate of high single digit year-over-year growth. Our calendar 2021 forecast continues to include an estimate of 450 million to 550 million 5G handsets. Next, I’ll summarize our guidance for third fiscal quarter. We now expect a stronger outlook in both QTL and QCT relative to our prior expectations, which we shared last quarter due to several positive tailwinds. We are forecasting revenues of $7.1 billion to $7.9 billion and non-GAAP EPS of $1.55 to $1.75 with year-over-year growth of 53% and 92%, respectively, at the midpoints. In QTL, we expect revenues of $1.35 billion to $1.55 billion, up 39% year-over-year at the midpoint, with EBT margins of 68% to 72%. Our revenue guidance midpoint is $100 million higher than our previous estimate, reflecting the positive bias in total handset shipments. In QCT, we estimate revenues of $5.8 billion to $6.3 billion and EBT margins of 24% to 26%. At the midpoints, this represents year-over-year revenue growth of 59% and EBT dollar growth of 151%. Our stronger forecast for QCT reflects upside in IoT, design traction in handsets and RF front-end, and improved product mix. We are pleased with the success of our diversification strategy as we continue to extend the adoption of smartphone technologies in automotive and IoT. In the third quarter, we expect IoT revenues to increase to $1.3 billion. We anticipate non-GAAP combined R&D and SG&A expenses to grow 3% to 4% sequentially, which includes a full quarter impact of expenses from the NUVIA acquisition and investments to enable additional sourcing for supply. Beyond third quarter, we expect growth to be driven by 5G flagship launches for the holiday season by major OEMs and strong demand across IoT and automotive. In addition, with the continued transition of Huawei handset volume to other OEMs, we estimate QCT’s annual addressable handset and RF front-end revenue opportunity to increase by up to $10 billion. Given our strong product portfolio, we are positioned to benefit from this opportunity starting in fiscal 2022. Before I finish my prepared remarks, on behalf of all Qualcomm employees, I want to thank Steve for his contributions over the past 26 years and wish him the best for a well-deserved retirement as CEO. During his successful tenure as CEO, he navigated significant challenges to put the company in a strong financial and strategic position. I look forward to working with Cristiano and the rest of the Qualcomm team to build on his vision and capitalize on the opportunities in front of us. Thank you. And I’ll now turn the call back to Mauricio. Mauricio Lopez-Hodoyan: Thank you, Akash. Operator, we are now ready for questions. Operator: Thank you. [Operator Instructions] Our first question is from Mike Walkley with Canaccord Genuity. Please proceed. Mike Walkley: Great. Thank you. Congratulations on the strong results and, Steve, my best wishes for whatever is next, including some hopeful fruitful fishing trips for you. My question for the group is with June seasonally softer quarter for QCT but the guidance quite strong, could you just update us if there is any supply constraints that are still adversely impacting the guidance for the June quarter? And then just a follow-on, with the Huawei SAM opportunity you highlighted at the end, Akash, maybe you guys could just touch on your view for the second-half of calendar 2021 in terms of potential share gains for you into the Android installed base? Thank you. Akash Palkhiwala: Yes. Hi, Mike. It’s Akash. I’ll take the first one. From a third quarter perspective, we are really seeing a lot of benefits on the QCT side, both in terms of kind of improved product mix, which is helping our performance. What we’re seeing there is really since we saw supply constraints and which we continue to see across a broad set of businesses, we were able to take action to optimize our product mix, both across tiers and then also when we had reductions in orders by a large OEM – handset OEM, we were able to redirect that capacity to integrated Snapdragon products with strong margin profile. So it’s really a combination of those things. So while we remain in supply constraint, we’ve been taking actions to manage to optimize the mix within the constraints we have. Your second question was... Mike Walkley: Just on the… Cristiano Amon: Yes, I can take that. This is Cristiano. Look, it’s – we’re extremely happy at the opportunity in terms of SAM expansion. If you look at a market such as mobile which is mature, you don’t see that very often an expansion of SAM of about $10 billion. And Qualcomm is very well positioned for that. So as far as second-half 2021, we’re very happy with the traction we have in our premium and high tiers across our customer base with new customers as well as Honor, and that’s a great opportunity. It’s going to be one of the largest growth drivers for our mobile business alongside our RF front-end and the ability to have Snapdragon 800 equal premium Android. Mike Walkley: Thank you. Operator: Thank you. Our next question is from Chris Caso with Raymond James. Please proceed with your question. Chris Caso: Yes. Thank you. Good afternoon. And, Steve, congratulations. All the best. My first question is related to supply, and you talked about in your prepared remarks, supply coming at the end of the year and being able to attack that Huawei replacement market in fiscal 2022. Can you give us some sense of how much incremental supply comes in before then? Or do we have to wait until the December quarter in order to get that volume? And as a follow-on to that, how does that align with your customer product introductions? Again, a lot of product introductions typically happen towards the beginning of the year in the Android space. Cristiano Amon: Hi, Chris. This is Cristiano. Look, there’s a lot in there. Let me just start with the supply. The overall supply constraint in semiconductors for us is really across all product lines. It’s not unique to one thing or the other. It’s not only smartphone. Frankly, it’s a good position to be in that we actually have more demand than supply across all of our business. And that’s a good sign, gives us confidence about the growth position. We are utilizing our scale and with that we have the ability to be supporting our suppliers’ capacity planning. We can provide stability of demand and in turn get stability of capacity. We are one of the few companies that have the ability to do multi-sourcing at the leading node, and we have done a lot of that with our roadmap. All of that combined, it give us material improvement in supply by the end of 2021, positioned us very well for 2022, and the full extent I think, as Akash outlined, the $10 billion SAM expansion on Huawei. Now, I want to go back to your question about how we think about our customers and customer product introductions. As I said before, we’re very happy with the progress we’re making in premium and high tier. That’s a great opportunity for Qualcomm and is reflecting in the product mix. As we still have right now even as we show growth, we still have more demand than supply, give us an opportunity also to have the ability to focus on the products that give us more value to us and to our customers, both on the premium side with RF front-end attach and that’s really showing in the numbers with a much-improved product mix. Akash Palkhiwala: And then, Chris, it’s Akash. Just to add quickly to Cristiano’s comments, as you know, towards the end of the year, a lot of the flagship phones get launched both for the holiday season going into Chinese New Year. And so we do feel that with supply constraints opening up a bit, that allows us to take advantage of those launches and really expand into the Huawei SAM. Chris Caso: That’s great. That’s good color. Thank you. Next question is on QTL, and based on your guidance, it would seem that the revenue that you’re suggesting for the third quarter is back on what you previously expressed as the normalized QTL revenue. Is that what we should expect now going forward that – is that a reflection of the handset market is now normalized and therefore, the QTL revenue is normalized against the plan that you’ve talked about in the past? Akash Palkhiwala: Yes, that’s definitely a reasonable conclusion. We did see upside – significant upside in the March quarter and which is reflected in our results. But as we go from March to June, what we are forecasting is really a normalized market within the handset market consistent with the historical framework we’ve set up, and that’s a reasonable way to model the business going forward. Operator: Thank you. Our next question comes from Joe Moore with Morgan Stanley. Please proceed with your question. Joe Moore: Great. Thank you. I wonder if you could give us more color on the reduction in orders you talked about from one vendor. How does that play out when you’re in kind of an allocated environment? And then in terms of the supply constraints, maybe if you could just talk about if I’m placing a new order now that’s not in backlog, like how long am I waiting? How tight is the situation? Thank you. Akash Palkhiwala: Yes, Joe, it’s Akash. Really, as you’d expect, given the kind of broad breadth of demand we have across not just mobile but all of our adjacent markets, including IoT and auto, we take benefit of any reductions on orders from an OEM to really redirect the supply towards the highest margin product that we have in working with our customers. So that’s really the action we took. It’s obviously a good thing for us to be able to optimize the available supply across our customer base, and that’s what’s reflected as one of the benefits in our June quarter guidance. Cristiano Amon: Maybe if I can address, Joe, your second question. As far as supply constraints, look, not much more than it’s going to get better at the end of the year. So we – some of the orders that we still cannot fulfill even though we’re seeing growth and is reflected in the results and the guide, we expect to see towards the end of the year and into 2022 a much more favorable supply environment. Operator: Thank you. Our next question comes from the line of Stacy Rasgon with Bernstein Research. Please proceed with your question. Stacy Rasgon: Hey, guys. Thanks for taking my question. I wanted to ask about the – first about the sequential guide across the businesses. You’re guiding QTL down 10%. It looks like chip revenue is guided down about 4%. I know you talked about normalization of the market, but is that just a timing thing given the nature of the constraints in what you’re making? Is it indicative of mix of like the interplay between handset versus non-handset? What can you tell us about the drivers behind the differences of those two segment guidance? Akash Palkhiwala: Sure. Stacy, it’s Akash. So let me start with QTL. As I mentioned in my prepared remarks, the two key drivers for QTL in the March quarter were significantly higher than expected