Qualcomm Expects $1bn From IoT Sales This Year

Matthew Broersma,

Qualcomm’s figures underscore the rapid expansion of connected gadgets into all areas of life, even as smartphone sales level off

Qualcomm has said it expects chips from smart watches, connected speakers and other “Internet of Things” (IoT) devices to bring in more than $1 billion (£770m) in sales this fiscal year.

The company produced the figures as a way of persuading investors that it can diversify its revenue sources outside of its core area of mobile phones, following the collapse of a $44 deal to buy Dutch chipmaker NXP Semiconductors in July.

But the projections also shed light on the rapid expansion of internet connected devices with advanced processing capabilities into all areas of life.

Qualcomm Stand MWC 2016Connected gadgets

Qualcomm said IoT devices make up about one-fifth of the $5bn in revenue expected from outside the mobile market, where sales have levelled off in recent years, with smartphone shipments showing their first-ever decline earlier this year.

The remaining $5bn is from areas including networking chips and automotive processors, Qualcomm said.

The company said its chips now power more than 200 kinds of wearable devices and 1,300 different wireless headsets, earbuds and wireless speakers.

Revenue growth from chips for wireless, internet-connected cameras are expected to increase by 120 percent this year over last year, Qualcomm added.

The company had intended to buy NXP to expand its presence in the growing market for chips built into automobiles, but the deal failed to gain the approval of Chinese regulators.

Royalty row

Qualcomm is the leading provider of microprocessors for phones, with its chips powering most high-end smartphones, and is also one of only a few major providers of smartphone modems.

The company is embroiled in patent battles with Apple – one of its biggest customers – over the patent royalty fees Apple pays Qualcomm, a spat that has led Apple to remove Qualcomm’s modem chips from its upcoming 2018 iPhones, according to a report.

Industry journal DigiTimes said Intel is likely to supply all the modems for Apple’s 2018 iPhones, but cited sources as saying that the iPhone maker is likely to return to Qualcomm for its 5G modems.

It would be risky for Apple to use another provider for the next-generation modems, since Qualcomm’s 5G chips are already relatively stable, the report said.