Qualcomm SVP: Automakers making ‘direct bets’ on technology partners

Nakul Duggal, Qualcomm Automotive Senior Vice President & General Manager, joins Yahoo Finance Live to discuss the company's Snapdragon platform and how automakers are investing in technology and chips.

Video transcript

- Well, turning now to the world of semiconductors. Qualcomm is revving up its partnerships announcing a deal with Mercedes-Benz for its upcoming vehicles at its automotive investor day. The chipmaker also announced the expansion of its automotive design win pipeline to $30 billion. Joining us now to discuss, Qualcomm automotive senior vice president and general manager, Nakul Duggal.

Thank you so much, Nakul, for being here. Looks like investors when you guys made this announcement yesterday were pretty pleased with the results. This was a bigger than expected pipeline than they were looking for. So talk to me about the process here. I know that-- what-- automotive is about 12% of your sales or so right now. What are you guys pushing towards here in terms of goals?

NAKUL DUGGAL: Good morning. Thank you for having me. Look, we had a fantastic investor day. The auto industry is betting on the Qualcomm Snapdragon digital chassis platform, which we are working with a large number of automakers on. As the industry goes through this massive transformation that is upon them, every car company has to very rapidly become a technology company.

And Qualcomm is being selected by a variety of different automakers globally as that technology partner of choice. We expect rapid transition in terms of how the market evolves when it comes to automated driving, digital cockpits, connectivity. So the definition of the new car of the future is going to require this shift in technology adoption. And that's what we are driving.

- Is that total addressable market based on clients, customers, partners that you're already working with? Or is that also in competition where you're going to seek to take on a certain extent of the market share of that total addressable market? And if you can kind of parse through some of your competitors that are also going to be really competing for that, how that really looks like and how ready you are to accelerate that, too.

NAKUL DUGGAL: So we have been consistently and patiently investing in this space. There are a few things that are absolutely evolving. One is the silicon and the software content is rapidly expanding in vehicles as every vehicle starts to become software defined. That is certainly a big accelerant in terms of the addressable market. I think the other big shift that is happening is that automakers are making direct bets on technology partners that they want to be able to work with over multiple generations.

So sitting here today in '22, we are involved in decisions for production years '26 and beyond. And this is why we are actually able to provide visibility in terms of what the business starts to look like over the rest of this decade because the pipeline that we announced is actually providing us that coverage over an extended period of time. And we've shared the $30 billion number, but we are essentially seeing a rapid transition in the market in terms of making these technology bets. And that's how we are able to forecast that larger addressable market.

- Nakul, I want to ask about supply chain for a moment here. Now, I know you guys aren't fab. You're designers and licensors. But nonetheless, you're affected by what's going on in supply chain. We're hearing from the likes of Ford that they've got 40,000 or 45,000 unfinished vehicles sitting around. Is any of that because-- or not Ford specifically, but are we seeing still issues with getting automotive chips into vehicles?

NAKUL DUGGAL: That's a good question. One thing that Qualcomm did early on right at the beginning of the pandemic was we prioritized automotive supply above all other verticals that we're involved in. So we wanted to make sure that none of our customers were impacted by the supply chain crisis on account of anything that Qualcomm would ship. Now, obviously, automakers put in a variety of different semiconductors that have a various set of dependencies across a fairly complex supply chain. We do see that the supply chain complexity is going to improve over the second half of next year. We ourselves are not necessarily seeing any specific challenges on the products that we supply [INAUDIBLE]

- Nakul Duggal, Qualcomm automotive senior vice president and general manager and owner of a birds of paradise and monstera plant behind you there. Appreciate it.

NAKUL DUGGAL: Thank you for having me.