Qualcomm's reputation has primarily been built on its chips and modems for Android phones. However, in recent years, the company has ventured into a new line of business by offering a comprehensive solution called Snapdragon Digital Chassis to automakers like GM, Hyundai, and Volvo. This package includes hardware chips, sensors, and software, enabling automakers to integrate advanced features into their vehicles.
Qualcomm aims to leverage the growing interest in generative artificial intelligence to encourage automakers to adopt more of its chips and explore new possibilities. For instance, the company envisions the integration of smart assistants in cars, assisting drivers in navigation, making reservations, and performing various day-to-day computing tasks.
Despite automotive revenue being a small fraction of Qualcomm's overall sales, the company anticipates a significant increase in demand for its chips in upcoming vehicles over the next few years. Qualcomm projects sales of over $9 billion in 2031, compared to $1.32 billion reported in fiscal year 2022.
Qualcomm generates revenue ranging from $200 to $3,000 per car through the sale of its chips and software. Additionally, the company earns $5 per car for licensing fees when connected to 5G networks.
An example of Qualcomm's involvement in the automotive industry is the integration of its chips and software in GM's Cadillac Escalade IQ SUV. These components power the vehicle's 55-inch dashboard display, as well as lane-keeping and hands-free driving features under GM's "Ultra Cruise" branding. Interestingly, the SUV does not support phone mirroring features like Apple CarPlay or Android Auto, emphasizing the importance of the in-car computer experience and GM's chosen software interface.
However, Qualcomm faces tough competition from other chipmakers in the automotive chip market. Companies like Intel, Nvidia, Continental, NXP Semiconductors, and Bosch also offer automotive products and are eager to supply parts and chips for dashboards and driver assistance systems.
Recently, Qualcomm showcased potential future scenarios enabled by its chips through the use of large language models and generative AI. In one example, a car assistant could find a recipe for chicken enchiladas and create a shopping list. In another demonstration, the car's computer used Stable Diffusion, a generative AI model, to generate and send an AI-generated birthday card to the driver's brother. These demonstrations emphasize Qualcomm's vision of cars evolving into personalized computing platforms.
Qualcomm's ultimate goal is to be recognized as an AI company, leveraging its low-power smartphone GPUs and AI accelerators. While rivals like Nvidia have gained significant attention for their cloud GPUs, which power applications like ChatGPT, Qualcomm's stock has only seen a modest increase during the AI boom.
In the short term, Qualcomm aims to utilize its language models to create smart user guides by training them on dense user manuals that accompany cars. Additionally, driver monitoring, enabled by machine learning, is another focus for Qualcomm, with the objective of determining if the driver is distracted or fatigued.
Qualcomm also envisions providing over-the-air software updates that enhance a car's self-driving capabilities. This could potentially become a new revenue stream for automakers, allowing them to offer additional features and services to customers.
The integration of context and advanced technology in cars opens up a wide range of possibilities. Features like automated parking upgrades, personalized services, and free trials could all be offered based on the specific needs and preferences of the driver.
Qualcomm is expanding its presence in the automotive industry by offering comprehensive solutions to automakers. By harnessing generative AI and language models, the company aims to create a more personalized and intelligent driving experience while also exploring new revenue streams and partnerships.