units primarily driven by China for the total handset markets. That was the main driver. And then we also did see a benefit of approximately $80 million due to adjustments to prior quarter royalty estimates that benefited our second quarter performance. So as we go from Q2 to Q3 on the QTL side, we obviously don’t have that royalty estimates adjustment benefit in Q3. And then the second factor is really what we’re assuming is a more normalized handset market going into Q3. We saw some weakness in the December quarter, strength in the March quarter, but when you kind of abstract back from the quarter-to-quarter variances, we think it’s prudent to forecast going forward on a normalized market. So that’s really what’s driving QTL. From a QCT perspective, you’re right, we’re assuming a 4% quarter-over-quarter decline. If you – as you’d recall, our new premium tier product launches in the March quarter, so when we go typically from March to June, there’s a little bit of seasonality. Part of that is offset by really the supply framework, and so that kind of calibrates a little bit on what happens between the quarters anyways. So that’s really kind of the key drivers there. The one thing, I’ll highlight is and I mentioned this in my prepared remarks, for IoT, we have very strong demand going into the June quarter. We have a forecast of $1.3 billion increasing from $1.1 billion in March. So very happy to see the diversification across the businesses. Stacy Rasgon: That’s helpful. Thank you. If I could ask a brief follow-up, I mean you called out Honor specifically several times as both a customer and a potential growth driver. Can you talk a little bit more about them? Do you have any thoughts on where – I guess your share is low today, but any thoughts on where that can go, what your average ASP or tier that you’re attacking with Honor is going to be, and does the Huawei license that you signed last year, does that license directly transfer over to Honor, or did you have to sign a new license with them, and if that’s the case, have you signed one with them? Alex Rogers: Stacy, this is Alex. Let me just answer that question really quickly. We have separate agreements now with Huawei and with Honor, so all that is covered under separate licenses. Cristiano Amon: Hi, Stacy, this is Cristiano. We had traction with Honor across their product portfolio, but as you would expect a lot of our focus and that’s where we actually have a very unique position to market is really high-end premium tier. And that has also been kind – as I said earlier, it’s really reflected how our product mix is changing as we see a lot more demand for premium and high. Akash Palkhiwala: And then, Stacy, I’d just add, it’s Akash. I’d just add that we do expect Honor to be a significant customer going forward with our traction with them. Operator: Thank you. The next question comes from Blayne Curtis with Barclays. Please proceed with your question. Blayne Curtis: Thanks for taking my question. I wanted to ask on millimeter wave, you talked about I think China in fiscal 2022. I was just curious if you saw any additional geographies rolling out millimeter wave this fiscal year or this calendar year really? Cristiano Amon: Hi, Blayne. This is Cristiano. Millimeter wave is commercial today in United States and Japan. We also see a lot of investment in Korea as the next market. There are a few things you see as the initial signs in Europe. Its auctions have completed in some states. We’re excited about China just given the scale of the China market. Right now, we have a lot of activity leading into the Winter Olympics as China Unicom and companies like ZTE are working to have a lot of millimeter wave activity and coverage and services around the Winter Olympics and we think that’s the beginning of starting to get more traction in China. The reason we talk about China is because the scale of China will significantly change the dynamics of millimeter wave, getting it faster to more markets due to the economies of scale of China. Blayne Curtis: Thanks. And then if I can just ask you, you highlighted NUVIA. You’ve been in the ARM PC market with Snapdragon before. Just curious, there’s a lot more focus on both client as well as data center for ARM processors. Maybe just elaborate your plans in the next couple years and where you see the best opportunities to lever that NUVIA asset? Cristiano Amon: The NUVIA asset give us a lot of flexibility. You should think about it as having a scalable leading CPU asset to together with the other Qualcomm assets. Our focus right now as outlined in what we’ve been saying and what we said in the earnings call is we have an incredible opportunity now with compute and of course premium tier, phones and automotive and some of the segments we are right now. We are very happy how computing has been redefined. Number one, use case in a PC right now is a communicator device, and I’m sure you relate to this. In some of the transition across the board to ARM architecture really create a big expansion opportunity for Qualcomm, and we’re very focused to make that happen with the leading position leveraging the NUVIA CPU. Having said that, I think this asset gives us a lot of flexibility to continue to be expanding to all the different business vectors we’re building in the company. Operator: Thank you. Our next question comes from the line of Ross Seymore with Deutsche Bank. Please proceed with your question. Ross Seymore: Hi, guys. Thanks for letting me ask a question and, Steve, congratulations on your retirement. I guess, Akash, one for you, in the last couple quarters, you’ve given us a heads-up one quarter beyond guide just when there was something unique happening in the market. I guess in this instance, given the fact that you’re talking about share gains in the Huawei ecosystem, the seasonality has had different implications over the last couple years with some of your bigger customers. Is there any sort of color that you’re able to give in the back half of this calendar year, puts and takes versus what you would deem to be normal? Any sort of guidance along those metrics? Akash Palkhiwala: Yes, sure, Ross. So while we’re not guiding fourth quarter at this point, let me highlight a couple things that maybe is a framework to think about the rest of the year. First is, just when you think about the demand profile, handsets, RFFE, IoT, automotive really extremely strong. We’re gaining share pretty much in all markets and very, very strong position in each of them. So you should think of each of those as a growth vector for us and extending into kind of Q4 and then going into next year. Second is flagship phone launches. As I mentioned earlier in the call, they usually start in the August/September timeframe going through December. And so as those launches happen, that’s a favorable trend for us. Not just for handsets but for RF front-end as well with or without millimeter wave. And then the third is really supply improvement. As Cristiano mentioned, we’ve been working very hard on kind of partnership with our suppliers to improve the supply profile going forward, and as you said towards the end of the year, we expect a material improvement in supply. So that will be another vector that will drive us forward. And so those maybe are three things that can be used to frame the QCT profile. And then from a QTL perspective, it’s really consistent with our model the way we’ve portrayed it as seasonality in the handset market changes. That changes the revenue opportunity for QTL as well. Ross Seymore: Got it. Thanks for those details. I guess as my quick follow-up, Akash, another one for you. On the gross margin side of things, we know the perturbations that happen with mix between QCT and QTL, but the QCT side has been very, very strong. I just wanted to see what are you envisioning as the sustainable drivers of that? Are the gross margins today at all over-elevated or inflated due to your ability to prioritize in a limited supply environment, or are there attributions or aspects of the mix between handsets, RF, auto, IoT, et cetera, that gives you the belief that the gross margin improvement that you’ve delivered in QCT thus far is truly sustainable and can continue? Akash Palkhiwala: Yes, Ross, we feel like we have tailwinds on the gross margin side really across each – across the mix of products, across the markets we have, but also within each market. And it’s really Cristiano’s point earlier in the call, where we’re focusing on the industry-leading performance across premium and high-tier products that allows us to really have that price premium that results in expansion of margins. Also, as we kind of take the products that we have for mobile and the technologies we have for mobile and we leverage it in auto and IoT, that’s a tremendously scalable way for us to expand in those markets. And as we do that, we’re also able to expand not just gross margins but also operating margins. Operator: Thank you. Our next question comes from Matt Ramsay with Cowen. Please proceed with your question. Matt Ramsay: Yes. Thank you very much. Good afternoon, guys. Akash, my first question is on QCT EBIT or operating margins. I mean, I think I went back and looked, and we’re pre-2010, I mean, pre-4G since you had a non-holiday quarter that was 25% margin. So well done there. Maybe you could talk a little bit about the sustainability of margin expansion in QCT, and given the June quarter’s likely the revenue trough quarter for the year, is that 25% margin, how we should think about the floor in margins going forward? Thanks. Akash Palkhiwala: Yes, Matt. Thanks for the question. We’re really happy with how the margin profile has played out. I mean, it’s a plan that we set in place and outlined at Analyst Day about 18 months ago, and we’re pretty happy to be able to execute to it. Your observation is right. I mean, typically the June quarter is a trough from a margin perspective, and really as you look forward from here, for us the most important thing is the revenue scale and hence the things we highlighted in my prepared remarks both from an IoT growth perspective just gives us scale that allows us to expand operating margins. And then finally, the Huawei SAM, as we start approaching that SAM and really leveraging the existing products and roadmap both across handsets and RF frontend and growing into that SAM, we already have the product portfolio to go there. So as we grow there as well, it will be accretive to operating margins. So, pretty happy with where we’re at and looking forward to improving it going forward. Matt Ramsay: Got it. Thanks for that. As my follow-up for Cristiano, you guys were kind enough to share a slide tonight that highlighted the diversity of the RF footprint across I think, I don’t know, a dozen or so premium Android devices both from global OEMs and in China. The question that I still get from investors is your confidence and ability