Qualcomm CFO Akash Palkhiwala joins Yahoo Finance Live to discuss its product expansion for Wi-Fi 7 networks, the chip shortage, and supply chains.
- Welcome back, everyone. A new expansion in the chip space. Qualcomm is doubling down on its Wi-Fi and Bluetooth offerings with the unveiling of its new Wi-Fi 7 front-end modules, which expands the business beyond smartphones. Joining us now to discuss, we've got Qualcomm CFO Akash Palkhiwala. Akash, great to have you here with us. First and foremost, just what difference will the consumer see as a result of these changes?
AKASH PALKHIWALA: Yeah. So for first of all, thanks for having me. It's great to be here. The products that we announced are really a part of our diversification strategy. What we're trying to do is we are already a very strong player in handsets. And we are prioritizing growth within IoT and automotive.
The products that we announce, the way it helps consumers is if you think about the demands on Wi-Fi networks today within the home, whether you are streaming a movie, playing a game, or you're doing video calls from work or home, or you're accessing the cloud, documents on the cloud or processing on the cloud, each of these experiences require a better Wi-Fi network. And what we're bringing forward today is a set of new technologies and products on the RF front end side that would allow the Wi-Fi networks to work better as we go from Wi-Fi 6 to Wi-Fi 6E to Wi-Fi 7. So we're excited about what these products mean for consumers and how we can bring this innovation to them.
- Akash, what does the demand look like for these products out of the gate?
AKASH PALKHIWALA: The demand is very strong. I mean, this is something-- if you think about Wi-Fi technology, Qualcomm is already the largest Wi-Fi chipset player in the world. And this allows us to expand our product portfolio not just core Wi-Fi chips, but also the front end chips that go with it. So it's an expansion of a market we are already in and we are already the leader in.
- Akash, it's Julie here. What about on the supply side? Obviously, this has been a long standing hot topic for the industry. How's it looking in terms of whether you're going to be able to meet the demand that you're seeing in the marketplace for these new chips?
AKASH PALKHIWALA: Yeah. Sure, Julie. I mean, on the supply side, Qualcomm really was one of the first companies to have identified the issue a couple of years ago. And since then, we've put a great plan in place that has allowed us to grow our revenue significantly, even in the face of supply constraints. What we've said about supply constraints is later in this year we expect demand and supply to balance out against each other. So we're pretty confident that we are in a good place as we look forward from a supply perspective in being able to meet the increasing demand for this technology.
- Separately here, when we think about just chip production and the state of affairs as of right now, we were waiting for more capacity to come online. We're waiting for even some of the partnerships as Qualcomm and even GlobalFoundries have really struck to bring more products to production. When you think about the Chips Act and the logjam that that's seeing right now, from your perspective, when will this actually allow some of that supply, some of that capacity to come online? And how quickly is that going to need to be fast tracked, the dollar sign that even is going to be next to that from your perspective?
AKASH PALKHIWALA: Yeah. I mean, as you know well, we are a big supporter of the Chips Act. We think that leadership in technology and innovation is extremely important for our country. And so Qualcomm has been very vocal in supporting the Chips Act. From an overall supply perspective, we already use a lot of capacity in the US, especially with GlobalFoundries and Samsung.
And we've been working with these players over the last couple of years to expand their capacity, which is what has helped us address some of the supply constraints. So our plan is still in place in the short term. But longer term, we think the Chips Act is important. And it's something that's important for our country as a whole from a technology leadership perspective.
- Just as a follow up to that, does that delay or does that kind of push off any of the forecasts or impact materially any of the forecasts that the company currently has for its own revenue or earnings expectations in the near term or long term?
AKASH PALKHIWALA: Well, I'll stay away from updating any guidance at this point. But when you think about the long term, this is where the Chips Act would be extremely important for us in terms of additional capacity coming online. And so that's why we are very supportive of not just about the capacity, but also from a technology leadership perspective.
- Akash, what is your thinking on and the team's thinking on how the CapEx cycle or the demand cycle for chips might be different should we go into a recession next year compared to prior periods of slowdowns?
AKASH PALKHIWALA: Yeah. So it's interesting where the industry is at if you step back and have a five-year view. The chips are actually becoming more important in every single device you can think of. It's not just about phones. If you look at cars, if you look at industrial transformation of technology, everything is trying to connect to the cloud.
And as soon as someone makes a decision to connect the device to the cloud, you're going to need a lot more chip content. You're going to need connectivity, whether it's Wi-Fi or 5G. You're going to need AI at the edge and low power processing. And these are all technologies that Qualcomm is extremely well positioned in. So we're very excited that the connected intelligent edge as that vision materializes we have tremendous opportunity in front of us.