QUALCOMM Incorporated (QCOM) Earnings Call Transcript & Summary

All right. Good afternoon, I guess, or good morning out on the West Coast. My name is Matt Ramsay, the semis analyst at Cowen. And hope you're enjoying instantiation #1 of the Virtual TMT Conference. I think we're all trying to kind of figure that out for ourselves, but -- as we go. But super happy to have Cristiano Amon from Qualcomm. And most of you know Cristiano. He's the president of the company and also runs the chip business among other things. And with 2020 being the year of 5G, lots and lots of things to talk about with Cristiano. So thank you for joining us. And if you want to kick off with a few words, and then we'll dive right in.

Matt, happy to be here. I really appreciate the opportunity to be talking to you all. Yes, 2020 is still the year of 5G. And yes, happy to give you an update, I think, of how we're doing and in the current environment, talk a little bit about how we see the market and some of the opportunities ahead. There's -- I just want to say, this is a very unfortunate -- unprecedented situation we are living, but it is a privilege to be in telecom these days. I think connectivity is really enabling us to do just that. Everybody had stayed connected and productive. And we see the role of connectivity improving over time, and we're excited about that, the opportunity for the company within the next few years.

All right. Great. Well, just for the investors on the line, and I know we have quite a crowd for this one, I've prepared a bunch of my own questions. And then there's an interface, Cristiano, just so you know as well, there's an interface here where they have investors shooting me questions as we're talking here. So if I'm looking off to the side, I'm not watching Netflix or doing anything goofy on the side and that people are pinging me.

So I think just to dive right into a couple of things. And there's obviously the COVID situation that's happening at the same time that many of your smartphone partners and your carrier partners are in the process of and soonly anticipating to launch 5G devices around the world. The company, for the first time, since I can remember, hold the smartphone forecast for the year, and -- but at the same time, held in with a sort of 200 million unit forecast for 5G. I wonder if you might talk about the visibility you have in the 5G unit market versus the smartphone market overall and how device launch timings are looking in the U.S. and China.

Very good. It looks -- it's a very good question. Look, I would just start by restating, I think, what we said in our earnings call, we -- we're still maintaining the estimate for calendar '20 on 5G. We believe the units are unchanged in the range of 175 million to 225 million. Now let me give you some color, and I would like to start talking about China. China, it's -- even though every region will be different, I think China is an interesting model. It's a data point we have right now for the recovery. And if you look at what happened in China, we said in the December quarter that 19% of the devices sold and activations were 5G. As we go to the March quarter, that number went up to 30%. When we look at the May sell-in data, the 5G, as a percentage of the total devices, is now above the mid-30s, getting close to 40%. When we look at the product launches that happened within the quarter, 70% of the launches were 5G. So what we've seen in China is 5G, as a percentage of the devices, continued to increase, so even though the market, the overall phone market, it's going to be smaller than we thought because of COVID-19, what we see is 5G, as a percentage of the market, exactly increasing as we see in China. Now it's -- I would like to add the China -- some color to the China story as well. As we look at what happened around the world and I will talk consumer, and then I'm going to talk commercial, is many of the connectivity that we're seeing right now, especially in many other markets, there's a lot of people using their phones. So we're starting to see more use cases continue to increase from phone usability, especially some of the productivity use cases. A lot of markets right now, United States is a great example, some of the carriers removed the data limits and you've started to see unlimited data rates. We expect that's very likely to stay. That's associated with 5G plans. On top of that, from an operator perspective, if you believe that average data per user per month continues to go up, it's not economical to do it with 4G. So therefore, the resolve to upgrade the data to 5G is still there. And then my last comment on this. Just looking on what happened, and we have a whole conversation we can have later about some of the dynamic we see in the market overall impacted by COVID, one of the things that's started to be well understood is important of uplink, the importance of faster speeds, the importance of QoS and the ability to have SLAs, which is important for the commercial. And we saw, in the United States, some commercial and enterprise sales probably kind of reduced the impact on the overall consumer market because a lot of the stores are not open, right, so difficult for consumers to buy new phones. But we did saw commercial and enterprise sales up. So because of all of this, there's going to be puts and takes. I'll be happy to tell later about what we see in terms of the network rollout. But on the device side, we feel good about the units for the year, and we see 5G increasing as a percentage of the phones even in a smaller market.