to sustain or maybe expand that footprint as we go into next generation devices maybe as some of the RF competitors have a bit more mature 5G stances in their portfolio. So do you have any visibility as to how the – with those OEMs, the footprint might continue as you go forward and be sustainable in the RF franchise? That would be really helpful. Thanks, guys. Cristiano Amon: Look, Matt, thank you for your question. It’s a great question. And I want to start by maybe providing some data points and emphasize some of the data we provide in the earnings script. We heard a lot in the past that our RF frontend business, a lot of people thought that most of it was because of our leadership position in millimeter wave which we do have a leadership position in millimeter wave. But the reality is millimeter wave represent less than 20% of the revenues that were shown in RF frontend. The absolute majority of it is sub-6 and 4G actually, which actually shows that we’re winning not only at the system level, we’re winning at the component level. Otherwise, we would not come in as a fifth supplier and be winning 4G sockets. And it kind of really highlighting what we said at the end of the day, you’re going to have every single spectrum, whether it’s existing spectrum through DSS that goes to 5G, plus the new mid bands and the millimeter wave bands. We feel pretty good about our roadmap of RF front-end. The fact we’re winning designs across the board, it’s a testimony that our strategy is working. And to your specific question about is this going to go away, we’re now probably – if you look at the beginning when we launched 5G in 2019, in early 2019, we’re now multiple product generations and we continue to win RF frontend. So we’re very confident about this business. It is a great growth story for Qualcomm, and the beauty of this we’re actually winning on technology. Operator: Thank you. Our next question comes from Samik Chatterjee with JPMorgan. Please proceed with your question. Joe Cardoso: Hi. This is Joe Cardoso on for Samik. My first question is on competitors. One of them commented pretty bullishly about targeting flagship millimeter wave, SoC opportunities next year. So I’m just curious [Audio Gap] competitive landscape and market share dynamics going forward and whether you expect the return of more aggressive pricing in the industry? Cristiano Amon: Look, there’s a lot of good things in this data point. I think this data point when our competitors are targeting millimeter wave in China, it just validates that China is going to have millimeter wave. And that’s how we read it. That’s a great data point consistent with what we’ve been saying. It’s going to add a lot of scale to millimeter wave. Look, Qualcomm has been very focused in our strong position in premium and high tier. There’s an incredible opportunity with the expansion of SAM. Everyone is benefiting. I think it’s an opportunity for everyone to be successful and generate growth. And we really becomes – we become equal to premium Android flagship opportunity and that’s going to continue to be a key part of our mobile strategy going forward. Joe Cardoso: Got it. Appreciate the color. And then my second one is on the automotive revenue opportunity. I appreciate the color on the RF revenue target, but was just curious relative to the automotive revenue target provided during the Analyst Day. With the pipeline now at $9 billion, is the revenue target now completely accounted for, or are we even north of that? Or is there more room to make on the pipeline there? Thank you. Akash Palkhiwala: Yes, so just on the automotive side, really since the Analyst Day, we feel like our position has really strengthened and then this is not just kind of in telematics and infotainment or digital cockpit, we’re seeing an expansion of our product portfolio within the market. So while we’re not updating the guidance at this point, we feel very comfortable with our position and we see it as expanding versus where we were 18 months ago. Operator: Thank you. Our next question comes from Rod Hall with Goldman Sachs. Please proceed with your question. Rod Hall: Yes. Thanks for the question. I wanted to come back to China. I know that last quarter things were weak and then we observed that Chinese demand on mobile phones improving this quarter. And that’s obviously been part of the QTL story here. I’m just curious, I know that you guys were thinking that China was moving into more of a mature market phase where we would see elongating replacement cycles and so on. I wonder if the result here changes your mind on that at all? And then I also wanted to come back and talk a little bit about RFFE and whether you think you have a chance to see content increasing particularly in high-end phones as we move into the backend of the year? Or do you think that on a per-phone basis your content looks roughly similar? So just wonder if you could comment a little bit on how content – I’m sorry, I meant millimeter wave not just RFFE but kind of how that progresses through the backend of the year. Thanks. Akash Palkhiwala: Rod. It’s Akash. So on the China data point, really the market in December was slightly smaller than we’d expected and the March quarter was slightly bigger than we’d expected. I think you made a note of it in your report as well. But really when you normalize for it, which is how we think about the forecast going forward, it’s reflected in the market guidance we gave. So we think of high single digits as still a reasonable metric for 2021, but we do have upward bias given what has played out and we’ll see how the rest of the year rolls out. Cristiano Amon: And on millimeter wave, Rod, you’re right. If millimeter wave become a component of the RF frontend, we highlighted that today is less than 20% of the RF front-end revenues. The silicon and content and value increases substantially. When you do millimeter wave, you’re talking about multiple modules into a device, and you have antenna arrays, and it is a key accelerator RF frontend once millimeter wave becomes deployed more broadly across the 5G footprint. Thank you. Operator: Thank you. Our next question comes from the line of Timothy Arcuri with UBS. Please proceed with your question. Timothy Arcuri: Thanks a lot. I guess I wanted to ask about the auto’s pipeline. It’s now up to $9 billion. I assume that most of this is probably parked out into the middle of the decade, something like that. But can you sort of help us maybe size the average age of that pipeline and maybe how you think that that revenue rolls out? It’s a big number, but it’s a lot different if it’s over five years versus over, say, nine years. So can you help us on that? Thanks. Akash Palkhiwala: Tim, it’s Akash. So one of the reasons why we gave a revenue target at Analyst Day was really to put a framework around the scale of – annual scale of the business. And so as you’ll recall, we said we’d be greater than $1.5 billion in 2024. And so that’s still a reasonable way of thinking about that business. And as I said earlier, we feel like our traction in the market is accelerated and so we’re well positioned to kind of execute at that scale and continue to grow really in the – even in the 5, 10-year timeframe. So it’s pretty attractive long-term growth and we like the fact that it’s predictable and it adds a slightly different mix than the rest of our business. Cristiano Amon: Look, I’ll try to give you a little bit more color when we think about the timelines. The development lifecycle within the automotive industry is well known, and the way we think about it is when a decision is made and a contract is awarded, usually you get the technology contract award for the upcoming models. And that’s what is exactly building on our pipeline. So everything you see on the pipeline is basically contract awards, and they start to show up in revenue when those models get to SOP and they launch. And it continue to increase as we’re basically expending throughout multiple brands as the car companies are trying to be really be focused on electrification and the digital chassis component of their assets. Timothy Arcuri: Thanks a lot. I guess just as a second question, so, Akash, have you sort of handicapped where you think the tax rate could go with these changes? I mean, obviously if it goes through at face value and the statutory rate goes to 28% and if the global intangible low tax income rate goes to 21%, what – if you just take that at face value, what does that do to your tax rate? Akash Palkhiwala: Well, so, I mean, honestly it’s kind of early to see how it plays out, right? We’re obviously talking to – looking at the various proposals that have been made. So you kind of have one extreme proposal that I think you outlined. There’s other proposals that are a lot more favorable. What we’re really doing at this point is really working with folks in D.C. and educating them on the most important thing for us is really to make sure U.S. remains competitive, and there is really a strong reason for U.S. companies to continue to invest in R&D especially companies like Qualcomm who have a very high bias towards domestic R&D investments. So that’s been our focus. There is missing details in the proposals that allows us – doesn’t really allow us to give you a right answer to this question just yet, but we’re hopeful we’ll get some more clarity soon. Operator: Thank you. Our next question is coming from the line of C.J. Muse with Evercore. Please proceed with your question. C.J. Muse: Yes, good afternoon. Thank you for taking the question. I guess first question, can you give a sense of what the revenue headwind for QCT is as a result of supply constraints? I’d be curious if that’s concentrated primarily in handsets or are you also seeing it on the adjacency front? Akash Palkhiwala: Yes, C.J., so we’ve not sized the revenue headwinds really within QCT. We have not shared that data point. But it is something that is impacting all of our vectors. So this is not just handsets but also stretching into RF front- end, IoT, and automotive. And it’s a very significant number, right? So we could – in a perfect supply situation, we would have been much better off versus the results we are offering. And as we look forward, we think of that as a tailwind as we resolve these supply issues and things are much better for us towards the end of the year, we’ll be able to grow into the opportunity in front of us. C.J. Muse: That’s helpful. As my follow-up, I guess two-part question on the adjacency side of your QCT business. Near term into June, do you think that IoT and auto can offset the seasonal decline in RF front-end such that that business could be flat excluding handsets? And then bigger picture for fiscal 2021, given what you’ve put together in the first-half of the year, it looks like the business combined is growing 50%, 60% year-on-year. Is that the right kind of framework we should be thinking