Qualcomm (QCOM) Q2 2026 Earnings Transcript

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Date

April 29, 2026

Call participants

• President and Chief Executive Officer — Cristiano Amon
• Chief Financial Officer — Akash Palkhiwala
• Senior Vice President of Investor Relations — Brett Simpson

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Takeaways

• Total revenue -- $10.6 billion, with non-GAAP EPS of $2.65 at the high end of guidance.
• QCT segment revenue -- $9.1 billion, including $6 billion from handsets, $1.7 billion from IoT (up 9%), and a record $1.3 billion from automotive (up 38%).
• QTL segment revenue -- $1.4 billion, with EBT margin of 72% at the high end of guidance, driven by a favorable mix as global handset units remained flat year over year.
• Automotive annualized revenue -- Exceeded $5 billion for the first time, with an expected run rate above $6 billion by fiscal year-end.
• Capital return -- $3.7 billion was returned to stockholders, including $2.8 billion of share repurchases and $945 million in dividends.
• Tax valuation allowance release -- A $5.7 billion non-cash GAAP tax benefit was recognized, excluded from non-GAAP results, due to new IRS and Treasury guidance on R&D expense deductions.
• Channel inventory dynamics -- QCT handset shipments in China were significantly below end consumer demand due to memory-driven OEM build reductions and channel inventory drawdowns.
• Guidance for Q3 -- Revenue projected at $9.2 billion–$10 billion and non-GAAP EPS at $2.10–$2.30; QCT revenues of $7.9 billion–$8.5 billion (handsets: $4.9 billion), QTL revenues of $1.15 billion–$1.35 billion, and non-GAAP operating expenses of approximately $2.6 billion.
• QCT automotive outlook -- Revenue growth is guided to accelerate by approximately 50% year over year in the next quarter.
• Segment diversification -- Combined automotive and IoT revenue increased 20% year over year, reflecting management’s diversification strategy.
• Custom data center engagement -- Initial shipments to a leading hyperscaler are expected in December, marking a strategic move into custom silicon for data centers.
• 6G strategic initiative -- Launch of a 60-company coalition to advance 6G technology, with initial silicon targeted for 2028 and early launches planned for 2029.
• Premium smartphone exposure -- Multi-year agreement with Samsung set at “greater than 70%” share for Snapdragon, reaffirmed for both the current and next year.
• Apple product assumption -- No change to 20% share assumption for new Apple phones launching in the fall; royalty revenue expected to remain at a similar scale pending renegotiation.

Summary

The call highlighted Qualcomm (NASDAQ:QCOM)'s momentum in diversification with record automotive and growing IoT revenues, as well as proactive capital returns. Executives stressed that memory industry dynamics drove handset under-shipments in China and expect QCT handset revenue from Chinese customers to bottom in the third quarter with sequential growth thereafter. Management described initial data center silicon shipments to a leading hyperscaler in December as a key strategic development, noting it will be margin accretive. Presenters outlined 6G initiatives including a broad industry coalition and described the transition as a significant upcoming growth driver. Multiple references were made to agentic AI opportunities and a roadmap encompassing PC, automotive, edge, and data center applications.

• Cristiano Amon said, “we expect to exit fiscal 2026 at a run rate above $6 billion.” for automotive revenue, emphasizing progress with digital chassis and ADAS ramp.
• Akash Palkhiwala confirmed, “QCT handset revenues from Chinese customers will reach a bottom in the third quarter and return to sequential growth in the following quarter.”
• Management attributed the QTL segment’s 72% EBT margin to “favorable mix with global handset units approximately flat on a year-over-year basis.”
• Executives stated that custom silicon for the data center business will involve “longer multi-generation agreements with companies that bring a lot of Qualcomm capabilities to the table.”
• Capital return in the quarter was characterized as an “acceleration of our capital return program.”

Industry glossary

• QCT: Qualcomm CDMA Technologies — the segment that develops integrated circuits and system software for wireless communications and connected devices.
• QTL: Qualcomm Technology Licensing — segment handling licensing of the company’s intellectual property portfolio.
• EBT margin: Earnings Before Tax margin — segment profit as a percentage of revenue prior to income tax expense.
• ADAS: Advanced Driver Assistance Systems — automotive technology features that assist drivers and enable semi-autonomous or autonomous driving.
• Agentic AI: Artificial intelligence models or agents capable of orchestrating multi-step tasks autonomously, often running at the device edge.
• TOPS: Trillions of Operations Per Second — a measure of compute performance, especially for AI accelerators and NPUs.
• SiP: System-in-Package — an assembly that integrates multiple chips or electronic components into a single package, often enhancing functionality and value.