Got it. That's really helpful, particularly the sort of real-time data points out of China from the month of May. What I wanted to pivot to really quickly, and obviously, you held the guidance for 5G units. And for the rest of the market, 4G, 3G markets, I think investors typically follow U.S., Western Europe, China pretty closely, but there's obviously some other really big markets out there, Brazil and Latin America, Indonesia, what's going on in India and the Middle East. If you have any -- as you think about the whole -- I mean it's important, obviously, for your chip business, but also for the royalty side of the business, what's going on in those markets. And I think we all read the headlines and maybe don't dig into those as much as we should do. So if there's any pieces there that you might be able to share for just how things are trending real time, that would be really helpful.

I will be happy to. Look, maybe it's worth going around the world and seeing kind of what's happening. And just before I go to emerging markets, maybe an update, I think, is relevant. In the developed economies, I think the infrastructure rollout of 5G is progressing, in some cases, accelerating. I would say, in the case of the United States, some carriers took advantage of the fact that there's not a lot of people in the streets. It was perfect to install infrastructure, and they're probably ahead by 1/4 of their buildup requirements. And that's -- we talk about China that's moving at full speed. I would say, in Japan and Korea, Japan launched in the middle of the pandemic, and Korea continued to see the rollout, including Korea Telecom announced the millimeter-wave. Now where are we seeing kind of a slowdown? I think Europe, it's a mixed bag. I think some countries that had not had auctions, like in the case of France, that's going to be pushed to the right. I think some of the deployments in Europe are also kind of impacted in terms of the scale because of uncertainty on the vendor side, given some of the existing tensions. So we expect Europe, well, from a rollout perspective, to be pushed to the right. And then that's also true in emerging markets. Having said that, the device ecosystem in the premium and the high tier already switched to 5G. And the best example I can provide to you is India. Xiaomi, 2 weeks ago, just launched the Mi 10 5G in India. There was a big launch for 5G. There is no 5G in India and ain't going to be one, I think, within this year, but the device ecosystem already switched to 5G, especially in categories such as premium and high, which are designed for the globe opportunity. Overall market, we expect to be smaller. I think based on the data we have today, we're calling 10% down, but it's -- we have -- that's based on the data we have right now. We're going to have to continue to monitor the situation. I think in emerging markets, you have a higher impact of lack of disposable income to buy phones, especially, because the credit system is not there and allow as much financing and subsidy from the carriers. But it's good for Qualcomm to be, on the mobile side, heavily weighted on the 5G side because it's probably going to be tough for commodity, lower-tier 4G units, where some of our competitors, I think, focus on. I think the 5G transition for all of the other data points I provided to you and the underlying, I think, long-term value of 5G, we expect that to continue.

Got it. I think one of the things you talked about on your last earnings call was watching the way that China had recovered from the virus in the months of March and April. And I guess every country or every region around the world will move at its own pace. But the way the market had recovered in China could inform how you guys are modeling or thinking about other markets recovering and coming out of that. And we've had another month, 1.5 months go by. Maybe you could just provide us some antidotes about how you're seeing other markets that maybe are important and recovering? Are they following that same path, or are some taking longer or some faster? Just getting a sense on how you're getting to that, say, 10% down for the market and what assumptions you're using.

Look, that's a very good question. And we're still monitoring the situation. Of course, the market, especially for us, is heavily influenced by China and the United States, the 2 largest economies. And I think sell-out data on the United States market is something we're going to be monitoring. I expect markets are going to react to a different pace than in China. But that's kind of the data point we have right now. We -- what I can tell you is we're monitoring this in real time, as I gave you just the month of May to sell-in for China. We don't have any data point at this point that will cause us to change the assumption that we have to restate the 5G units for the year and how we see about the market. Of course, the situation can change. But where we are right now, I think we maintain our call on the market for the year as well as the 5G units.

Got it. And I guess the other piece of that whole puzzle, there's the device rollouts and I guess, the demand side from a disposable income and all those other factors. But the other piece of the puzzle is the carrier launches of 5G service and their willingness or reluctance, depending on which carrier you talk to, to subsidize 5G units as they try to bring traffic onto their new 5G networks. Any thoughts there? Anything surprise you are different than you guys might have expected that might have changed since COVID around the way carriers may be rolling out networks other than maybe a couple of pushouts?

