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tv   Whatd You Miss  Bloomberg  November 16, 2021 4:30pm-5:00pm EST

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caroline: from bloomberg's world headquarters in new york, i'm caroline hyde. today, the s&p 500 closing within a whisker of a record high. one company that managed hit another record was qualcomm. earlier today, a bullish sales forecast. over the next 30 minutes, we're going to sit down with the relatively new ceo. he is not new to the company. he is going to be laying out his
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plans on how he will move the company forward by seizing on the high growth opportunities not only in but automotive, home, the meta-verse. this discussion comes amid the global chip shortage that can remain pervasive. we start with one of the highlights from his presentation. taylor: helping pushing the shares to a record high. some of the big takeaways. traditionally think mobile phone. you think that is where the majority of the revenue is. you are starting to look at a lot of this diversification. there is saying auto industry sales could hit three and half billion dollars by 2025. this is according to some of the bloomberg estimates. rarely showing that anything next few years, going to be some of this diversification growing -- diversification paying off. romaine: there was a lot of investors doubt earlier in the year. he talk about the performance of the stock over the next -- the
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four weeks or so. more than 40% over that time. you can see the spike on the far right of your screen. the second best performer in the s&p 500. it gives you some sense investors are starting to think some of the issues they thought were plaguing this company, maybe the guidance on the leadership is responsible for that. caroline: let's get more guidance from the leadership. we are happy to welcome the president and ceo. it is wonderful to have you in the studio. thank you for your time. i love you stated we are no longer defined by a single end market and a single customer relationship. this is about diversification for you. >> absolutely. today is a great day for qualcomm. the overall industry is moving toward technology. creating incredible opportunities to diversify. we have always been the company driving the technology and innovation cycle. as we are going to get billions
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of devices connected across automotive, it is a great opportunity for qualcomm to grow and diversify our customer base. romaine: we're at a stage where there is basically a chip in everything. investors have in concerned you are too wedded to smartphones. that there's this whole other universe here. when you make that transition, is it a transition or you have the technology and expertise and it is a matter of moving into a new market? >> the reality is the speed of digital transformation of our industry is moving toward technology. what is unique about qualcomm, we can diversify leveraging our one technology roadmap. we finished this fiscal year with $10 billion of non-handset residue -- handset revenue. with the real message is, we used to look at a company being mobile. we have a 700 billion addressable market paired mobile
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technologies go everywhere. it is one of the fastest growth of adjustable market and that will drive the diversification of our revenues. taylor: does it drive the bottom line? you think about the internet of things, this new meta-verse. can that be a higher margin business? >> absolutely. there are many drivers of margins. one of the things we did about a year ago, we would talk about the semiconductor business. today, we upgraded to 30%, 30 plus percent. the reality as we get skilled -- we get scaled, as we go to some other opportunities, we can capture more of the value. it is really an exciting diversification plan. we are investing to diversify while expanding margins that is a great story for our shareholders.
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caroline: plenty of other ceos giving messages at your event. mark zuckerberg among them. pumped on the meta-verse. so much they rebranded their entire company. how quickly is that being rolled out? they sold 10 million units. that over the course of a year? how quickly are we getting that much of in our homes? >> we are very optimistic about this because we invested early. it was hard to create a technology that allowed us to wear something that allowed us to go -- to be part of connecting digital and physical spaces that is why snapdragon is in virtually every single device. 50 devices today. virtual reality or augmented reality. the reason we are bullish on this, we believe when you look your phone today, the screen is the limiting factor. there's so much more you can do but you are limited by the
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screen. i can see a future when everybody will have a companion glasses you will wear. this opportunity could be as big as the smartphone itself. romaine: how are you moving toward that? you're talking about a world that for a lot of people is hard to envision. even some of your potential customers may be do not necessarily have that vision. had you move people toward that? ? there is a simple way to describe this. i will give you a technology insight. the meta-verse may be different for different companies. i believe the company meta-has one way to think about it especially as their number one asset is social and how people socialize. if you go all the weight to the enterprise cloud like microsoft, we have been working with microsoft for more than one generation. it is about the application on the enterprise. you have access to training. you can do remote operations and
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many things like that. it will manifest itself in different ways. you are going to need a device that is going to connect you or superimpose images. that is what we do. i will give you a little glimpse of the future. today, we talk about can collaboration. -- about collaboration. zoom became a verb in many linkages. you can see a scenario not that far away, you could be wearing a glass. you can render a person in front of you. the glass consents from your face what your facial expressions are. just how we communicate, i can see an application for that. taylor: one of these days i will learn how to get on board with that. take us back to how you are talking about this diversification into some areas while maintaining the margins and the market share within the existing home base.