Full Conference Call Transcript

Cristiano Amon: Thank you, Brett, and good afternoon, everyone. Thanks for joining us today. In fiscal Q2, we delivered revenues of $10.6 billion and non-GAAP earnings per share of $2.65 with EPS coming in at the high end of our guidance. QCT revenues were $9.1 billion with another quarter of record automotive revenues as well as growth in IoT. Licensing business revenues were $1.4 billion. Before I share key highlights from the business, I would like to provide some perspective on QUALCOMM Incorporated’s current customer design cycles and the opportunities ahead. We are in a period of profound change and it may not yet seem obvious to the financial community.

The emergence of agentic AI workloads, to have Open Claw as an early example, are fundamentally changing user experiences across connected edge devices and reshaping our roadmap in every platform we develop. For agents to work efficiently they must run continuously in the background, fuse sensor data into context, orchestrate multi-step tasks reliably, and deliver strong security. Today's installed base of devices were not built for these new capabilities and it represents a significant upgrade opportunity and expansion of our addressable market in the coming years. Agent orchestration is predominantly CPU-bound and QUALCOMM Incorporated has the world's best performing CPU across smartphones, PCs, auto, and soon the data center.

QUALCOMM Incorporated’s unparalleled connectivity solutions and power efficient NPU for local models will also be key assets to delivering AgenTeq AI. No other semiconductor company matches the breadth and scale of our technology and product portfolio, which powers devices spanning milliwatts to kilowatts from smart wearables to data centers. As a result, we are seeing a step function increase in strategic customer engagement and it is changing how we think about the broad AI opportunity as well as the speed of our diversification efforts. Beginning with automotive, in Q2 we exceeded $5 billion in annualized revenues for the first time, and we expect to exit fiscal 2026 at a run rate above $6 billion.

This growth is driven by our fourth-generation Snapdragon Digital Chassis platform, which comprises connectivity, telematics, infotainment as well as advanced driver assistance and automated driving. Notably, we have now enabled more than 1 million cars operating ADAS and autonomy on our Snapdragon Ride processors. By the end of the fiscal year, we will begin commercial shipments of our fifth-generation Snapdragon Digital Chassis platform. This represents the largest generation-to-generation content increase in QUALCOMM Incorporated’s history, delivering 3 times higher CPU throughput, a threefold increase in GPU capability, and 12 times higher NPU performance while supporting in-vehicle agents and processing for Level 3 and Level 4 autonomous driving.

Looking ahead to fiscal 2027, we expect continued share gains and increased content, particularly in ADAS. We are pleased with the performance of our automated driving stack with BMW and we are seeing broad customer engagement from other leading automakers. Our recent announcements with Bosch and Wave are good examples of what is to come as we build on our proven platforms and self-driving stack and scale ADAS. In IoT, AgenTeq workloads and EdgeAI are driving major product renewal design cycles. Overall, our pipeline is healthy and there is clear momentum for QUALCOMM Incorporated’s solutions. In Personal AI, we expect a significant increase in the choice of new smart glasses starting in the second half of the year.

We believe these launches combined with rapid progress in agentic AI will catalyze an inflection point in customer demand across this category. Our 2026 Snapdragon X2 PC platforms are currently in production and our world-class Orion CPU unlocks powerful always-on agentic experiences, making it a true competitive differentiator. Agentic orchestrators such as Open Claw, Clawed Desktop, Clawed Code, OpenAI Codex Desktop, Perplexity Computer, CrewAI, Hermes Agent, Land Graph, and Humane One running on Snapdragon X2 are early proof points. A recent PCMag review of the ASUS ZenBook A16 notes that QUALCOMM Incorporated is now a serious challenger in the PC space and states: The generational leap from the original Snapdragon X Elite to the X2 series is particularly striking.

QUALCOMM Incorporated just caught up to the industry. In some cases it is now helping to set the pace. In addition, our Hexagon NPU is the world's fastest for laptops delivering up to 85 TOPS. Together with our industry-leading CPU, which has the best on-device token generation rate, Snapdragon X2 delivers the full agent experience end-to-end and outperforms Intel's Pinter Lake by nearly 30. In physical and industrial AI, our new Dragon Wing IQ 10 platform has generated substantial customer interest since our launch at CES.

