Qualcomm has big dreams for its IoT and automotive units

By fiscal 2029, it aims to generate $22 billion of combined revenue from its IoT and automotive divisions – the former is expected to turn over $14 billion; the latter $8 billion.

That's quite the predicted growth trajectory considering where these two sit today.

IoT and automotive turned over $5.4 billion and $2.9 billion respectively in Qualcomm's fiscal 2024, accounting for almost exactly 25 percent of total chipset revenue. Handsets – Qualcomm's bread and butter – accounted for the remaining 75 percent, or $22.6 billion to put it in dollar terms.

These targets appear no less ambitious when compared against the outlook for the broader IoT market.

According to Transforma Insights, global IoT revenue – which includes the automotive market and comprises sales of connectivity modules, value-added connectivity, and applications – is expected to reach $934 billion by 2033.

Connectivity modules – which is where Qualcomm comes in – are expected to account for 4 percent of that total, which is more than $37 billion.

Ergo Qualcomm setting a target of $22 billion of IoT and automotive revenue by fiscal 2029 implies that it wants to capture the lion's share of that particular slice of the market, which is no mean feat.

The driving force behind these ambitions is Qualcomm's newly-unveiled diversification strategy, presented at its annual investor day this week.

Qualcomm splits out its IoT operation into different market segments, namely PC, industrial, 'other', and extended reality (XR). The first three of these categories are each expected to turn over $4 billion by fiscal 2029, while XR is expected turn over $2 billion.

CEO Cristiano Amon mentioned during his investor presentation the proliferation of partnerships Qualcomm has established in the automotive and IoT verticals, noting in particular that it has a design-win pipeline worth about $45 billion in the automotive market, and has scored 58 design wins in the PC segment.

"We're starting to see that Qualcomm is becoming increasingly relevant to a number of different industries," he said.

When combined with its handset business, Qualcomm reckons the total addressable market for its products could be worth around $900 billion by the end of the decade.

"Qualcomm's focus on diversification and industry-leading technology roadmap has significantly strengthened the company's growth profile," Amon said.

Of course, all Qualcomm's hopes and dreams hinge on the broader performance of these various sectors.

According to the most recent stats, the smartphone market continues to recover, but global PC shipments slipped 2.4 percent year-on-year in Q3.

Meanwhile, figures from S&P Global put new car registrations at north of 7.5 million worldwide in October, up 5.8 percent on October 2023. Every major region apart from Europe saw growth.

Almost everything appears to be tracking in the right direction for Qualcomm. However, the current macro economic situation is nothing if not unpredictable.