Qualcomm CEO Cristiano Amon on the Earnings Beat: DeepSeek, Tariffs, and Why China Looks Good

I spoke with Qualcomm CEO Cristiano Amon in an exclusive video conversation about Q1 fiscal 2025 earnings. Revenue and earnings beat expectations, guidance for the current quarter also beat consensus, but the stock was down after hours.

I asked Amon about trends in the business and the trajectory of technologies that would impact Qualcomm's growth. Here's an edited transcript:

ON THE PROGRESS OF AI PCs

"U.S. retail, 10% share on sales of laptops above $800, which is how we started with X Elite. That's very good. If I put it in context for you: On an investor day last year, we said by 2029 you know, we outline our plan for five years to grow, 22 billion of non-handset revenues. For 2029 on windows PCs, we said 4 billion or a $35 billion SAM. That's about a 12% share. That means we're tracking great. And and then when you look at PC overall, in the quarter we’re showing the designs continue to increase. We now have a new product for a $600 price point, which will expand the addressable market. So we'll keep going."

ON HANDSET STRENGTH

"When you combine handsets, auto and IOT, this is the first ever $10 billion quarter for QCT, and handset is a big component of that, especially premium tier. So if I unpack that to you: Why did we do so well in the first quarter in handsets? The first one? It's not necessarily a China story. It's the fact that we are now 100% on Samsung Galaxy S 25 series. I think we're supporting the platform for all the Galaxy S 25 globally. But the second one, it's a very strong result in China. And I wanted to describe this number one, Snapdragon 8 elite is doing very well."

ON CHINA

"Our customers are gaining share and the premium tier is expanding. And this is all end customer demand it is end customer demand, it is not channel. And and that's a great story. And it's also reflected in our guide for Q2, which is above revenue and consensus on EPS."

ON AUTOS AND TARIFFS

"The good thing about the Qualcomm auto business is it continues to be a story of converting the pipeline in revenue. So I think this is another record revenue for auto: 61% year over year growth, compared to fiscal 24. But Qualcomm is designed across the entire automotive industry. We’re designed with virtual every single OEM. So we're not depending on one or another car or model. The second thing is the technology is becoming so relevant for cars that even at the premium tier, when you expect those silicons to be at a at a premium, we just announced at CES Snapdragon Ride Elite for ADAS and Snapdragon Cockpit Elite. And design traction is increasing. The pipeline is actually increasing. We're not disclosing a new number. So we're actually optimistic about the story of auto to continue. And while it's early to tell about tariffs, I think the technology that we built, it's very relevant for the automotive industry."

ON DEEPSEEK AS A TAILWIND

"What happened with DeepSeek-R1? It kind of shows that the next innovation cycle on AI, the models are becoming smaller. They're becoming more capable. They're becoming easier to train, they're becoming efficient. And they're very targeted, especially when you look at techniques, this, mix of experts. And they can run on the edge. Within days of the DeepSeek announcement, people were showing it running on Snapdragon phones, showing on Snapdragon PCs. As a matter of fact, Microsoft announced that DeepSeek-R1 is running on Copilot plus PC, starting with Snapdragon.

"That's an exciting development for Qualcomm, because what it shows is as models start to get ready for production – I think there's been a lot of creation of models, but as they go to production, they’re starting to have real commercial use cases. People are going to use any computing that’s available. And as those models become smaller, they can run on phones, on PCs, on cars. That will create demand for Qualcomm chips. So that is a great, I think, tailwind for our business. And it kind of materializes what we've been preparing for, which is designing chips that can run those models at the edge."

ON WHETHER QUALCOMM’S CHIPS IN $600 LAPTOPS WILL BE ABLE TO RUN DEEPSEEK, AND HOW LONG BEFORE THAT DRIVES CONSUMER DEMAND

"Look, that's an excellent question. Excellent question. And I have two answers to give. I think the first one: We made a decision that we're not going to compromise on AI. So if you look at what happened on PCSs: From the $600, Snapdragon X all the way to the 12-core Snapdragon Elite, we have uncompromised AI capability. So you're going to be able to run those models at any price point, because we think that's going to be a big inflection point. Now, let me step back and answer the question a little bit from a consumer use case. If you look at the announcement of the Galaxy S25 smartphone, the Android smartphone that Samsung just launched at Unpacked, compared to the Galaxy S24. The number of AI features and use cases doubled. So I remember when the iPhone just launched, and I asked people how long it took for you to switch? And people said well, I gave up my BlackBerry after one year or two years. And that's because you start to see new apps coming to the App Store. We love the trend. We love the trend. More and more use cases increase and eventually people are going to buy a new AI phone, buy a new AI PC in this development of AI with smaller models such as DeepSeek and others, and Llama. I think there are new models announced this week from Google. They're smaller models. OpenAI now, smaller models. This thing is great because those things are going to run on PCs, they’re going to run on phones, and that's going to drive people to say, I want to buy a device that has that AI processing capability. And again, that's the opportunity we've been looking for."