This is a significant upgrade compared to IQ 9, featuring an NPU with up to 700 TOPS of on-device AI performance and an 18-core Orion CPU, over 20 camera sensors, and an integrated safety island. Building on our design win with figure.ai, we announced an exciting multiyear agreement with Nura, reinforcing our confidence that we can become a significant player in the broad robotics market. Also during the quarter, we introduced VentunoQ at Embedded World. This is the second Arduino platform built on QUALCOMM Incorporated silicon and we view it as a world-class prototyping engine for both robotics and industrial AI developers as we expand our ecosystem across key verticals.

VentunoQ is purpose-built to bring AI into the physical world, enabling fully autonomous AI agents in a wide range of edge AI applications, including voice assistance and vision systems. Several new industrial AI products are also moving from design win to deployment across retail, utilities, oil and gas, agriculture, and other verticals. In data center, the Alpha Wave integration is off to a great start and we are pursuing multiple opportunities with large hyperscalers, cloud service providers, sovereign AI projects, and other global partners. Building on that momentum, we are also entering the custom silicon space, beginning our ramp with a leading hyperscaler and we expect initial shipments in December.

In addition, development of our leading data center CPU and high performance AI inference accelerators is progressing well. We look forward to sharing more details and customer wins at Investor Day in June. Regarding handsets, I would like to underscore two key points. First, the quarter played out as we expected. Sell-through held up, and our chip business materially under-shipped consumer demand. We believe our China Android revenue is bottoming out in fiscal Q3 and Akash will provide more specifics in his financial update. Second, we think agentic smartphones will soon begin to influence premium tier and we expect this theme will only get stronger into fiscal 2027.

With examples like the Biden's, DowBao powered agentic AI phone from ZTE Nubia, Xiaomi's recent announcement of a MiClaw agent framework, and other agentic assistants now in development across the Android ecosystem, we have a clear line of sight into how the AI upgrade cycle will unfold and this is going to be an important tailwind for premium demand over time. Next, I want to highlight a major strategic initiative and long-term growth driver for QUALCOMM Incorporated. 6G, the next generation of wireless, designed for the age of AI, we believe 6G will present one of the most significant transitions for the wireless industry.

From a connectivity perspective, 6G will enable a new class of mobile and personal devices such as smart glasses with enhanced uplink capabilities to support agentic use cases like “see what I see.” Beyond connectivity, 6G will be an AI-native network where AI reasoning, learning, and autonomous action are core functions. It is intended to act as distributed intelligent infrastructure that integrates communication and wide-area real-time sensing. With these new capabilities, the network becomes critical infrastructure and provides the telecom industry an opportunity to develop completely new business and economic models.

It will make possible new AI-enabled services ranging from context-relevant data, data insights and analytics, low altitude aerial terrestrial and autonomous traffic management, drone detection and tracking, and 3D mapping with telemetry to build dynamic digital twins at scale. QUALCOMM Incorporated’s leadership in connectivity, AI processing, and high performance low power computing positions us to be one of the key architects and beneficiaries of the 6G transition.

In addition to the development of foundational technologies and standards, we are building end-to-end solutions for devices and the network, from agentic modems and compute platforms that power phones, PC, intelligent wearables, and cars all the way to the network, including power efficient next-generation radio units, wide-area network sensing platforms, and high performance compute and AI accelerators for the RAN, network edge, core, and data center. To help shape and accelerate the 6G roadmap, at MWC we launched a 60-company coalition spanning carriers, cloud infrastructure, AI-native partners, and auto OEMs.

The engagement and feedback on our 6G vision and plans from our partners, customers, and governments across the globe has been very positive and we look forward to working across the industry to deliver on this generational opportunity. Before I turn the call over to Akash, I want to note that we will provide a broader update at our Investor Day including our data center plans and our progress in other areas including advanced robotics, next-generation ADAS, industrial edge AI, personal AI devices, and 6G. We hope you can join us as we will be highlighting meaningful new avenues of growth to support our long-term diversification story. I will now turn the call over to Akash.

Akash Palkhiwala: Thank you, Cristiano, and good afternoon, everyone. Let me begin with our results for the second fiscal quarter. We delivered revenues of $10.6 billion and non-GAAP EPS of $2.65 with EPS at the high end of our guidance. QTL revenues of $1.4 billion, EBT margin of 72%, came in at the high end of our guidance driven by favorable mix with global handset units approximately flat on a year-over-year basis. QCT revenues of $9.1 billion, EBT margin of 27%, in line with our expectations. QCT handset revenues of $6 billion came in as anticipated as OEMs remain cautious on handset builds due to the impact of challenging memory industry dynamics.