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the threat of competition, the threat of substitutes, the pricing power. how are you thinking about competition substitutes and the pricing power you have? >> you have to start thinking little bit different. i think that conversation was very common associated with qualcomm when companies will just look at qualcomm in the mobile space. we look at a mobile market and you will think about it. how many customers do you have? how many of those customers are developing their own chips? you need to look at the situation a little bit different. we are growing in android as one of the fastest growth opportunities for us. with new customers like in china -- show me show me is the number two in the world. we create automotive spirit a whole new set of industries. new set of competitors. we are uniquely positioned. romaine: could you say is your primary competitor? >> it is hard to pinpoint because i have different
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competitors in different markets. what is unique about qualcomm is we are going to be everywhere. the easiest way to answer your question is qualcomm is competing with everyone else now in the semiconductor space. caroline: the ceo is speaking with us. coming up, we are going to be discussing a little more about the supply chain and the challenges and how he has been overcoming them. why companies are looking at moving operations closer to come. -- closer to home. this is bloomberg. ♪
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romaine: today, we are focused
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on semi conductors. every day, we are focused on the supply chain issues. those two have intersected significantly. chuck schumer announced plans to jumpstart action on the stalled 250 billion dollar bill aimed at spurring chip manufacturing here in the united states. taylor: we have been focused on the infrastructure bill appeared we have not been thank enough attention -- paying enough attention to the annual defense spending. looking to spur r&d. looking to spur r&d. looking to increase domestic chip manufacturing and is part of a national defense authorization because in order to help the u.s. better compete with china as we think about reassuring back some of this manufacturing to the u.s. let's do all of this and more and discuss this push for near shoring with the founder and president of ellomay capital to, a firm specializing in
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manufacturing strategy and supply chain transformation. perhaps some of the skeptics are wondering how this happens fast enough and in time. it sounds great to talk about manufacturing in the u.s. but doing it is a different story. >> very true. it does take some time. the smarter companies have been taking steps all along, but even if not, they are jumping on the bandwagon rapidly. i have a client that is planning to move 80% of their production from asia to north america within the next year. caroline: is it right to do this? does it benefit the consumer? >> absolutely. near shoring and reassuring. reassuring is moving production back to where it may have been
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originally like the u.s. as an example. near sure he -- near shoring is moving it closer till your customers. which in many cases is the same thing. with these disruptions that have an happening in the supply chain based on the pandemic, we have discovered there is way too much risk and lengthy lead time in our supply chain. if we can near shore and reshore, can produce closer to our customers. we can more rapidly respond to changing conditions. if there is one thing happening today, it is that change is here to stay. romaine: there has got to be some balance with regards to pricing. the big knock on why we don't have more u.s. manufacturing is the idea consumers might balk at having to pay more for their goods. the cost differential between what we produce here and what we can produce here versus what may be some of the countries in asia
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and latin america can do is a pretty wide golf. i'm wondering if that is strained to narrow with the cost proposition becomes more favor to consumers. >> it absolutely is. it depends on what kind of product we are talking about, but for labor-intensive products, most manufacturers are looking at latin america because labor costs are going to be lower. for non-commodity prices, none labor intensive products, labor costs are largely in alignment and even favorable, especially if you consider that we have in reducing the amount of people required to produce products, and that is happening in asia as well, and now we are further strengthening that. there is less -- of the labor component is not significant.
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the transportation cost, inventory cost -- there are all sorts of costs that get added in with the lengthy supply chain. taylor: talk to us about the inventory costs. the cost that once you start ramping up, this on shoring once we get there, the problem it hits perhaps when a lot of the supply chain issues have been resolved. are you thinking that the demand for chips will be more never-ending? >> i do think the demand for chips is going to be never-ending in the foreseeable future because we are digitizing not only our supply but our lives. with that said, there is overall consumer products are going to end up with a glut of inventory somewhere along the line because there is a significant amount of inventory in transition coming from overseas. there are also folks who are reassuring. you're right there will be inventory piles somewhere.