about? Thank you. Akash Palkhiwala: Yes, so C.J., we gave a pretty direct number on the IoT forecast for fiscal third quarter. We said it would be in the $1.3 billion range. So that’s a pretty good indication of how that business just continues to grow. We just reported a quarter with $1.1 billion and then sequential growth from $1.1 billion to $1.3 billion. Similar trends in auto as well. So this is really a business portfolio that has strong growth vectors across the board, and as we look forward, we continue to see a similar trend. Operator: Thank you. Our final question is coming from Brett Simpson with Arete Research. Please proceed with your question. Brett Simpson: Yes, thanks very much. I wanted to ask a little bit about QCT and the second-half seasonality that you see, second-half calendar year seasonality. And just factoring in the supply challenges particularly in the first-half of the year, maybe the weaker flagship Android market in the first-half of the year, and then you look into the second-half and you’re talking about getting much more supply particularly in the December quarter. Should we be looking at – can you just maybe share with us that sort of first-half to second-half dynamic that you see today and could it be similar to what we maybe saw in calendar 2020? Thank you. Akash Palkhiwala: Yes, so from a second-half perspective, clearly kind of as one of the key drivers I outlined earlier was flagship launches that happened starting in the September timeframe. And so we do expect to see seasonality as those launches happen. And it would be across the board across all OEMs, across Snapdragon 800 as well. So looking forward to those launches materializing and especially as Cristiano said as supply gets addressed to a large extent into that quarter, it will allow us to benefit from those launches. Brett Simpson: Okay. Thanks. And maybe just a follow-up, Akash. Can you maybe just comment on smartphone ASPs? I know it’s not something that you specifically comment on as you used to, but would like to get your perspective particularly with COVID at the moment and 5G adoption sort of like rising at the moment. What sort of – how do you see smartphone ASPs and how do you see the outlook as you go through this year into next year? Thank you. Akash Palkhiwala: Well, as we said, while we don’t disclose the specifics, I mean, if you look at some of our customers and them reporting their results, you’d see that at least at the premium high tier, there’s some upward bias on those smartphone ASPs. So that’s really the tier in which 5G is penetrating first and you’re seeing some of the benefits roll through our customers’ results. Operator: Thank you. That concludes today’s question-and-answer session. Mr. Amon, do you have anything further to add before adjourning the call? Cristiano Amon: As this was Steve’s last earnings call, I’d like to take this opportunity to thank him for his leadership and tenure. It has been a privilege to work alongside him for more than 15 years through the good times and the hard times as we have grown and diversified the company. I look forward to building on his legacy, and I’m humbled by the opportunity ahead. This is an amazing time to be part of Qualcomm.

Operator: Ladies and gentlemen, thank you for standing by. Welcome to the Qualcomm First Quarter and Fiscal 2021 Earnings Conference Call. At this time, all participants are in a listen-only mode. Later we will conduct a question-and-answer session. [Operator Instructions] As a reminder, this conference is being recorded February 3rd, 2021. The playback number for today's call is 877-660-6853. International callers please dial 201-612-7415. The playback reservation number is 13714808. I would now like to turn the call over to Mauricio Lopez-Hodoyan, Vice President of Investor Relations. Mr. Lopez-Hodoyan. Please go ahead. Mauricio Lopez-Hodoyan: Thank you and good afternoon everyone. Today's call will include prepared remarks by Steve Mollenkopfl and Akash Palkhiwala. In addition, Cristiano Amon, Alex Rogers, and Don Rosenberg will join the question-and-answer session. You can access our earnings release and a slide presentation that accompany this call on our Investor Relations website. In addition, this call is being webcast on qualcomm.com and a replay will be available on our website later today. During the call, we will use non-GAAP financial measures as defined in Regulation G. And you can find the related reconciliations to GAAP on our website. We will also make forward-looking statements include projections and estimates of future events, business or industry trends or business or financial results. Actual events or results could differ materially from those projected in our forward-looking statements. Please refer to our SEC filings, including our most recent 10-K which contain important factors that could cause actual results to differ materially from the forward-looking statements. And now to comments from Qualcomm's Chief Executive Officer, Steve Mollenkopf. Steve Mollenkopf: Thank you, Mauricio and good afternoon everyone. Fiscal 2021 is off to a great start with record first quarter non-GAAP revenues of $8.2 billion, up 63% year-over-year and record non-GAAP earnings of $2.17 per share, more than doubling from the prior year. The simultaneous global adoption of 5G combined with the increasingly complex technical requirements and a pace of change that it's accelerating drives a significant multi-year industry transition that plays to our strength. QCT revenues of $6.5 billion were also a record, up 81% year-over-year and 32% sequentially. Notably, our strong performance and outlook would have been even stronger had we not been supply constrained. Within QCT, we saw strength across our portfolio. Our RF adjacency demonstrated continued growth with quarterly revenues more than doubling year-over-year and crossing the $1 billion threshold, a significant milestone. We are executing extremely well in our strategy to address many of the technical challenges of delivering a true modem-to-antenna 5G experience and capture a higher dollar share of content in smartphones. We are also well-positioned with design wins across the mobile handset ecosystem, a strong pipeline for further growth in smartphones and a roadmap to bring our RF expertise to adjacent industries. Our automotive revenues of $212 million were up 44% year-over-year and our design win pipeline has grown to $8.3 billion from just $3 billion three years ago, placing us on a trajectory to achieve our fiscal year 2024 revenue target of $1.5 billion. Our IoT adjacency also passed the $1 billion threshold in Q1 and grew 48% year-over-year, driven by the growth of our core technologies for the digitization of consumer, networking, and industrial applications. Our team continues to execute extremely well in spite of supply constraints and the continued impact of the pandemic. Our strategy is playing out largely as we expected, positioning us well to capture the rapid deployment of 5G in both the core handset industry, as well as creating new opportunities in adjacencies. In our licensing business, our broad portfolio of foundational system-level innovations and intellectual properties across 3G, 4G, and 5G, along with valuable implementation patents is unmatched and recognized in part by having signed more than 120 5G license agreements, up from 111 license agreements last quarter. Our continued success in licensing reflects our development of foundational technologies enabling 5G standards coupled with leadership in developing the standards themselves; leadership in developing the products necessary to implement 5G technology and leadership in enabling the industry to rapidly implement 5G seamlessly worldwide. This process continues through the successive releases of 5G currently under development as our foundational innovations, coupled with our ability to implement 5G in products and coordinated deployment in new verticals, continues to drive progress outside the handset industry. We continue to invest in complementary technologies that will enable the adoption of 5G use cases that will benefit consumers and businesses in a variety of industries, as well as agriculture and the advanced important social objectives of both urban and rural environments, including improvements in healthcare and education in a more widely connected future. We have also spent the past decade deep in AI research and development, resulting in the creation of the technology necessary to scale AI across industries and products from smartphones and automotive to the IoT and data centers. To make AI ubiquitous, we focused on making efficient hardware, algorithmic advancements, and software tools available to developers and OEMs. We believe AI will transform industries and our technologies will help accelerate the commercialization and scale of AI, making AI ubiquitous around the globe. Our commitment to our high-performance processor roadmap was reflected in our recently announced proposed acquisition of NUVIA. We look forward to combining NUVIA's world-class CPU and technology design team with Snapdragon to enable our ecosystem of customers to redefine computing performance, drive innovation, and deliver a new class of products and experiences for the 5G era. Just two years ago, we first announced our Snapdragon 855 mobile platform, the world's first commercial platform supporting multi-gigabit 5G and demonstrated end-to-end 5G consumer experiences with real demos over live millimeter wave 5G networks and devices. Today, we have an expanding portfolio of differentiated 5G solutions across multiple tiers of our Snapdragon mobile platforms. With high performance basebands, advanced RF front-end designs, and leading-edge process nodes for our flagship solutions, we are well-positioned to address growing 5G demand in the handset space and across our adjacencies. In RF, our position today is the result of executing on our strategy to extend the breadth of the products we offer. In just a few years, we have emerged as one of the largest RF suppliers in the smartphone ecosystem with a long-term roadmap supporting 4G and 5G sub-6 bands, in addition to 5G millimeter bands, enabling us to expand our RF leadership end-to-end product applications. The automotive industry continues to change rapidly and the car is becoming more connected, more autonomous, and more electric. As these trends disrupt the industry, 5G connectivity and new experiences and user demands, such as always-connected digital cabins for infotainment, real-time navigation, and entertainment are becoming the new standard. We are working to meet the increasing demands of safe and premium driving experiences powered by 4G LTE and 5G connected services. With integrated cellular V2X, WiFi, Bluetooth and precise positioning technologies, our 4G and 5G platforms are designed to securely connect vehicles to the cloud, each other, and the surrounding