QCT IoT revenues of $1.7 billion were up 9% on a year-over-year basis driven by growth across consumer and industrial products. In QCT Automotive, we delivered another record quarter with revenues of $1.3 billion representing 38% year-over-year growth, driven by accelerating demand and increasing content per vehicle due to the transition of new digital cockpit and ADAS launches to our fourth-generation chipsets. On a combined basis, 20% year-over-year, underscoring the continued diversification of our business consistent with our long-term revenue targets. We also returned $3.7 billion to stockholders during the quarter including $2.8 billion in share repurchases, and $945 million in dividends, reflecting acceleration of our capital return program.

Lastly, we released a previously recorded tax valuation allowance resulting in a $5.7 billion non-cash GAAP tax benefit in the second fiscal quarter. This benefit is excluded from non-GAAP results. This reversal reflects new guidance on corporate alternative minimum tax, issued in February by Treasury and IRS, permitting taxpayers to deduct previously capitalized domestic R&D expenses. Before turning to guidance, I would like to provide an update on the continued impact of memory industry dynamics on our business.

Last quarter, we highlighted that the increasing demand for memory in AI data centers was driving uncertainty in memory supply and price increases to handset OEMs, and as a result, the handset OEMs, particularly in China, were taking a cautious approach by reducing build plans and drawing down channel inventory. These dynamics played out as expected in the second fiscal quarter and are also reflected in our third quarter guidance. As a result, in both quarters, our China QCT Android shipments are meaningfully below the scale of end consumer handset demand. We now estimate that QCT handset revenues from Chinese customers will reach a bottom in the third quarter and return to sequential growth in the following quarter.

Now turning to guidance. In the third fiscal quarter, we are forecasting revenues of $9.2 billion to $10 billion and non-GAAP EPS of $2.10 to $2.30. In QTL, we estimate revenues of $1.15 billion to $1.35 billion and EBT margins of 67% to 71%, with sequential decline primarily due to the operating assumption of weaker low-tier handset units. In QCT, we expect revenues of $7.9 billion to $8.5 billion, EBT margins of 25% to 27%. We are forecasting QCT handset revenues to be approximately $4.9 billion as a result of the impact of the industry-wide memory dynamics I just outlined.

We anticipate QCT IoT revenues to grow by high single digits versus the year-ago period driven by industrial and consumer products. In QCT automotive, following another record quarter, we expect year-over-year revenue growth to further accelerate, approximately 50% in the third fiscal quarter. Lastly, we forecast non-GAAP operating expenses to be approximately $2.6 billion in the quarter. In closing, while our near-term revenues are impacted by memory industry cyclical dynamics, we are confident in the underlying fundamentals around Snapdragon product leadership and content growth opportunities, including the adoption of agentic AI technologies. We continue to execute on our secular growth opportunities in automotive and IoT, and remain confident achieving our long-term revenue targets.

In addition, we are very excited about the progress in our data center products and customer traction. We now expect initial shipments for a custom silicon engagement at a leading hyperscaler later this calendar year. We look forward to providing an update on our growth initiatives including opportunities in data center and physical AI at our Investor Day on June 24. This concludes our prepared remarks. Back to you, Brett.

Brett Simpson: Thank you, Akash. We will now open the call for questions. Operator, we are now ready for questions. Thank you.

Operator: Thank you. If you need a speakerphone, please pick up your handset before pressing the numbers. Our first question comes from the line of Joshua Buchalter with TD Cowen. Please proceed with your question.

Joshua Louis Buchalter: Hey, guys. Thank you for taking my question. Obviously, I am not sure you are going to be able to front run the AI Day you plan to host in June, but any details you are able to share on or context on what the custom silicon engagement, you know, what the scope is, what the magnitude is, is this a CPU, is it an accelerator, is it a networking chip, just, you know, any help you can give us beyond the press release and prepared remarks, I think, would be helpful as that is where investors certainly want to dig in today. Thank you.

Cristiano Amon: Josh, this is Cristiano. Thanks a lot for your question. Look, I cannot provide a lot of details. As you said, we do not want to front run, I think, June 24, but here are a couple of things I can tell you, which is alongside what we said in the script. I think we have spent the time building assets and we will be building our CPU, we have accelerator, we have a different solution for memory in the accelerator. We have added a lot of capabilities for custom ASIC with the acquisition of AlphaWave and connectivity we have been pursuing.

