Qualcomm’s Generative AI Efforts Expand as Chip Maker Wants a Bite of the Market

Key takeaways

• Qualcomm recently demoed its new AI-powered car assistants
• The car chip business is only 3% of Qualcomm’s sales right now, but has the potential to blossom
• Qualcomm’s share price has only risen 7% this year despite the generative AI tech boom

Chip maker Qualcomm, best known for making the chips that go inside Android phones, is taking its first leap into the burgeoning generative AI market. It’s looking to expand its fledgling car software and hardware business, but the company faces some pretty significant headwinds before it reaches that point. Here’s what we know so far.

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What’s the latest with Qualcomm?

While still primarily known for its Android chips, Qualcomm has recently expanded its products to include hardware chips, sensors and software for car companies like General Motors and Volvo. Now, it’s looking to take its automotive chips offering a step further with generative AI.

In a demo this week, Qualcomm showed off how car computers could become AI assistants with the help of its chips and software. The car assistant can add recipes and send an AI-generated birthday card using Stable Diffusion, in what Qualcomm CEO Cristiano Amon calls a “new computing platform”.

Qualcomm’s car business is tiny — the segment reported $1.32 billion in sales for 2022, which made up just 3% of Qualcomm’s overall sales. But it’s a definite growth area for the chip maker, which makes $200 to $3,000 per car using its chips and software.

Did the stock move at all?

There’s no denying that Qualcomm is behind the curve on generative AI adoption, with Qualcomm’s share price only up 7.2% since the start of the year compared to AI darling Nvidia’s share price soaring by 238.4%.

The company is also grappling with a slowdown in global mobile phone sales, resulting in a poor earrings beat in August. Qualcomm beat expectations on earnings but disappointed on revenue and revenue forecast for the third quarter.

Finally, Qualcomm is expanding into a market already rife with competition. Rivals like Nvidia and Mobileye already operate in the space alongside traditional car software and hardware companies like Continental and Bosch.

The bottom line

With sales tanking and gloomy financial results, Qualcomm needs a win — which it believes lies in the car industry. Whether Qualcomm can make a sizable dent in the generative AI market for cars when the likes of Nvidia are already dominating the space is yet to be seen.

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