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this mark companies are building strategic inventory stockpiles and those make a light of sense ongoing. caroline: let's bring back the qualcomm ceo. let's talk about your strategy and how you have weathered what has been an extraordinary supply chain storm and how you think about on shoring and using foundry bases in the united states. is it necessary? >> we already do. one of our suppliers, samsung, a large portion of the chips we buy from them are manufactured in austin, texas. where the buzzed -- the most diversified of the companies. one thing we did early in the supply chain crisis, we designed our product across every available capacity of with every single foundry in multiple locations trade we put at -- multiple locations.
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semi conductors will continue to increase. it is part of moving the bar of digital. a resilient ngo diversified supply chain is very important. we have been public about it. if intel develops their process, we would be more than happy to work with them. we are working with tsmc. we are working with intel and we have to work with intel. you have got romaine: to be in a lot of different countries. does it make sense at all to centralize any of that production or should it be spread across these nations? >> the reality is you cannot just focus on one single semi conductor technology and say we are going to bring this particular technology to this location because i can ship a very advanced chipset for a phone and it will have a four
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nanometer chip but it has a chip that controls the battery. so the important thing really is to think about a global interconnected supply chain. is to have a geo diversified and resilient. the answer to your question is certain regions or countries are likely going to specialize on one technology or the other. the important thing is to have enough of it and in multiple locations. taylor: we were speaking with a supply chain analyst who says he is starting to advise his client and i know it is much more complicated than your world but where you make the good, you assemble the good and you sell the good. no more of this because the ports and the lines are getting too complicated. does that work in your business? would like you said, it is too complicated that you cannot make and assemble and sell the good in one country. >> it does not work that way.
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i will give you an example. when you talk about the amount of investment that is required to build advanced semi conductors -- let's focus on advanced semi conductors. right now you see countries like taiwan with tsmc and south korea with samsung having the lead in semiconductor manufacturing. intel is going to be closing the gap. the order of magnitude of investment is very high. look at what is in the united states. look at usmc -- at tsmc. you have to put that investment in the process will become obsolete in a few years. we are talking about a global scale. if you look at a company like qualcomm, our suppliers are in japan or in korea or the united states. build somewhere. you assemble somewhere else. usl -- to sell somewhere else.
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romaine: in conversation with the ceo of quad,. -- of qualcomm. we are going to ask him about this new partnership qualcomm has with bmw. that is coming up next right here on bloomberg. ♪
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caroline:caroline: today, we are focused on all things chips. earlier, qualcomm and bmw announced plans to collaborate on building next generation drivers systems. romaine: computers on wheels p that is only going to get worse. you go back to my first car. a maxima.
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i think we have a graphic. this is really over the past 20 years at 18% of vehicles in 20th -- in 2000 contained chips. once we get into the future, the meta-verse, it will be 100% true caroline: i can't wait until i don't have to drug myself. taylor: i don't drive. let's do all this in more. let's get some final thoughts with the qualcomm ceo. still sticking with us. talk to us about this partnership with bmw. this diversification into the road of automotive's and the opportunity that percents. >> this is a very important milestone trade we have been building a record -- building and neighborhood time in automotive business. -- building in record time in automotive business. this bmw announcement, it is
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about bmw choosing qualcomm technology for their assisted driving and autonomy. that is a significant milestone. it is a validation not only of what we built, which is an additional chassis for the automotive companies. we made a bid. 15 days into the job it is -- into the job. it is validating, the expansion into autonomy. romaine: this is going to be a big deal not only for qualcomm but i think for all of us. we talk about all the supply chain shortages, you need the chips are that is basically the car now. appreciate you being here. the qualcomm ceo fresh off his investors day. caroline: wonderful to have you on the east coast heading back to beautiful san diego. -- on the east coast. heading back to beautiful san diego.
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what innovations we can look forward to whether it be in our glasses, or driving. romaine: i think what you learn is this idea of adapting. you thick about what qualcomm was 20 years ago, so much of a different company now. ♪ moving is a handful.
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announcer: in silicon valley and beyond, this is bloomberg technology with emily chang. ♪ emily: this is bloomberg technology. coming up, activision blizzard employees taking a stand, staging a walkout. this


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