Custom ASIC, we talked about having engagement with a number of companies and being pleased with the engagement several quarters ago. And I think, given the capabilities that we are developing and what is happening in the market, that is why we are very excited. The only thing I can tell, it is a large hyperscaler, and we are really thinking about a multi-generation engagement. But I think that is what we can say at this point.

Joshua Louis Buchalter: Okay. I guess we will stay tuned. For my follow-up, can you maybe walk through why you are confident that I assume it is fiscal third quarter that you were referring to with the third quarter, but why you are confident fiscal third quarter can be the bottom for Android QCT sales into China. I guess, typically, September is usually a typically down seasonal quarter. And just given how low visibility is right now overall in the handset market, I would be curious just what inputs you are seeing that gives you the confidence it is going to bottom in June? Thank you.

Akash Palkhiwala: Sure, Josh. It is Akash. So if you think about the impact to QCT from Chinese handset OEMs as a result of the memory dynamics, it is really two parts. The first part is the scale of the handset market. And there, we have seen some small decline in it, especially in the mid-low tiers. But by far, the larger impact has been the OEMs making a decision to slow down their builds and draw down on channel inventory. So both of these factors have been in our March results and they are also represented in our June guidance.

And so what we will end up doing in both quarters is significantly under-shipping the end consumer demand for handsets as a result of the channel inventory drawdown factor. So as we look forward, we feel confident that the third quarter is now the bottom. And so as we go forward, the revenue is going to be much closer to the scale of the handset business versus the inventory drawdown factor continuing into our forecast.

Cristiano Amon: Hey, Josh. This is Cristiano. Just to add one thing because there is another way to look into this. As you know, because of our licensing business, we do have visibility of what happens in the market. So we know sell-through. We know how the sell-through market is behaving even with increased price on the handsets. So it gives us a really good idea on activations and customer demand versus what we are shipping. So that dynamic outlined by Akash is very clear to us that Q3 becomes the bottom.

Operator: Our next question comes from the line of Samik Chatterjee with JPMorgan. Please proceed with your question.

Samik Chatterjee: Cristiano, maybe just going back to the data center opportunity and just trying to think about, if you can, sort of help us think about the competitive landscape here. I mean, you have had, which is IP provider, now announce they want to vertically integrate and make chips. You had NVIDIA announce that they are going to focus on the inferencing market as well. How are you thinking about the competitive dynamics where they are relative to maybe three months ago or six months ago that you are now sort of going and trying to deliver these wins on? And I have a quick follow-up after that. Thank you.

Unknown Speaker: Great question.

Cristiano Amon: Look, I will give our perspective. And I think we now have more clarity than we ever have about where we are in the AI space. So maybe at a very high level, right? In the beginning, it was all about training. All about creation of AI, a lot of GPU, very GPU-centric deployment. Inference started gaining scale and then the conversation changed to “I am going to use my GPU for training on the cluster that I build. And when I am not training, I am going to use that for inference.” As inference starts to gain scale, you start to see dedicated solutions. The data center becomes more disaggregated.

You have separate computing solutions, some for compute-bound, some for memory-bound. And now we are entering the next phase, which is how AI is really going from inference generating tokens to how you generate demand for tokens, with all those agentic experiences and those orchestrators that run in a lot of the devices. So when you think of that landscape and you look at our IP, and the places that we can be very differentiated, I will start with our CPU. I think when you think about agents, CPU becomes very important. And I will argue we are one of the companies that have a pretty good CPU asset.

We have proven that CPU performance with leading performance in the markets that we are in right now, such as PC, smartphone, and auto. And we have built—we will provide details on Investor Day—a dedicated CPU for agentic experiences in the data center. We are going to show the metrics, we are going to show how it performs, people will be able to compare. As you know, we have an architecture license and we have a very, very high performance CPU. So that is one of the assets. The other asset is how you think about the scale of a semiconductor company like QUALCOMM Incorporated. We are not small.

And the ability to combine the IP with the ability to do custom silicon, make sure that it yields, make sure it is delivered with quality, and combine a lot of the connectivity IP, which I believe Alpha Wave—because it was a licensed IP company—has as leading IP. The more you license, the better your IP becomes. The number three is how we think about the accelerator. You are going to need high compute density, low TCO. And we think that we have something unique which is focused on a cluster that is disaggregating. For very specific functions, especially like the code.

I think the activity you have seen with companies like Grok and Cerebras just proves that you have opportunities for a dedicated inference accelerator. And the last point is, we will not discount the position that we have on the edge. If you actually track what is happening with OpenClaw and all of the different desktop and co-work solutions, you rely a lot on a high performance CPU device, which is also causing an upgrade cycle for us. So we look at this whole landscape and that is how we feel so good about the agentic transition of AI, what it means to QUALCOMM Incorporated.