Look, on your prior question, let me give you a data point because I think it's -- I'm just looking right now to give you that's some real-time because it's a data point like many different data points. But CTIA, the CTIA during the last Board meeting, they reviewed a survey. Basically, they conducted a survey within the quarter. And it's showing -- a question was, what bills American consumers are most concerned to pay? The answer came, number one, utilities; number two, the wireless carrier bill; number three, rental -- rent payments; number four, cable; number five, credit card payments; number six, car payments. So wireless came at number two. So I think the -- we'll see. But I think the utility level of, right now, being connected and connected with smartphones, it's probably very high and that could be an indicator. When we -- to answer your specific question, when we talk to many of the carriers, they are still marching forward with the rollouts. I think the -- from a carrier, once you start a transition, just from the years of experience under a portion of my career work in a carrier, when you have a transition to a system, you're actually increasing your OpEx because twice the electricity bill for the equipment and you have transport maintenance. So once you start a transition, you want that transition to happen as fast as possible. We see, for example, in the United States, carriers talking to us about adding new bands as well as refarming existing 4G spectrum. So we think the rollout is moving forward. And we have not seen, or at least in the developed economies, indications for the carriers to slow down. Subsidies is a different story. I think we'll see how the market works, and it is just an economic equation at the end.

Got it. Got it. There's lots of variables here. I think we're all going to be watching over the next 12 months to see how this plays out. I think one of the things that, obviously, yourself and Steve and Akash have highlighted as the big financial driver for the company around 5G is revenue per MSM or ASPs within your chip business. Maybe you could just kind of lay out -- I know you talked about a 50% growth opportunity and I would think that the 5G units might even be more than that right now in the model, considering how much the ASPs have moved and the units are relatively small. So if you could just kind of walk at a high level through what increased content you're seeing, both in the modem and in the RFE stack, and then we can kind of go in and unpack it a little bit after that because I have a few more follow-ups.

All right. Very good. So we -- when we transition to 5G, I think we provide a metric of 1.5. And we told that our business, especially QCT, will see 2 major inflection points: one, that you started to see right now, when we reported our March quarter; and then the other one, throughout the end of the year, when we have another significant launch of a large customer. So when you look at those inflection points coming from incremental digital content as well as RF content, and I think by showing 50% growth year-over-year on RF front end, we kind of show in the last quarter that, that is happening. We maintained that 1.5, and it kind of works well, it's a good metric, works well in every tier. Of course, if you have 5G in a premium tier device or in a mid-tier device, the multiplier is still there even though the dollar content will be proportional to the chipset ESP for that tier. The modulation of the 1.5 is really kind of averaging out of the tier. It is true in markets that you have more millimeter-wave attach. We started right now with the United States market millimeter-wave attach, but we just saw Japan launching, Korea launching. So that kind of started changing that equation. That moves the number up. So it's a much higher content than sub-6. Also, the difference between when you have a China device with only China bands versus you have a global device that has multiple bands. So that modulates, but in average, it's 1.5. We've seen that inflection point on the business and we expect to see another one as we get to the end of the year.

Got it. I think that's a good place to start. And obviously, the numbers have shown it out so far. Some folks have asked me to post the question how much of the ASP jump are you seeing like-for-like that may be due to the increased features of the modem versus the addition of the RFE stack. And I'm just trying to understand the pieces of the big ASP jump that you're getting from 5G.

All right. We are not breaking down between the RF and digital, but I can give you some, I think, qualitative, I think, data points. It's really on both. So on the Snapdragon side, on the MSM, we're seeing, of course, increased modem content and there's more value there. Think about adding a 5G on top of a multimode 4G modem. But also, there has been other drivers of growth. When -- consistent to what we have seen in our premium devices, as you add more bandwidth and speed, you add more GPU, more on-device AI, you add incremental capabilities on cameras. And I think we have seen an overall increase on the digital side because of the new basket of technology that has come together with 5G. On the front-end side is also a key component, and for us, we have this modem-to-antenna strategy. So everything on the 5G, on the 5G RF chain, everything starting from the transceiver, all the way to the antenna, we have a Qualcomm component on it, and that also contributes to that ASP increase.

It's interesting you talk about millimeter-wave, and that's obviously a big topic given the price points that we hear out there for millimeter-wave modules. I guess a couple of questions. If you could talk a little bit about the pricing and not just the pricing of what kind of dollars you might receive from millimeter-wave modules, but also the value that those modules add. And you've given a couple of stats around the U.S. and Korea and Japan, but I think it is a pretty heavily debated topic with investors as to the proliferation and the speed of how millimeter-wave is going to roll out. And so any comments you have there would be, I think, really helpful for the group.