environment. With over 150 million vehicles on the road today connected with our modems, we are a leader in automotive telematics. We are evolving our strong position in automotive telematics to a strategic industry partner building incumbency with continued innovation as the auto industry undergoes rapid transformation. Our third-generation automotive cockpit solutions have been selected by 20 of the top-25 automakers and our recently announced fourth-generation automotive platform demonstrates our leadership in high-performance compute, computer vision, artificial intelligence, and multi-sensor processing. Lastly, our recently announced strategic engagements with General Motors and leading Tier 1 suppliers including LG Electronics, Google, Panasonic, and Visteon are further evidence of our strong alignment with the automotive industry. Turning to IoT, we continue to drive momentum in compute with the launch of our second-generation Snapdragon 8cx, the introduction of our commercial and educational platforms for both Windows and Chrome and continued ecosystem progress. We are also driving industry leadership in XR with over 40 design wins and strong ecosystem momentum with global operator partnerships. We believe XR has the potential to be the next computing platform. Our networking solutions target the full potential of Wi-Fi 6 with a blend of advanced technologies and protocols, targeting networks deployed in enterprise, venue, and prosumer applications. We are also extending our advanced Wi-Fi 6 feature profile into the 6-gigahertz spectrum with second-generation platforms. We are capitalizing on the transformation in private and public networks, enabling millimeter-wave indoor and outdoor launches in North America and Japan with our small cell solution, bringing higher reliability and speeds to consumers, as well as providing connectivity for 5G enterprise private networks of the future. Lastly, we are accelerating the deployment of our core technologies for digitization of non-mobile industries across retail, utilities, transportation, and manufacturing applications. It is exciting to see the strategy we laid out several years ago playing out largely as expected and placing Qualcomm in a very strong position for Cristiano to carry the vision forward as he executes on the many opportunities in front of us over many years. Being CEO of Qualcomm for the last seven years has been a privilege and an honor. The foundation of Qualcomm's leadership is a relentless commitment to innovating with great products, focusing on large industries with technical challenges that are hard to solve. This is what always gave me the confidence we would succeed even when it wasn't obvious and I have every confidence Cristiano shares this vision. I would now like to turn the call over to Akash. Akash Palkhiwala: Thank you, Steve and good afternoon everyone. We are extremely pleased to report strong results to start our fiscal year. We delivered a record first quarter with non-GAAP revenues of $8.2 billion and non-GAAP EPS of $2.17, which was above the high end of the strong guidance we provided at the beginning of the quarter. These results reflect year-over-year increases of 63% and 119% in revenues and EPS, respectively, driven by strength across QTL and QCT. In QTL, we recorded revenues of $1.66 billion, up 18% year-over-year and EBT margins of 77%. In the December quarter, we saw a year-over-year reduction of 7% in global 3G, 4G, 5G handset shipments compared to our planning assumption of a 5% reduction, reflecting the impact of COVID and softness in the domestic China shipments. In QCT, we delivered record results with revenues of $6.5 billion, up 32% sequentially and 81% year-over-year. These results were driven by strength across handsets, RF front-end, automotive, and IoT. Our strong revenue growth drove EBT margins of 29%, which was above the high end of our guidance and increased 900 basis points sequentially as we realized the benefit of operating leverage. We are also pleased with our continued diversification as we delivered record revenues in RF front-end, automotive, and IoT. RF front-end revenues of $1.1 billion more than doubled on a year-over-year basis, reflecting the strength of our broad product portfolio across all frequency bands and customers. Automotive revenues of $212 million grew 44% year-over-year as our telematics and digital cockpit products continued to benefit from the industry rebound. In IoT, revenues grew 48% year-over-year to $1 billion across consumer, networking, and industrial applications, driven by an acceleration in demand for our products and technologies. Our non-GAAP combined R&D and SG&A expenses of $1.78 billion was lower than our previous estimate, primarily due to the timing of certain R&D expenses within the fiscal year. Turning to 5G adoption, we estimate approximately 225 million 5G handsets in calendar 2020 and forecast 450 million to 550 million units in calendar 2021. We are extremely pleased by the adoption of our 5G chipsets across OEM partners with over 800 designs using 5G modem and RF Solutions. Our recently announced 5G premium tier mobile platform, the Snapdragon 888 already has over 120 design wins. We now have 5G offerings across several tiers, from our premium tier Snapdragon 888 to our recently-announced Snapdragon 480, all capable of supporting millimeter-wave. For global 3G, 4G, 5G handsets, we estimate that shipments declined 12% on a year-over-year basis in calendar 2020. In calendar 2021, we expect total handsets to grow in high single-digits year-over-year. This assumes an impact from COVID in the first half, consistent with the exit rate of 2020 and a recovery in the second half. In addition, QCT's addressable market will expand to include Huawei's existing share which is estimated to be approximately 16% of total handsets in 2019. Turning to our second quarter guidance, we are forecasting revenues of $7.2 billion to $8 billion and non-GAAP EPS of $1.55 to $1.75, a year-over-year increase of 46% and 88%, respectively at the midpoints. In QTL, we estimate revenues of $1.25 billion to $1.45 billion and EBT margins of 66% to 70%. This is in line with normal seasonality following the strong holiday quarter and reflects the slightly lower handset forecast I previously outlined. In QCT, we expect revenues of $6 billion to $6.5 billion, up 52% year-over-year and EBT margins of 23% to 25%, reflecting EBT dollar growth of 125% versus the year ago quarter. Consistent with historical trends, we estimate non-GAAP combined R&D and SG&A expenses to be up 5% to 6% sequentially due to normal calendar year resets for certain employee-related costs. We estimate that the pending acquisition of NUVIA will increase fiscal 2021 non-GAAP combined R&D and SG&A expenses by approximately $100 million, a portion of which is contemplated in our second quarter guidance. Looking forward to the third fiscal quarter, we estimate QTL revenues to be in a similar range as our second quarter guidance and expect QCT earnings to double on a year-over-year basis. This forecast contemplates the current seasonality of the QCT business, following the strength in the first half of the fiscal year, which was driven by 5G flagship launches, including Apple, the holiday season, and Chinese New Year. In addition, we are seeing demand significantly outpacing supply, given the constraints affecting the industry. Beyond the third quarter, we continue to forecast strong growth across QCT, driven by new device launches, design win traction, and strength in our adjacent platforms. Lastly, we launched our latest annual corporate responsibility and ESG report yesterday, which is now available on our website. I'm pleased to share that we have successfully met or exceeded our 2020 goals and have disclosed 2025 targets, focused across key areas of diversity and inclusion, purposeful innovation, and reducing our carbon footprint. We continue to respond to the expectations of our stakeholders to disclose ESG information in alignment with international standards. Before I finish my prepared remarks, I want to thank our employees for their continued hard work and focused execution. I will now turn the call back to Mauricio. Mauricio Lopez-Hodoyan: Thank you, Akash. Operator, we are now ready for questions. Operator: Thank you. [Operator Instructions] Our first question comes from Samik Chatterjee with JPMorgan. Please proceed with your question. Samik Chatterjee: Hi, thanks for taking my question and before I ask my question, congratulations to both Steve and Cristiano. And so, if I can just start off with the seasonality here, I think, what you're guiding to for the QCT segment is a mid-single-digit decline in -- seasonally in revenues versus more of a mid-teens decline in QTL. Can you just help us understand the drivers, what's causing that difference? And I think that's leading to some concerns in investors today that the sell-end of chips is greater than the sell-through base and leading to some inventory build. So, I just wanted to see if you can address that as well. Akash Palkhiwala: Yes, hi, Samik, this is Akash. We are not seeing any significant inventory build in the channel. So, let me just maybe clarify that to start with. If you think about QCT -- QTL revenues sequentially from December quarter to March quarter, we've talked about seasonality in that business consistently in the past. And so our guidance really reflects that. So, it's no different than kind of the shape of the year that you generally see in the handset market and mix of OEMs being reflected in the dollar. So, in the past, we talked about $1.7 billion midpoint going to $1.4 billion from December to March and what we are guiding is, we came in just below the midpoint in the December quarter and we're guiding similarly just below the $1.4 billion for the March quarter. So, that's the message on QTL. On QCT, clearly with Apple now in our revenue stream, there is a different seasonality than we've had in the past and so you see kind of that becoming a factor, but when you take -- remove that, our seasonality is actually extremely strong with significant growth from December to March quarter and really strength across not just mobile platform, with the launch of our Snapdragon 888 chipset, but also across RFFE, auto, and IoT being strong as well. So, it's really strength across the board. And what you see in the numbers is the seasonality of the revenue profile showing up. Samik Chatterjee: Yes. Got it. If I can quickly follow up, I think historically pre -- before the U.S. restrictions came into place, you've talked about Huawei not really being material in terms of contribution to earnings even though you had some MSM in your shipments there. Do you see a likely change or any material change post the restructuring of that business where there is a part of the business sold to Honor brand and I think there are also some restructurings going on for