And hopefully on June 24, we will show the details on the roadmap and an investor will be able to see where we stand. And please reserve a seat.

Samik Chatterjee: Yes. No, please look forward to talking about that more at the Investor Day. Maybe for my follow-up, just going back to the handset business, can you just remind us of the multiyear agreement framework that you have with your primary premium smartphone customer, Samsung. You did have some sort of changes in the market in the share with them this year. I think there is some more indication of a further step down in share and more use of the in-house SoC sort of next year? Or can you just remind us sort of how you are thinking about that engagement long term and what does the multiyear agreement sort of capture at this point?

Cristiano Amon: No. Absolutely. I love answering this question. So this is a very, very stable relationship with QUALCOMM Incorporated. I want to remind you all that we have reset the framework of this relationship. Historically, we always had a business with Samsung that was in the 50% share between us and their own in-house silicon. That has changed to greater than 70%, as you know, and that has been the framework. And sometimes we get more than that, but we plan our business in greater than 70% share, which is exactly what we have said. You should expect that is the framework of this year and that is also the framework for next year.

I would say that is probably one of the most stable relationships that we have, and we have visibility of what that entails. And we feel good about the position on Snapdragon. And I will argue, given what is happening with agents, we have an opportunity to actually have a positive bias on that share.

Operator: Our next question is from the line of Chris Caso with Wolfe Research. Please proceed with your question.

Chris Caso: Yes, hi. Good evening. I guess the first question, just returning to the data center briefly and to clarify what you mentioned in terms of the hyperscaler engagement for December. Is that an engagement for an accelerator or a CPU? I understand you are targeting both it sounds like, but what is the particular engagement for December?

Cristiano Amon: This particular engagement, which we are going to ship in December, is a custom product we are working with a hyperscaler.

Chris Caso: Okay. So no other specificity past that?

Unknown Speaker: Okay.

Chris Caso: Just with regard to QTL, and it looks like that is modestly down and likely due to what you have been talking about with regard to what is going on in the handset market. What is the right way to think about the QTL business as we go forward into the second half of the year? Do you think that we kind of maintain these levels and adjust for seasonality as you get to the end of the year? Or do you expect the impact on QTL to be significant as you go into second half?

Akash Palkhiwala: Yes, Chris, it is Akash. So as you saw in our results for the second quarter, year-over-year handset units were flat for the global units, and this was really impacting our guidance as well, our actuals as well. As we look at third quarter, what we are guiding is some weakness in the mid-low end of the market. I mean, this is obviously something that we are projecting forward, and we are going to track closely. But what we are seeing is the premium-high tier of the market is continuing to hold, and weakness in the lower tiers. And that is what is reflected in our guidance.

That is our reasonable way of thinking about the market going forward as well.

Operator: The next question is from the line of Stacy Rasgon with Bernstein Research. Please proceed with your question.

Stacy Aaron Rasgon: Hi, guys. Thanks for taking my questions. So if the China handsets bottom in Q3 and then they grow in Q4, so that is September. September, I think, is when we are supposed to get the Apple step down, which may be an offset. So I guess just how are you thinking about handset seasonality in September given those kind of competing dynamics? How should we be thinking about that?

Akash Palkhiwala: Yes, Stacy, it is Akash. You are right. I think in terms of handset revenues for QCT from Chinese OEMs, we do expect that June is the bottom. And you will see sequential growth from there. And Apple, you are right as well that typically it is a growth quarter for Apple product revenue and we do not see that at this point given the share assumption change. So those are the two factors you would use to forecast us in September.

Stacy Aaron Rasgon: I mean, so, do you think handsets grow sequentially in September or not? Given those two—

Akash Palkhiwala: Stacy, we are not specifically guiding it at this point. But I think those two factors would be the input into the forecast.

Stacy Aaron Rasgon: Okay. And for my follow-up, you talked about, like, agentic devices and agentic smartphones driving a shift in things, I guess, into ’27. Do you think the memory issues are going to be done by then? Like, how much memory does an AgenTeq smart need? And is that something that is going to continue to be—when do you think on this as we go into 2027? How do we think about the broader dynamics around memory as we go forward?

Unknown Speaker: Thank you for the question, Stacy.