Yes. Look, and I have to say that, forgive me for saying it that way, but resistance is futile against millimeter-wave. I think 5G has been designed to be able to have -- use lots and lots of spectrum. You're not going to get to the full potential of 5G, especially some of the industrial cases, without millimeter-wave. Here's how -- here's a very simple way to describe, and I will paraphrase T-Mobile when they talk about the layer cake, very -- a way to describe. Over the many, many years, let's say, over 2 to 3 decades, the operator has been accumulating spectrum to different auctions, and now we have 65 different bands of 4G. All of that spectrum from an operator will amount to 1 or 2 channels of sub-6 when they convert using Dynamic Spectrum Sharing. All of these we have to aggregate to get 100 meg or 200 meg. Millimeter-wave, it's an 800-meg spectrum. So in some cases, even more. So for you to get that performance, you're going to go -- in millimeter-wave, it's going to happen on a global scale. It just takes time. And you have to understand some of the dynamics. For example, Japan, the country of Japan, if -- maybe we're going to show our age, but when you go back to the past, our technology that came during the time of PCS called PHS, it was a cordless phone system. The Japanese built cell sites 100 meters apart with fiber backbone. That's just perfect for millimeter-wave. You just drop in and you will have. Korea also had a large number of repeaters, when did they use, when did deploy cellular, so that they have a lot of indoor coverage everywhere. So you have like the infrastructure in place. Other places, like the United States, it takes time. It takes time. You have to -- the networks become more dense, and you'll have to go with site approval, site permits and you build it. And that's why, in the beginning, people won't see coverage, but it's going to happen. It's a matter of time. We -- in China, for example, we have now, in the conversations about trials, with the 26-gigahertz band, and it's probably not unrealistic to expect by 2021, you're going to start to see deployment of millimeter-wave in China. So 5G is going to use the existing spectrum, the new mid-bands and millimeter-wave in different countries that are going to deploy a different base, but it's going to happen in a global scale. It's just a matter of time.

Got it. Now I guess the -- you talk about a strategy from modem-to-antenna. There's a few questions that have come up about other folks potentially doing customized millimeter-wave modules or supplying third-party millimeter-wave modules. Is that something that you see happening potentially? Is it something that you would caution very much against for purely technical reasons? Would -- if those things happen, would you guys have to know about it being the modem on the front end? I'm just -- I mean there's a lot of speculation about those type of things and I imagine that you guys would have to have visibility into what's attaching to your modem at a minimum.

Thank you for your question, Matt. I get this question all the time. So I am going to -- I'm going to be very careful in how I provide my answer, but I'm going to try to point you to the right place because there's a lot in that question. Let me just say it this way. Data point number one, if you're using the Qualcomm baseband for modem and you're going to use that for millimeter-wave capabilities, in the same way that when you buy the Qualcomm baseband for modem, you own the chipset, it goes with a power management IC as well as a transceiver. You're going to have silicon content that go into millimeter-wave modules associated with that baseband modem no matter what strategy you have for a front end. Whether it's a Qualcomm-provided module, whether it's a third-party design provider module, there will be IC from Qualcomm inside the module. That's just the first fact. The second fact is millimeter-wave is a very complex technology. The reason we like millimeter-wave so much is because it points to what companies like Qualcomm can do. It's heavy with system engineering. You have to put multiple modules in the device, and there's a lot of real-time data that require a lot of signals from the system from the baseband for you to deal with coverage and hand-position all of those things. We started very early on this, and I think we have the best-performing module in the industry today. We also have started to identify a number of new features that are part of having the system solution, that -- such as Smart Transmit, for an example, that we've been talking about as being part of a lot of the FCC-type approvals from our customers that allow you to have significant DBs. There's a difference in millimeter-wave between coverage and no coverage. And I think Qualcomm will continue to have the leadership in the module. So I think we've been proving that from keeping our modules from multiple design generations because of the way it performs. And I think it's fair to say that the best-performing device you're going to find in the marketplace right now will be the one that has the Qualcomm module. It has been designed side-by-side, tuned and calibrated to our baseband. It does not preclude people to design their own module. But in that case, there will be Qualcomm IC that goes inside their modules as well. I think that's the best way to answer your question without getting into areas that I can't get into.