the Huawei brand, any changes that could lead to? Akash Palkhiwala: Yes, as I -- Samik, as I said in my prepared remarks, we see the Huawei market share -- Huawei portion of the market really as a significant SAM growth opportunity for us as either the share goes to other OEMs or to Honor or Huawei continues, we have an opportunity to sell into it. So, kind of, longer term, in the second half of the year, we feel like that's a significant opportunity for us, but at this point, in our second quarter guidance there, we don't have material revenue assumed for Huawei or Honor. Operator: Thank you. Our next question comes from Mike Walkley with Canaccord Genuity. Please proceed with your question. Mike Walkley: Great. Thanks. And, I guess, my best to Steve navigating some tough times and best wishes to Cristiano also. My question, I guess, just focusing on the margin front, really strong margins on QCT. I know there's some seasonality into Q1 and an increased cost. But given the strong margin start to the year, Akash, how should we think about margin trends over time as you leverage and harvest that 5G investment? Akash Palkhiwala: Yes, so, thanks, Mike, for that question. Very happy with the QCT margins in the December quarter, I mean, really at 29% operating margins and gross margins were extremely strong as well and contributing to the strength in the operating margin profile. So, very happy to see that. Really, when you look forward, there are a couple of factors driving our margin profile. Overall, from a gross margin perspective, there really isn't a specific trend. As we've said in the past, we feel like we have the ability to hold margins in the -- consistent with our recent history and potential upside opportunity to grow it and so we still have the same view. And operating margin will then just become kind of something that falls out based on the revenue profile. But just kind of when you abstract out the seasonality, we're pretty happy that we set a target at the Analyst Day last -- about 15 months ago and we are on our way to meeting and exceeding what we set out. Mike Walkley: Okay. Thank you. And then just a follow-up on the margins on the QTL side with a lot of the legal things dying down and signing over 120 5G contracts. Do you see the leverage on that side also maybe if you can reduce legal costs, or there's still high audit cost involved there? Thanks. Akash Palkhiwala: Yes, Mike, from a QTL perspective, really legal costs have been at a stable lower level for the last several quarters. And so the margin profile that you're seeing kind of reflects stabilization of the legal cost and really it's about the topline revenue and focusing on kind of expanding and keeping the licensing business steady going forward. Operator: Thank you. Our next question comes from Chris Caso with Raymond James. Please proceed with your question. Chris, your line is live; you may proceed with your questions. Chris Caso: Hi. Excuse me. Thank you. So, for my first question, wondered if you could address the shortages and obviously it's something we've heard from a number of others in the industry this quarter. Can you talk about the extent to it? And in your opening remarks, you mentioned that revenue would have been higher if not for the shortages. Could you help us to quantify that some and then perhaps talk about the next couple of quarters, how that may play out if you recapture some of the business that you weren't able to ship in the December quarter and how that proceeds? Cristiano Amon: Hi, Chris, this is Cristiano. Yes, happy to address. We have seen, I think, probably shortage across the entire industry. There is a couple of factors driving that. One is V-shaped recovery, I think, across many of the sectors that were present now. We saw acceleration of digital transformation also consistent with this trend of the enterprise transformation of their home. And especially for Qualcomm and QCT, we have seen an opportunity with the expansion of addressable market. Huawei represent -- or it represented 16% of the market that becomes available to us across all of our OEMs. So, that's driving a situation that demand is outpacing supply. We're happy what we see right now on the premium tier, for example. In high tier, we see share gains in fiscal 2021 and we expect the situation to normalize towards the second half of the year. Chris Caso: Okay. Thank you. And with that, you made some comments about the fiscal third quarter, that perhaps you could clarify. First on the QTL side, you were talking about similar levels on QTL, if you can help us to reconcile that with your view of mobile handset units, I think you said growing 7% sequentially. And then you gave us something to go on with regard to the QCT side with the profitability doubling. And I guess, with that, should we assume that would -- that profitability doubling would be at similar operating margins to what you're guiding for, for the March quarter? Akash Palkhiwala: Yes, Chris, so this is Akash. I think QTL, as we've said in the past, we're going to see the market consistent between March and June quarters in terms of how the overall market -- mobile market behaves. And so that's what is reflected in the data point we provided for the June quarter. QCT, I think it's a fair way of thinking about it. We are expecting it to be extremely strong, doubling profit year-over-year basis and margin profile is really going to kind of fallout from the scale of the revenue as we discussed earlier. From -- just what is reflected in our third quarter numbers is just the natural seasonality of the business now that we have Apple in our revenue stream and their -- the timing of their purchases within the year is reflected in the data points we are providing. Operator: Thank you. Our next question comes from Joe Moore with Morgan Stanley. Please proceed with your question. Joe Moore: Great. Thank you. I wonder if you can give us color on the growth in RF being so impressive when you look at 5G units potentially kind of more than doubling, when you look at millimeter-wave really at one customer and one region. I'm just surprised at how robust December is and kind of can you talk to the sustainability of those revenue levels and the growth drivers going forward. Cristiano Amon: Hi, Joe, it's Cristiano. Yes, it's very consistent to what we have been saying since the beginning of 5G. We saw 5G as an entry point for us. We have a highly differentiated solution with our modem-to-antenna platform and all of those designs. I think we updated the design count now 5G is in excess of 800 designs. They all contain 5G RF front-end components. Also we like that it's very diversified RF front-end revenues across our customers, also with a lot of sub-6, it's not only millimeter-wave, even though we are very happy with the expansion prospects of millimeter-wave and that's definitely an accelerator for Qualcomm. So, it's a business which is now one of the fastest growing business we have. We're happy we achieved the threshold of $1 billion and we'll continue to grow as we grow 5G. Joe Moore: Great. Thank you. Operator: Thank you. Our next question comes from Stacy Rasgon with Bernstein Research. Please proceed with your question. Stacy Rasgon: Hi guys. Thanks for taking my questions. First, I wanted to dig again in the chipset margin guidance. So, you're guiding chipset profit dollars down over $400 million sequentially on about $280 million revenue decline, that's like a 150% negative incremental margins. But presumably the mix ought to be getting better as Apple and the handset stuff rolls off in the adjacencies. It sounds like they grow. So, like what is going on in there? Like why are the margins coming down that much, given the revenue trajectory? Akash Palkhiwala: Yes. So, a couple of factors, Stacy, its Akash. First is, as I indicated in my prepared remarks, we typically see kind of a resetting of certain expenses on the OpEx side, so you have OpEx growth that happens between the December and the March quarter. And this is consistent with history. So, if you go back and look at our numbers in the past, you kind of see the same increase. So that impacts the margin a bit. Second is we did see some strength in certain pockets in the December quarter in our gross margin profile. So, gross margin profile was higher in the December quarter than our recent trend and what we're guiding forward is some something that's consistent with our recent trend. So, any upside to that would be something that, of course, we're going to try to execute on, but it'd be upside to our guidance. Stacy Rasgon: Thank you. And then if I can follow-up on QTL margins. So you're guiding 68% on, whatever it is, $1.35 billion at the midpoint. In 2019, you were actually running higher than that, you were at like $1.1 billion to $1.3 billion, so lower revenues, you've had margins that were in line to higher than what you're guiding now with legal costs that presumably were higher. So, like what's going on on the QTL side, why aren't margins higher on this revenue level? Akash Palkhiwala: Yes, Stacy, there is no something specific going on. I mean, if you go back to Analyst Day -- and I don't have the 2019 numbers in front of me, but if you go back to Analyst Day, what we laid out in front of you for the full year for QTL where we thought the margin for the year would be higher than 70% with Huawei result, we are very much executing to the target we laid out. We think we're in good place to execute on it. Operator: Thank you. Our next question comes from Blayne Curtis with Barclays. Please proceed with your questions. Blayne Curtis: Hey thanks for taking my question. Just revisiting on the margin side, given the shortages you're seeing and just kind of if you could just comment on your input costs and whether that's kind of rolled in yet or whether that's an impact kind of going forward to EBT margin? Akash Palkhiwala: Yes, I think, Blayne, as you'd expect, a lot of our conversations with the customers and suppliers are around how we address supply and our agreements on price generally tend to be longer term. So, really that's where we are focused on, as kind of being good partners to our customers and focusing on supply. Margin is consistent with our recent history and that's what's reflected in the guidance. Blayne Curtis: Thanks. And then just for the June quarter, the doubling of QCT profits. I think, obviously, the new large customer; you may be seasonally down there just on the Android side, that's typically a stronger quarter particularly if the market is going to double. So, just kind of the moving pieces, actually looks like Q-to-Q would be down sequentially from March to June to keep that doubling of profit. So, just any perspective on your outlook with your Android within that? Akash Palkhiwala: Yes, Blayne, there isn't a specific trend that I'd like to point out there. I think our -- the strength of our business remains