Cristiano Amon: Look, it is a little early to talk about ’27. I think one thing to see is the pace of change of AI is getting scale. When I think about the framework that I talked about before, which is you go from inference to now how you generate demand for tokens with a lot of agents, what we see is two things. One is the devices. The devices are changing the requirements in the design and the players. We see interesting associations now starting to form between smartphones and AI companies. We are starting to see some very interesting dynamics there. It is changing the nature of designs.

We see designs moving towards products that have much more capable CPU to run those types of products. And there is a lot of noise in the memory environment right now. I wish I could make a prediction on ’27. It is a little early. But we see a combination of some of the same companies that want a lot of demand for data centers also getting involved with some of the devices at the edge as well. And we see new memory players coming and building capacity. So we are going to have to monitor the situation and see what happens in 2027.

Operator: The next question is from the line of Timothy Arcuri with UBS. Please proceed with your questions.

Timothy Arcuri: Thanks a lot. I wanted to ask also about this custom that is going to ship in the fourth quarter of this year. I know you brought a team in from AlphaWave. It seems a little fast to get something to market that includes your IP by the end of this year given cycle time. So I think they had some chiplet stuff and maybe some custom DSP stuff. Is that the sort of thing you are talking about, or is this truly something that includes a big portion of your IP that you have been able to, you know, turn around since the deal closed?

Cristiano Amon: Look, I think two answers. So we have—I am pretty positive for the past several quarters we have been talking about engaging with customers in the data center. So I think when we start engaging and talking about some of the QUALCOMM Incorporated capabilities, it is probably even before the acquisition of Alpha Wave. I think the acquisition of Alpha Wave increased our execution capabilities and the portfolio of IP. I think you should expect that we are going to have longer multi-generation agreements with companies that bring a lot of QUALCOMM Incorporated capabilities to the table.

I wish I could provide more details, but like I said, I do not want to front run what we are going to do on ’24. But I think we will provide a detail of everything we are doing, our customers win, and our roadmap and our IP.

Timothy Arcuri: Thanks a lot. And then I guess just as a follow-up, is the assumption still the same around your share at Apple. I know there are some signs that there is going to be a little more aggressive displacement. Is the assumption still that it is going to be 20% for the new launch? Thanks.

Akash Palkhiwala: Yeah. No change, Tim, to our assumption there. We have said 20% share of the phones that will launch in fall this year and no product relationship beyond that. And this assumption has been consistent for the last couple of years. In terms of Apple product revenue for fiscal 2027, we have seen sell-side models in the range of a little over $2 billion in terms of QCT product revenue in the year, and we think that is a reasonable place to model the business.

Operator: Our next questions are from the line of Joe Moore with Morgan Stanley. Please proceed with your question.

Joseph Moore: Yes, thank you. You alluded to weakness being more in the mid tier and the premium tiers being stronger. Is that something you can see where you are sort of taking limited memory allocation and that sort of drives just the sort of limit that puts in the higher tier. Just what are you seeing in terms of what that is doing to your mix going forward?

Akash Palkhiwala: Yeah. I think the actions from the OEMs are obviously very logical. If you had to choose between which devices you put your memory allocation to, you would pick the premium and the high tier. That is where the profitability sits, and that is what you are seeing happen in the market.

Joseph Moore: Okay. And thank you. And you talked about 6G and 2029. I mean, what does that timeframe represent? Is that sort of introduction of technology? Is there shipments then? Just anything you can tell us about when 6G starts to become relevant?

Cristiano Amon: Yes. And look, thank you for the question. The reason I brought it up is because 6G is going to feel very different than the other Gs for QUALCOMM Incorporated. I also believe that 6G creates some very interesting sovereign AI and data center opportunities for QUALCOMM Incorporated as well. You should be thinking about our timeline—and we have been consistent with it. We will have prototype, I think, demonstrations in 2028. Likely we are going to have first silicon in 2028 and we want early launches in 2029 and then we expect that to get scale by 2030.

Joseph Moore: Great. Thank you.

Operator: Our next question is from the line of Ross Seymore with Deutsche Bank. Please proceed with your question.

Ross Clark Seymore: Hi, thanks for letting me ask a question. I want to go back to the handset side. If you could just level set us to whether it is the fiscal second quarter or fiscal third quarter, what percentage of handsets is China? And you mentioned that a lot of the dynamics is how far you are under-shipping versus true demand. Are you believing that true demand, whether it is China or elsewhere, is truly weakening still? Or is that side of the equation stabilizing despite the memory fears?