Understood. Yes, it's walking the tight rope there. I appreciate that. I guess following up on millimeter-wave, most of the debate around this topic that I've heard is, I would say, a barely near-term debate, right? What rolls out in the next 6 months, the next 12 months, the next 18 months and how does that move Qualcomm's revenue per MSM. There's a -- I would imagine a number of your longer-term shareholders that might care about a longer-term discussion around millimeter-wave. And I have -- some of my own industry discussions are that millimeter-wave, the underlying technology, is very much sort of a nexus of the 6G standards that are being bantered about and debated within the industry. And I guess the question is, how much of the investment in millimeter-wave is, I guess, intentional from the company in the near term versus something that sets up sort of the next decade cost of technology stack for the industry that you guys might be ahead of some others?

Look, that's a great question. I really appreciate the question. At Qualcomm -- and somebody -- I've been fortunate enough to be in Qualcomm for a long time and witness every one of those transitions. At Qualcomm, I think we take pride of being the first company in every single wireless transition that happened. And we expect that to be the same thing as we go from 5G to the next. I think one thing that set us apart is that we do a lot of the research in fundamental technologies versus being an implementer of standards. That's not what we are. We're not an implementer of standards. And that's why we have such a strong IP portfolio that supports our licensing business, and many of our inventions get accepted into standards just because of the fundamental research that we do. We started with millimeter-wave way before, I think, 5G. Remember, some of the investments we did, in some cases, even ahead of the market, in 60-gigahertz Wi-Fi. And -- but that it's associated with a lot of design of higher-frequency bands and the complexity to deal with that. I expect Qualcomm, especially because of our advanced R&D capabilities, to not only continue to have a leadership in millimeter-wave right now on 5G, but what's coming next. And I want to reiterate one thing. When you think of short term as well, what you saw in the market today is basically millimeter-wave in the United States. And in the United States, across the 3 carriers, if you want to build a premium device, you have to have millimeter-wave; even T-Mobile, that's a requirement. But you're going to start, the Japanese market now require millimeter-wave, that increases the attach and the regional distribution. You're going to see Korea. Korea Telecom announced at the end of this year, so therefore, you're going to require millimeter-wave in the devices. And you're going to start to see some deployments in Europe and trials in China. So I think we're going to see increase in millimeter-wave from where we are right now, just within the short period of time. But the complexity associated with those frequencies, I think that's really going to separate winners and losers in the wireless, I think, semiconductor competition because it is much more complex. And I point you to basestations as well. I think a lot of the vendors right now have different architectures for sub-6 and millimeter-wave. They could not yet come up with a converged strategy, and that's because of the complexity of dealing with those high frequencies. That's opportunity there as well.

I really appreciate that. I mean going back to the 10 to 15 years I've been following the company, the amount of R&D that's always spent well ahead of revenue as you guys sort of help define where we're going for this industry has always been something that I've paid attention to. I think just you mentioned in your answer there, competition and the competitive landscape going into 5G is a very different landscape than we were in 2011, 2012 going into 4G. Some folks have exited the market altogether. Some have -- now we have Huawei as a much high silicon, as a much bigger player than they were back then. There's a lot of differences. Maybe you could, I guess, talk about the competitive position of where you're at, not just on RF, but on the modem itself. And then just as a little side question, I did notice that, for the first time, Samsung's merchant chip business has won a little bit of share at OPPO and Vivo, which is quite a new phenomenon for their chip business. And I wonder if that teases the landscape at all.