consistent between the quarters on Android. Cristiano Amon: Maybe -- this is Cristiano. I just want to add a small data point. If you -- there is, as Akash outlined, seasonality because of one large U.S. customer. But if you look at what is happening outside that, actually we're very happy with what we see in terms of a premium and high-tier share gains. I pointed to the addressable market that is becoming available to us from Huawei and that's going to be a growth story, especially for the QCT premium and high-tier as we go throughout the quarters. Operator: Thank you. Our next question comes from Tal Liani with Bank of America. Please proceed with your question. Tal Liani: Hi guys. You guided smartphone to be going up -- going from minus 12% last year to go up high single-digit this year. Can you give us like a little bit of color of regions, also kind of types of smartphones, any color on the composition of the growth this year? Akash Palkhiwala: Yes, hi Tal, this is Akash. So, really what our guidance -- just to reiterate it, we are saying the market was down 12%, 2019 to 2020 -- calendar 2019 to calendar 2020 and would grow in high single-digits from 2020 to 2021 and this reflects kind of continuing COVID impact in the first half and then recovery in the second half. Really within that market, what's the critical driver for us is how 5G plays out. And so if you look at our 5G forecast, we're expecting it to go up from 225 million in calendar 2020 to a midpoint of 500 million. So, very strong growth and that's kind of the key driver for us in terms of how our revenue expands on the chip side. And then maybe last thing I'll point out is to Cristiano's comment earlier, Huawei has been a very large OEM and it was -- really from a chip perspective, it was mostly high silicon that was satisfying their demand. Now, with the change in the market, we have kind of 16% of the market that was not available to us before being available. So, as we kind of look further out, we see this as a pretty material expansion of SAM for us. Tal Liani: So, just as a follow-up, if the market is going from declines to growth, what's the impact on QTL at the high level? Meaning, is this growth going to be in high end countries where anyway you're hitting the limit of the ceiling for the price of $400 or is it going to be mostly in developing markets where the growth in -- the improvement in growth can translate also improvement in the total addressable market, meaning units times price? I'm trying to understand the impact of the ceiling to the price for QTL. Akash Palkhiwala: Yes. So, I think from a QTL perspective, the way we see 5G benefiting the ASP is just 5G goes into lower tiers. Below the ceiling, it kind of makes the mix richer for us. As people upgrade devices, they buy more expensive devices and that would be the opportunity for QTL. But we -- again, we are not planning that into our forecast at this point and we see it has a potential upside as it materializes. Operator: Thank you. Our next question comes from Ross Seymore with Deutsche Bank. Please proceed with your questions. Ross Seymore: Hi guys. Thanks for letting me ask the question and first of all, congratulations to both Steve and Cristiano. I wanted to go back on the QCT side to the China dynamic and that 16% increase in your SAM. How are you guys handling the potential inventory dynamic where the Honor side might keep the share and you could get design wins there? But all of the aspiring share gainers are also going to build to take share, so there's the potential for inventory coming back. I realize, in a period of shortage, it might not be an issue for you, but how are you managing avoiding that pitfall? Akash Palkhiwala: Yes, hey Ross, it's Akash. It's definitely something that we are trying to manage carefully. I mean, we do have very strong demand from various OEMs. But as you rightly pointed out, it really is more of a supply-driven market and so we have more opportunity to sell and increase our revenue than we can supply at this point. So, it's really -- that's the primary focus and we don't really have any inventory concerns at this point with our customers. Cristiano Amon: If I could answer your question-- Ross Seymore: As my follow-up-- Cristiano Amon: Ross, this question, I just want to add one thing. Given the size of those customers, the semiconductor supply chain is probably sized for where the market sizes. So, that in itself provides some correction on inventory. Ross Seymore: Great. Thanks for that color, Cristiano. I guess, as my follow-up, if I went back to the margin side of things, it seems like you're guiding the implied gross margin down about three points sequentially in the March quarter. And then I understand QTL goes down and QCT up. So, from a mix perspective, that would happen, but it's still a little bit greater than I would have expected. You answered in a prior question, Akash, a little bit about a normalization that you're assuming there. I wanted to dive a little into what was driving the upside in the December quarter and why would that change going into the March quarter. Akash Palkhiwala: Yes. So, I think, Ross, it was -- the December quarter upside was just driven by mix across businesses and we have certain customers who made purchases earlier than they would usually purchase. So, it's just more operational mix that drove the upside and so, we're not forecasting that at this point going forward. Ross Seymore: Thank you. Operator: Thank you. Our next question comes from Matt Ramsay with Cowen. Please proceed with your question. Matt Ramsay: Yes. Thank you. Good afternoon guys. For my first question, I think a number of folks have asked about this 16% of the market that was Huawei that's now available to you, and I think you guys all answered about potential inventory buildup to this point, but no secret that Huawei had been building finished goods and semiconductor inventories going into the situation. Cristiano, any thoughts as to how long they can remain in the market and win that opportunity to -- for share shift that may present itself to you guys from a timing perspective? Thanks. Cristiano Amon: Hi Matt. Thanks for your question. Look, we measure those things based on the design activity and why we can't really predict how much inventory they have, especially on the high and premium tiers, whether you get range through a carrier in the portfolio or you get range in the retailer, the market's already moving. And as I said earlier, we have -- we've seen very strong design activity. We are in a positive position, because we're very well hedged. If iOS win, if Samsung Android wins, if Vivo, Oppo, Xiaomi wins or even if, over time, companies like Honor wins, we're very well-positioned there and we'll see how they'll play out. But I will say that the -- because of how distributors and the carriers think about it, the portfolio is already switching and that's reflecting in the design activity we see right now. Matt Ramsay: Got it. Thank you for that. I guess an unrelated follow-up question. I was interested in the acquisition of NUVIA. The team had made some changes on the CPU side a few years ago to be, I think, more dependent on, I guess, licensed cores directly from ARM for the Snapdragon portfolio and I wonder what the acquisition of NUVIA might signal around your intentions there, number one. And number two, about ambitions into markets that include Chromebooks, notebooks, 5G connected, consumer prices, et cetera, if there is any comments there on the TAM, Akash that would be helpful. Thank you. Cristiano Amon: So, Matt, let me just start and I will shift to Akash to talk about the TAM. We're very excited about that acquisition. And it's probably very clear, if you look on the announcement we made, one thing that was really incredible is the support we received from the mobile ecosystem, every single OEM was there, with the exception of two, which -- it doesn't really apply to them. And then you have the entire computing ecosystem there, both across the Windows and Chrome. For us, it basically reflect this view that we had of full conversions between mobile and computing. I think we are in the very beginning of that with our Windows and Snapdragon program and create opportunities for us to do a step function increase in performance with the -- obviously, the power advantage of Qualcomm, both across premium smartphones, as well as the computing segment and that is likely to be a key differentiation for Qualcomm going forward. Akash Palkhiwala: And really for the -- if you think about the addressable market for the PC and Chromebooks market, this is over a couple of hundred million of units, right? So, it's a very large market and what's really important for us is to be able to combine CPU -- leading CPU technology along with the other assets that we have in mobile and address that -- and address this market in a differentiated fashion. And so we feel pretty good about our ability to do that. I'll also say the CPU has lot of implications outside mobile phones and PC market along with -- into auto and IoT as well. So, it's an asset that's going to be broadly relevant to the end markets we pursue. Operator: Thank you. Our next question comes from Mitch Steves with RBC Capital Markets. Please proceed with your question. Mitch Steves: Yes. Congratulations guys. I just had a couple of questions here, just kind of circling back to the inventory thing, kind of looking at the full year. So, maybe first, I mean, how does Qualcomm kind of mitigate the idea that some people are overbuilding on the smartphone side, trying to gain share from Huawei and if they're going to have the back half kind of drop-off? And then secondly, maybe a better way to ask this question, I know you guys don't give full year guidance, but if I look at the full year in terms of calendar year basis, what kind of balance do you guys think the revenue is going to look like? Is it going to be more 45%, 55%? Just how should a calendar year look like now, now that Apple is kind of a major customer for you guys? Akash Palkhiwala: Mitch, on your second question, if you just look at our profile of customers, right, as we go past the third quarter and go into the fourth quarter, we're going to have flagship devices being launched again, going all the way to the holiday season. So, it does become a kind of a pretty area of strength as we go into September and December quarter relative to June. So, we are expecting revenues to grow significantly, not just in mobile but in RF front-end that goes with it, and then also in IoT and auto, we're continuing to see strength in the design win pipeline. So, it's really across the board. Cristiano Amon: And maybe to your first question, Mitch, maybe reiterating what we said before, we don't see -- I think we heard a lot in this call about discrepancy between sell-in and sell-out, we don't see that. We actually see demand outpacing supply and