Qualcomm ( QCOM ) made a number of key AI announcements today as the company looks to establish itself as a major player in mobile chips.
These announcements include a new computing platform called the Snapdragon X Elite. A new central processing unit chip called the Qualcomm Oryon CPU. And a new smartphone chip called Snapdragon 8 Gen 3.
Although Qualcomm makes chips, it doesn’t make the popular GPUs that are standardized for training AI models. This field is dominated by Nvidia ( NVDA ), although players like Intel ( INTC ) and AMD ( AMD ) are competing to make up for the lack of GPUs.
Qualcomm, during the artificial intelligence boom, is looking to create a niche that is related to mobile and increased efficiency. Snapdragon 8 Gen 3, Qualcomm’s mobile platform for Android smartphones, is designed to emphasize generative artificial intelligence, for example, and offers the ability to run large language models such as Llama 2’s META.
The chip will appear in mainstream Android devices over the next few weeks, and will also bring more advanced gaming and audio features.
The company’s Snapdragon X Elite computing platform is designed to enhance the artificial intelligence of Windows computers. Devices with the Snapdragon X Elite won’t arrive until mid-2024, but the platform has a new chip that Qualcomm is expected to emphasize moving forward, the Qualcomm Oryon processor.
According to Qualcomm, the Oryon CPU is faster than its Arm ( ARM )-based competitors, a group that includes Google ( GOOG , GOOGL ), Samsung and Alphabet’s TSMC. Apparently, the chip matches the best performance of Apple’s ( AAPL ) M2 chip and Intel’s 13980Hx chip, with less power.
This product is an implicit jab at AMD and a layered jab at Intel, both of which use Arm’s intellectual property in some of their chips.
Despite the hype around semiconductors, Qualcomm shares have underperformed the S&P 500 this year. The company is struggling with declining smartphone sales and an increasingly competitive landscape.
“In the near term, demand for handsets is set to fall sharply amid a sharp decline in channel inventory, while orders from Chinese Android manufacturers are still flat,” wrote CFRA analyst Angelo Zino, who rates the stock highly. Hasn’t come back quickly. While we like Qualcomm’s potential to diversify over time, we’re wary of its position given its structural share loss across the Android ecosystem.
Qualcomm’s partnership with Apple is also critical and fragile for its near-term prospects, as Apple has its own chip-making ambitions. In September, Qualcomm and Apple re-signed an iPhone deal, which sent Qualcomm shares soaring.
“This deal is the second time Apple has been forced into a multi-year deal to supply thin modems from Qualcomm, in a contractual relationship that Apple sees as unfair but necessary,” Argus research director Jim Kelleher wrote in September. “For Qualcomm, this deal locks in a key high-volume customer at a time when financial pressures and modest increases in smartphone performance and efficiency are limiting demand for new phones.”
Allie Garfinkel is a senior technology reporter at Yahoo Finance. Follow him on X, formerly Twitter @agarfinks And in LinkedIn.
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