Look, there's a lot in there. That's a great question. So just give me a moment. There's a number of different areas. I think we need to unpack that. So first, talking about the competitive landscape. Look, we always had a competitive environment, a very competitive environment in mobile. I'll argue, because mobile is the consumer electronic industry today, that's the smartphone and body, the entire consumer electronic with few exceptions, more and more use cases come to the phone, we -- and it's a very big segment, we expect that to always be very competitive. And competition is good. I think it keeps companies on their game and prevents a company from becoming complacent. And so -- and we always said that. I will argue that there's nothing in the 5G competitive landscape different than we expected. And I'll go back to what we said at the Analyst Day. In the Analyst Day, which we made a lot of projections about Qualcomm, where we're going to -- where we think about our long-term operating margin goals, how we think of our position in -- and even the number of units. And we said, we're not assuming any change in the competitive landscape we see today. So anything that changes is an upside for Qualcomm. Now let's go to the next segment. We look at competition 2 ways. So one is the competition that we have today with companies that have enough scale, you need to have scale, and you have to have other ancillary business for you to go vertical. I think we use this -- we hear this term "vertical" all the time. And we've been competing with Samsung internally. It's one of our largest customers. It is our -- one of our largest suppliers, one of our competitors. It's a complex relationship. But we're competing with their own solution. We've been competing with Huawei on solution. And here is what I'll argue. From all of the companies that are saying they would like to go vertical, I know there will be a question about their coming. So for all the companies that want to go vertical, the one that has the biggest chance of succeeding is Samsung. They have one of the largest semiconductor business. They're a strong position in memory. They have display. They have camera sensors. And they have an infrastructure business, including an infrastructure business that spans across the markets that Qualcomm are very strong, United States, Japan and Korea. What do we see in Samsung? We actually see, in the 5G area, our position accelerating, and we're upswing in terms of share with Samsung. And it's not like a situation that they didn't have an ability to launch 5G. They did launch 5G, but if you look in the current G S20, we expanded from our traditional United States, China, then Japan markets, into Korea. The device, 5G device, #3 in Korea, moved from their own solution to Qualcomm. On top of that, the Galaxy Fold globally is Qualcomm. The Galaxy Flip globally is Qualcomm. And we also have been working with Samsung for the A Series. So it's a very stable relationship. And I will argue that we've been competing with their internal solution. And I think the results are showing that if we can deliver a best-performing, I think, solution, we're going to gain share. So I will argue, in that case, the share is going into the right direction. On top of that, when you think about the China market, we see competition no different than we expected. We see competition from MediaTek, and we see competition from Samsung. If anything, it's going to be good to answer questions about are we going to have to compete with HiSilicon. There's enough competition already in China. You think about HiSilicon has to compete with MediaTek and has to compete with us and compete with Exynos, that's how we will think about it. But it's a good thing that everyone has transitioned to 5G. The way I look at that is the fact that we have competition in sub-6, especially companies that have been focused on the mid- and the low, is going to drive even more units of 5G. That's good for Qualcomm. And we have competed against those companies before. So I don't think, if anything, changes in the competitive landscape like the position that we are. And I will end with the last piece of that answer. The Huawei business has been impacted outside China. That's a fact because of the access of Google software. And we see and we monitor this. Huawei devices are no longer ranged by the carriers outside China where they have been selling some of the legacy devices. They have access to Google, but new models, they don't have access to Google. Historically, if you pick a market like Europe, Qualcomm has not been, because we've been always focused on towards the higher-end devices, because as a market, there was Huawei with their own silicon, Samsung with Exynos, and then you had, in the past, Apple with Intel within the few design cycles. So Qualcomm was not a significant participant in the European market. When I look at the situation right now, the Huawei's exit, I see that as an opportunity, not only with the designs such as the Fold, the Flip and the A Series we won with Samsung, but also Vivo, OPPO and Xiaomi, high and premium, going into Europe provides an opportunity for us. So overall, sorry for the long answer, but there's a lot to break down. With the competitive landscape and the overall market landscape, I like it. We like what we see. It could be a good opportunity for the company.

Got it. I appreciate the answer. And also, I think I -- rather than follow up on the Cupertino internal modem development, I think I was able to glean from your answer like what the take would likely be. And so to take the conversation, just from the few minutes we have left, in another direction, there's obviously a lot of companies, I talked to some folks from Intel this morning in this forum, large sort of bellwether companies like yourselves, like Intel and others, that have a significant business in China. There's been different rules from the Commerce Department come down, some of which have threatened to really -- obviously, there's the direct rule with Huawei. There's other rules that are expanding the definition of what might end up being a military user in China and depending on what political glasses you want to read those rules for. The interpretations could be wide. I wonder if you might talk a little bit about how, the business that you have in China overall, how you characterize that relative to some of these new rules that have come down. And I mean, is it something that's a top-of-mind worry for you? I'm just trying to characterize how you guys think about it.

