Qualcomm is best known for its handsets business, but the past two years the company has embarked on a business diversification process adding RF, IoT and automotive to the mix. In FY21 the revenue from RF, Auto and IoT represented 38% of total QCT revenues and the automotive business is on a $1B annual run rate, with a $13B design win pipeline, working with all major automakers.
Today, Qualcomm announced a multi-year direct auto collaboration with Stellantis to utilize Qualcomm’s Snapdragon Digital Chassis solutions for the automaker’s new digital cockpit platforms, termed the STLA SmartCockpit, and 5G telematics systems across all of its 14 car brands, starting with infotainment systems powered by Snapdragon Cockpit Platforms in Maseratis in 2024. There was also wording alluding to supply chain assurance for “strategic components”. Financial terms were not disclosed, and Qualcomm did not update its current $13B pipeline as I believe the company is in its quiet period ahead of earnings on April 27th and therefore cannot talk financials.
Stellantis is the 2021 merger between Peugeot S.A (PSA) and Fiat Chrysler Automobiles N.V. (FCA). It consists of 14 major automobile brands including Alfa Romeo, Chrysler, Citroen, Dodge, DS automobiles, Fiat, Jeep, Maserati, Opel, Peugeot, Ram, Vauxhall, Free2move, and Leasys. PSA and FCA have worked with Qualcomm independently of each other and I believe this partnership with Qualcomm will bring one uniform and standardized cockpit platform and 5G telematics system across all the Stellantis brands. Considering PSA and FCA’s previous collaboration with Qualcomm and mutual familiarity as a whole, the partnership between Qualcomm and Stellantis comes with some incumbency, and I believe it is a big win on both sides. It brings volumes with Chrysler, Dodge, and Fiat and some cachet with some of its iconic car brands like Maserati, Alfa Romeo and Lancia.
The dashboard is now the digital cockpit
A few years ago, we used to call the digital cockpit the “dashboard.”Is “digital cockpit” just a term marketing departments invented or a sign of what’s to come in the future? I think it’s the latter.
If you look at how drivers and passengers want to consume content, it has changed radically. The bar today is a 3D immersive and customizable visual system on many displays with customized streaming audio, video and map content. My recent 2021 car buy has all of this- today.
Think about tomorrow’s experience when drivers will spend less time driving and become passengers themselves. The digital cockpit becomes a portable office, living room and even a bedroom. With the typical car lifespan hitting ten years, the capabilities will be software and I hope hardware upgradeable. Even more exciting, wouldn’t it be great to “download” an extra 100hp or a 9th gear for that Maserati a year after you’ve purchased it?
While Qualcomm and Stellantis didn’t definitively use these exact words, it is certainly what I got reading through the lines.
Qualcomm’s auto business
Qualcomm is a player in the automotive electronics business with its telematics, connectivity, cockpit and ADAS technologies. Overall, Qualcomm has a $13B automotive design-win pipeline, and in its most recent quarter, attained an annualized, $1B revenue number. At its recent investor day, the company announced expectations to drive $3.5B revenue in 5 years and $8B in ten years. Automotive isn’t new to Qualcomm as it supplies nearly every brand of car on the road in one way, shape or form. It invented modern telematics with its prowess in wireless modem technologies, extended that to the dashboard, displacing many NVIDIA designs, then recently moved into ADAS and at some point it will move to full self-driving.
Qualcomm was never supposed to do this well in the automotive space if you had listened to the “experts” a decade ago. What the “experts” didn’t understand was that the auto market was going to shift so quickly and radically. Qualcomm did know.
I believe one of the reasons Qualcomm is doing so well in the digital automotive space is because it has become so similar to the mobile space. Like smartphones, cars have become a systems challenge, requiring scale and leveraged R&D to actually make money doing it. Having spoken to a few of Qualcomm’s customers, they also appreciate Qualcomm’s “open” approach, its full software stack capabilities and its willingness to partner for the long-term, servicing every tier of car.
Qualcomm is also benefiting from the changing state of the automotive industry where two dynamics are hitting. First, the auto industry was hit hard by the semiconductor shortage worse than most as automakers didn’t have direct relationships with semiconductor designers or manufacturers. Secondly, automakers realize that there’s a direct relationship between their future success and their ability to electrify, automate, and connect the car quickly and affordably. Qualcomm serves every part but the “electrify.”
Qualcomm’s major, recent wins with Renault, GM, Ferrari, and now a multi-generational collaboration with Stellantis, all share a common theme—all four partnerships began with Qualcomm’s digital cockpit, its open and scalable infotainment system.
Stay tuned for Qualcomm’s earnings report on April 27th as we will hopefully see an updated auto pipeline number, unless, of course, this was already baked into the November investor day number.
Note: Moor Insights & Strategy co-op Jacob Freyman contributed to this article.