Today I took the time to analyze Qualcomm Inc. (NASDAQ: QCOM) in detail, which seems to be on a very interesting development trajectory. As the world's largest seller of smartphone processors, the company recognizes the need to diversify its business and find new sources of growth, which leads me as an investor to think more deeply about its future potential.
Growth plan until 2029
Qualcomm has ambitious goals – it plans to generate $22 billion annually from new segments by fiscal 2029. Of this, it expects USD 8 billion from the sale of chips for the automotive industry and USD 14 billion from the Internet of Things (IoT) segment.[1] These figures were presented by the company's management during an investment presentation in New York and indicate a clear vision for portfolio diversification. For me, this signals an opportunity to invest in a company that wants to minimize its dependence on one segment.
Automotive chips as an engine for future growth
The automotive industry is an area that is experiencing rapid digitization. Qualcomm sees huge potential in this transformation. Automotive chips that support advanced driver assistance systems (ADAS), infotainment and connectivity could be a stable source of revenue for the company. The company expects this segment to bring in $8 billion per year.[2] This is especially interesting because the digitalization of cars is currently a priority for many car manufacturers.
As an investor, I realize that this market is competitive, but Qualcomm has a clear advantage due to its experience in connectivity and processors. If expectations are met, this segment can make a significant contribution to future growth.
IoT
The second key segment is the Internet of Things (IoT), which encompasses a wide range of devices – from personal computers to industrial machinery to virtual reality. Qualcomm predicts that this segment could bring it $14 billion a year. Amon mentioned that the total market opportunity for Qualcomm could reach $900 billion by 2030, indicating huge room for further growth.[3]
For me, it is interesting that Qualcomm also focuses on industrial applications and PC chips. This strategy could reach customers outside the traditional consumer electronics sector, reducing dependence on the cyclical nature of the smartphone market.
The threat of losing an Apple customer
On the other hand, the company faces a significant challenge – Apple Inc., one of Qualcomm's largest customers, is developing its own radio components to replace products purchased from Qualcomm. This loss will definitely have an impact on revenue, which only increases the pressure on the success of the diversification strategy.
From an investor's point of view, however, it is encouraging that Qualcomm leaves nothing to chance. Its automotive chip and IoT activities could offset Apple's loss of revenue. At the same time, diversification reduces the risk associated with one large customer, which I consider a positive step.
Conclusion: Is Qualcomm worth paying attention to?
Qualcomm has a clear plan to become a leader outside of the smartphone sector. Its expansion into the automotive chip and IoT segments looks promising, and if the projections can be achieved, the company could be a stable source of growth for investors. The threats associated with the loss of Apple are real, but portfolio diversification can mitigate these risks.
As an investor, I see Qualcomm as a company that not only responds to current challenges, but actively prepares for the future. With an emphasis on technologies that will be key in the coming decades, Qualcomm has the potential to appeal not only to its traditional customers, but also to new markets. It is a company that is definitely worth watching.
[1,2,3] Forward-looking statements are based on assumptions and current expectations, which may be inaccurate, or based on the current economic environment which is subject to change. Such statements are not guaranteeing future performance. They involve risks and other uncertainties which are difficult to predict. Results could differ materially from those expressed or implied in any forward-looking statements.
