

5G is slated to be the “connective tissue” that interconnects multiple industries and makes ubiquitous connectivity and intelligence a possibility. If you can’t gather data and update devices remotely, those devices become much less relevant in the overall scope of IoT, that’s why 5G has so much potential for IoT adoption of Qualcomm 5G technologies. It won’t be limited to what we traditionally think of IoT devices either because the transformative power of 5G will improve industries including the PC sector. Tethering is traditionally used to connect PCs to Wi-Fi connectivity or Wi-Fi hotspots, but with 5G laptops, tablets and convertibles can go truly mobile like smartphones. The company's Snapdragon on Windows 10 project with Microsoft and OEMs like ASUS, HP and Lenovo may be a sign of more to come in this area.
Qualcomm’s IoT business already saw upwards of $1 billion in revenue in FY 2017, which shows the significance of the business today and into the future.
$3B automotive revenue pipeline
Qualcomm’s ability to harness its strengths in core businesses to leverage itself into new businesses is also showing in their automotive efforts. Previously, Qualcomm’s involvement in automotive was essentially entirely focused on telematics like OnStar. Getting your foot in the automotive door isn’t an easy one and Qualcomm thankfully already had one, but still has made significant efforts to get involved in 5G telematics and infotainment. Qualcomm’s efforts in this space have already yielded 25 new design-wins in just FY 2017 alone and come along with a $3 billion design-win pipeline, which means these are volume vehicles. That’s ignoring any potential future design wins that Qualcomm may successfully get in 2018, especially with their leadership in 4G and 5G. Qualcomm announced at CES 2018 that they would be powering Jaguar and Land Rover’s next-generation cockpits/infotainment and telematics systems in addition to Honda and China-based BYD.
Unknown to most, Qualcomm has #1 share in auto connectivity and telematics and has 12 carmakers on deck to take their infotainment solutions
#1 in mesh WiFi and taking Broadcom market share
In addition to 5G and automotive, Qualcomm’s Wi-Fi business comes from their acquisition of Atheros in 2011 is paying major dividends for the company. Qualcomm is driving several trends in the Wi-Fi space, especially with their leadership in mesh networking like Google Wi-Fi. In fact, Qualcomm’s Mesh solution has allowed the company to achieve the number one position in retail mesh networking. Qualcomm says that nearly 40% of the US retail home Wi-Fi market is based on mesh now and that they have number one mesh market share. This market share also allows them to claim number one global Wi-Fi market share and enterprise/home/venue market share. All this Wi-Fi market share is important because down the road, Wi-Fi access points will be the core of how many people’s devices will interface with the internet at home. The Wi-Fi access point will become the front door to many consumers’ homes, and carriers are starting to realize the importance of this and adopting Qualcomm technologies as well.


All rose petals and unicorns?
Qualcomm has successfully managed to diversify its business in a way that no longer makes the company wholly dependent on the ebb and flow of the smartphone industry. The issue was that Qualcomm wasn’t telling many people about it, until now. Obviously, mobile is still a large portion of Qualcomm’s overall revenues and businesses, but the company is making significant inroads in these other business segments. Qualcomm’s success in these categories is what enables the company to be less dependent on the success of the NXP Semiconductors acquisition or a Broadcom deal. The new data reinforces that the Broadcom deal would be a really bad one and while I believe that the NXP deal is very complementary to what Qualcomm is already doing, it does build upon the momentum that the company already has in these spaces. A standalone Qualcomm wouldn't be all rose petals and unicorns, but certainly better than a disastrous Broadcom acquisition. We're already seeing cracks in the Broadcom/Avago style of cutting R&D to the bone with WiFi market share losses, late to market with mesh WiFi, losing RF share, and being literally nowhere in 5G. No wonder Broadcom wants Qualcomm.
Note: Analyst Anshel Sag contributed heavily to this article.