Akash Palkhiwala: Yes, Ross, when you think about the total handset market, and this is more of a QTL comment, right? That is where we are seeing that there is a slight decline in mid-low tiers, but the overall scale of the handset market has not changed much, at least in March, and we are going to obviously closely monitor that going forward. In terms of QCT shipments to Chinese customers, it is a factor, as I said earlier, of two things. It is not just the scale of the handset market, but the OEM decision to draw down on channel inventory.

And so my comments earlier were about the drawdown of channel inventory will end soon, and that is us calling the bottom on the quarter. And then really, our shipments will reconcile to the size of the handset market.

Ross Clark Seymore: Okay. And I guess, my follow-up question, shifting gears to the automotive side of things. You mentioned about the ADAS side starting to ramp and growing 50% this year, or at least in this next quarter, so doing very, very well. As you go from more of a cockpit business to the ADAS mix increasing, how does that change the revenue trajectory and perhaps the gross margin trajectory in your automotive business?

Cristiano Amon: Yes. Hi, this is Cristiano. What you see is it accelerates revenue dramatically because it is a lot more silicon content. That is true actually on both sides. What you saw is when we went from generation three to generation four in digital cockpit—the car is really becoming a computing surface. We saw a step function increase in the capability and silicon, and you should expect another one when we go from fourth generation to fifth generation. And as we add processors and you start to see more and more development of L2++ in direction towards Level 3, you are starting to see the amount of computing power going up.

So for us, it is basically a revenue accelerator within automotive.

Akash Palkhiwala: And specifically on your question on gross margin, I would highlight maybe two additional factors to what Cristiano said. I think we are transitioning from a chip sale to a SiP sale. And so as we go to a module, it increases the revenue opportunity for us as well. And then in addition, we have software opportunity on top of the chipset, which also helps our margin profile. So net-net, we still model the business in line with our corporate average, but it really is a business that has several vectors of growth as both of us are implying.

Ross Clark Seymore: Thank you.

Operator: Our last question is from the line of Vivek Arya with Bank of America Securities. Please proceed with your question.

Vivek Arya: Thanks for taking my questions. For the first one, Akash, you mentioned Apple product sales, I think $2 billion plus for fiscal 2027. What about the royalty contribution? How does that evolve as you approach the date for renegotiating that business?

Akash Palkhiwala: Yes. So pending the renegotiation, royalty, we do not expect it to change. Right? It should be in the same scale that it is at, and it is an independent business separate from the chip business.

Vivek Arya: Okay. And for my follow-up, Cristiano, back to the hyperscaler discussion, I realize you will give more details at Analyst Day, but is QUALCOMM Incorporated’s intention to approach this from an ASIC perspective? I thought you planned to enter the data center from a merchant perspective. But are you saying that now the goal is to approach it from an ASIC perspective? And if that is the case, what impact does it have on margins? Like, are you really going to compete head on with the other ASIC suppliers that are out there? So this is going to be more kind of a one-on-one type approach to the market as opposed to approaching the market in a broader merchant way?

So just what is the broader strategy, go-to-market strategy that QUALCOMM Incorporated has in this business?

Unknown Speaker: Very good

Cristiano Amon: great question. I think the answer is all of the above. Look, first of all, as a new entrant, we are very flexible. But we also look at the reality of what is happening in the hyperscalers. You can see that the majority of the revenue for semiconductor companies is heavily concentrated in a few very large companies. And those companies have now indicated clearly they have different—as the data center gets disaggregated, you have different approaches to compute and to connectivity. And you should assume that QUALCOMM Incorporated will play in merchant and in custom, and it is going to be a combination of how we configure our IP and different IP blocks for different solutions.

It is going to be a bespoke business.

Akash Palkhiwala: And specifically on your question on this custom engagement we talked about, we do expect that to be accretive at the operating margin level.

Operator: That concludes today's question and answer session. Mr. Amon, do you have anything further to add before closing the call?

Cristiano Amon: I think the obvious thing I want to say is to please ask everyone to attend our June 24 Investor Day. We intend at the Investor Day to really highlight not only everything that is happening with the new QUALCOMM Incorporated, but also the details of the products and technology we have been developing for the data center space, provide an update on how physical AI is transforming our business, and provide the clarity that we have today on how agents and agentic experiences actually have a broad implication in our entire business.

I am looking forward to speaking to all of you, and I would like to thank our partners and our employees for a great quarter as we continue to transform QUALCOMM Incorporated. Thank you very much.

Operator: Ladies and gentlemen, this concludes today's conference call. You may now disconnect.

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