That's a lengthy question right there. Okay. Look, we -- I will only answer by saying we kind of have been very fortunate in this whole, I think, dispute between, I think, the United States government and Huawei. I want to emphasize that there is a dispute between the United States and Huawei, but this Huawei and China are not the same thing. Remember, I think Lenovo, it's a Chinese company, and it's doing great across server and PCs. We just, in the middle of this whole thing, launched OnePlus device at Verizon Wireless with millimeter-wave. So I think there's Huawei and China. I will argue that Qualcomm is kind of fortunate in the situation because we see ourselves, if anything, a stabilizing, I think, force between the 2 sides in the area that we operate, which is mobile. Mobile is global. So it's one global standard. There is no other standards. It's just one global standard. It's global across infrastructure and devices. Our model has respect of intellectual property, which is one of the demands of the United States. And so our model has that. We don't have a situation that we have -- our IP, we license the IP. We don't have to form JVs or things like that. We license the IP. That's -- it's associated with the United States, wanted to accomplish in Phase 1. We have export semiconductors, but also, we generate growth for China -- for the Chinese mobile ecosystem, not only within China, but outside China. If you look at Vivo, OPPO and Xiaomi, the export of those companies grow at a much faster rate than their domestic market. So it's kind of like a win-win. And I will argue, in the middle of all of those tensions, we renewed 2 license agreements, one with OPPO and one with Vivo. That's not a small thing. And we continue to expand our design portfolio globally. So look, those things, eventually, they're going to get stable. I can give you my opinion. I think my opinion is some of those escalations, it's designed to bring people to the table. But we just continue, I think, to grow with our Chinese partners. And like I said, just looking at what we said on the last earnings call, I'll say our China business is very stable, and like everybody else, we're monitoring the situation to see what happens.

No. That makes sense. It's definitely interesting times on that front. The -- and for me, personally, just hoping that technology drives the winners and losers rather than other factors. But I guess from -- one thing I wanted to make sure to hit before we bump up against time is there's so much focus on the smartphone business in 5G and RF right now but that there are some pretty big initiatives that are within your purview on adjacencies that Qualcomm is doing around the automotive business, around IoT, around an inference product that's on the road map. If you could spend just a couple of minutes on the growth that you're seeing out of those businesses and the opportunities for them going forward, that would be great.

No, very good. It actually brings a very important topic. I know we're almost at the top of the hour, but I would like to highlight this. If there is a silver lining in this whole pandemic, in this difficult situation that we're dealing with right now, is that it has created an accelerator of many things. For example, Matt, I can -- I believe you and I have been into different trade shows and analyst meetings and we look at presentations when people write all those different use cases, like remote medicine, e-learning, ready or not, this stuff is happening right now. And I think it creates a number of things we're seeing right now. One of it is the enterprise transformation of the home. For example, our Wi-Fi 6 business is a -- it's up by -- significantly. So if you look, we're kind of stable in our adjacents. While you see some markets definitely got impacted like automotive, car sales is down, some others are up. Wi-Fi 6, both retail and enterprise, is up as people are transforming their home into an enterprise. What we see right now is many of companies that were not ready for digital transformation, now that's at the very top of the agenda. That's driving a lot of interest from our IoT business, especially in our industrial IoT with cellular connectivity. And then I will finish by saying we're optimistic about -- I know it's a long journey. We're just at the beginning. But we're optimistic about our connected PCs as well. I think the conversation, if you ask me, the conversation quarters ago was the CIOs will look at the Microsoft Surface Pro X and will say, interesting technology, I need to understand when is this technology going to fit into my environment. Now with all of the legacy IT apps, now the conversation is completely different. How do I change my environment so that I can make use of those technologies that will connect my workforce. And they just look at Microsoft. It's an all-time high on Teams, Office 365 and OneDrive. So all of those things are going to drive more of the data to the cloud to drive connectivity and could be an interesting opportunity for all those new businesses of Qualcomm, both on the industrial IoT side as well as our connectivity networking and the PC. And maybe early, but we're also seeing a lot of good traction with our infrastructure business, with our small cell business, that we provide 5G small cells. And because of this acceleration densification and it could create this future transition to virtual RAN, it could create interesting opportunities for Qualcomm as well. So we are optimistic about what we see in the future just because of the role of connectivity in this current environment. We don't have to explain to anybody 5G use cases anymore.

No. That makes a lot of sense. For those in the audience who know me, well, you know that I get -- talk technology all day with someone as tenured and plugged in as Cristiano. So -- but I think we're bumping up against time here. Cristiano, I really, really do appreciate your time. Hopefully, the audience got a lot out of this. And if you have follow-ups, investors on the line, please do reach out to myself or the Investor Relations team at Qualcomm. And all the best in the year of 5G, Cristiano. Well done.

Thank you. Thank you.

Thanks.

Thank you so much. Bye-bye.