the supply availability is what's really regulating the market. So, we're not too concerned about that at this point. Mitch Steves: I guess maybe if I can sneak this in, so I guess what do you think is causing that demand surge? Is it just 5G? I'm just curious as to what's giving you guys the confidence that continues for the rest of the year? Akash Palkhiwala: Sorry, Mitch, can you repeat that question? Mitch Steves: So, you guys are saying you're confident that demand is out-stripping supply and the sell-through is fine. So, I'm curious as to why you believe the demand is there and it's so significant versus prior cycle. Cristiano Amon: It's Cristiano. Let me address it again. It's a couple of things, right? We have been saying, and I think that's been a key driver in QCT, we are growing on a market that grows single-digit, we're growing faster than the market as both, I think, our expansion into 5G as well as the addressable market that is expanding for us, the Huawei 16% example, that's one. The other one is we have seen good numbers on 5G. We -- for the calendar year, we actually -- the range we went to the high end of the guide with 225 million 5G units and our guide for 2021, it's -- I think the upper side of the guide is in the 550 million, so the 5G transition is robust, device ecosystem has to move on and we see an expansion of addressable market. That is all giving confidence and the supply chain situations, I said earlier, it's been broad across the industry, it's not unique to handset. We also saw the acceleration of digital transformation across the industry in the V-shaped recovery, but it should get normalized towards the later part of 2021. Operator: Thank you. Our next question comes from the line of Brett Simpson with Arete Research. Please proceed with your question. Brett Simpson: Yes. Thanks very much. I just wanted to dig in a bit on the shortages that you flagged. Just specifically what is the main sort of source here of the shortages? Is it more sort of 5-nanometer yield challenges you're seeing and that's sort of impacting the premium flagship segment that you operate in or is it more sort of PMICs and what's happening with SMIC? I mean, can you maybe just talk a bit more about some of the challenges you're having here? And specifically, when do you think we come out of the shortage situation? Is it going to be the June quarter or do we have to wait for the second half before things get back to normal? Thank you. Cristiano Amon: Thank you for your question. Look, the simple answer is the shortage in the semiconductor industry is across the board, not only leading nodes but also legacy nodes. You should think about it that it's used -- legacy process is used in a lot of automotive, it's used in all of the networking products and consumer electronics and also you see that in a lot of the attaches, whether power management chips or RF chips. So, the V-shaped recovery that we've seen across the industry and all of the accelerated digitization is driving semiconductors and we've seen that across the board. Specific to a 5-nanometer, I think we're ramping a new process; it's very consistent to our expectations. I'll argue that we probably -- for a ramp of a new process with our partner, this time we shipped more in the quarter on -- early in the ramp for Snapdragon 800 and we expect, to your question, this to normalize towards the later part of 2021 as capacity is put in place and we see some of the demand across other sectors of the industry to catch-up with supply. Brett Simpson: Okay. Thanks. And maybe just a follow-up on QTL. So, I mean, you spoke a lot about some of the success you're having in QCT regarding autos and you referenced 20 of the top-25 automakers are using the cockpit platform and you've got a $8.3 billion backlog. How do we think about the QTL opportunity here for -- specifically for autos? I mean is there something you can share with us in terms of how royalty agreements are going here and what sort of royalty rates we can expect for 5G, given the use cases are very different in autos going forward? Thank you. Alex Rogers: This is Alex. Thanks for the question. We've had a long-term licensing program in automotive telematics for 3G, 4G. We're actually having quite good success with our 5G licensing, of course, not a lot of 5G units have hit the road yet. We haven't released details of the licensing program or the particular royalty structure at this point in time, but maybe at some point in the future. Operator: Thank you. Our next question comes from C.J. Muse with Evercore. Please proceed with your question. C.J. Muse: Yes, good afternoon. Thank you for taking the question. I guess, first question, with RF front-end doubling calendar 2020 versus calendar 2019, curious if there is a framework that you could provide in thinking about the growth trajectory into 2021. Obviously, you had two quarters now of Apple millimeter-wave in there, would love to hear any thoughts that you could provide in terms of how to think about the growth here in 2021 and beyond, if you can? Akash Palkhiwala: Yes. Hi C.J., it's Akash. At Analyst Day, we laid out kind of the financial targets for the RF front-end business. We said we want to be greater than 20% off an $18 billion market. We are very confident that we are on our way to achieving that in an accelerated fashion versus the timeline we had laid out. So, we had said we'd get there in 2022 and we feel like we are there -- able to get there in an accelerated fashion. So, pretty happy about that. C.J. Muse: Okay, that's helpful. And as my follow-up, you've had a number of questions, I guess, on the supply constraint front and EBT margins for QCT. But, I guess, I wanted to ask a little bit differently. In terms of higher wafer and OSAT costs and you talked earlier about how you have longer term contracts with set pricing, curious how we should be thinking about perhaps higher costs earlier in the year versus later in the calendar year and what that might mean for the trajectory of QCT margins over time. And I guess as part of that, you showed great growth from 14% to 22% in calendar 2020. Considering your outlook for 5G, should we be seeing another kind of stair step higher for margins there? Thank you. Akash Palkhiwala: Yes. C.J., from a wafer cost and fab cost perspective, really kind of not much of a story for us. It's really consistent with what we had expected before and we feel confident that we can execute to the margin profiles that we've outlined, both kind of from an Analyst Day long-term perspective and also guidance we are providing. Really as you look at the second half of the year, we are looking forward to strong revenue growth across all of our businesses and, of course, the margin will benefit from that as well just as we get scale and the operating leverage benefits shows up. Operator: Thank you. Our final question comes from the line of Timothy Arcuri with UBS. Please proceed with your question. Timothy Arcuri: Thanks a lot. I guess my first question is just on QCT. So, you'd guided QCT down, I think, 15% for March last call and now it's down just a little bit off of the December base, it was about as you guided. So, -- and that's even despite some of the constraints that you had talked about. So, the story really is that March on the component side is even better than what you thought it was three months ago, but that's despite sell-through on the licensing side being actually little bit worse than you thought due to COVID. So, I guess, the first question is why is QCT so much better than what you saw three months ago? And this is the fourth quarter where these two businesses are sort of going in opposite direction. So, I guess I wanted to better understand why -- Cristiano, why I think it's a problem as you get into the back half of the year. Thanks. Akash Palkhiwala: Tim its Akash. One of the things we -- the one of the key factors that kind of drives the two businesses going in different direction, in this case, is just timing of purchases by large customers and so we saw some accelerated purchases in -- going into the March quarter versus June. And so it's just depending on how the inventory strategies play out for different customers. The timing makes an impact as to when we see the improvement in our financial performance. But underlying trend, there is no kind of specific story; it's just how things play out based on sell-through and timing of when people buy parts. Cristiano Amon: Look, if I can add one thing just real quick. Also, maybe it's the beginning of this process, but QCT is showing also other growth drivers, like the automotive growth driver, the IoT growth driver. So, over time, as the business get more diversified, I think, you're going to have probably less correlation between the two. Timothy Arcuri: Thanks. Thanks for that. And I guess my last question is on millimeter-wave. So, I guess, the first 100 megahertz of C-band is going to clear at the end of this year. And it seems like the big U.S. carrier that was kind of driving that is going to maybe shift some of their CapEx over to build out C-band in the next two years. I know some of the other U.S. carriers are talking about building out millimeter-wave in 2023 and beyond. Can you just talk about the pace of adoption for millimeter-wave? Obviously, you have a lot of leverage there. Do you think it's going to be lumpy, or do you just see it growing from here? Thanks. Cristiano Amon: Hi. This is Cristiano. Look, we are very pleased with what we see in millimeter-wave. We restate what we said, I think, you need millimeter-wave for the full potential of 5G and especially as you look at some of the more advanced applications beyond smartphones, millimeter-wave continue to be a requirement for the premium devices in the United States. We're very pleased to see that one of our large customer had brought millimeter-wave across all price points of their devices. In this quarter, we saw Germany with the auction rules starting for millimeter-wave at 26 gigahertz and we continue to see activity indicating that China is likely to have millimeter-wave for 2022. So, we're happy what we see, it's progressing as we plan, and as you said it correctly, millimeter-wave is probably an accelerator of our 1.5 multiplier in QCT. Operator: Thank you. That concludes today's question-and-answer session. Mr. Mollenkopf, do you have anything further to add before adjourning the call? Steve Mollenkopf: Yes. Thank you. First of all, I want to thank folks who gave the kind words on the call, I know Cristiano feels the same way. This is actually, if I count correctly, my 50th earnings call. So, I appreciate the hard work from the Qualcomm team, making it a record. I look forward to seeing where the company goes; it's exceedingly well-positioned. And thank you all for joining us today. Thank you. Operator: Ladies and gentlemen, this concludes today's conference. You may now disconnect.