Ladies and gentlemen, please welcome Vice President, Investor Relations, Mauricio Lopez Hodoyan.
Good morning. Welcome to Qualcomm's 2019 Analyst Day. Thank you for joining us today. And before we get started, I'd like to thank all the Qualcomm team and executives that helped put this event together. And with that, let's turn to our Safe Harbor statement.
We will make forward looking statements in today's program, including statements regarding our expectations, projections and other potential future events. Actual results may differ materially from these forward looking statements. Please see our most recent Form 10 ks filed with the SEC for a description of risks and other factors, which could cause actual results to differ materially from these forward looking statements. Also, we will use non GAAP financial measures in today's program, and you will find reconciliations to the most directly comparable GAAP financial measures in today's presentation on the Investor Relations page at qualcomm.com. And with that, please join me in welcoming Qualcomm's Chief Executive Officer, Steve Mollenkopf.
Ladies and gentlemen, please welcome Chief Executive Officer, Steve Mollenkopf.
Well, good morning, everyone. Thank you for coming. I think this will be a good day today. So we're going to go through, you'll hear from a lot of speakers and look forward to telling the story. So it's been a while since we've talked to all of you.
And so we're going to spend a lot of time talking about 5 gs and the things that you would expect and look forward to it. So if we look at Qualcomm, who is Qualcomm? We're really the world's leading wireless innovator. We work on technology. We've led for 30 years.
We've led every generation of cellular. And our innovations are actually core to the dramatic transformation that really started with the smartphone and will end in, I think, any industry that wants to have connected things. Where are we? If you look at where we are as a company, we've been through a lot over the last 5 years. And the reason that we were so interested in making sure that we had the ability to participate in the upside of 5 gs is what you'll hear today really.
And where are we? Kind of where do we sit today? Number 1, we have the best products and the best technology roadmap that I think we've ever had in the company history. There was a lot of opportunity to be distracted. We really weren't distracted.
We were very focused on producing that. You'll hear from that you'll hear about that today. Our IP strength is unmatched and our financial strength really based on betting on ourselves is also I think a shareholder asset that we're quite proud of. And probably most importantly, we enter into the 5 gs era, which is a multi decade era with these assets intact. So it's a real, I think, story of opportunity for the company right now.
And why are we so excited about 5 gs? Because 5 gs is a big deal and not just a big deal in cellular. It's a big deal in every industry that you deal with. So with 5 gs, it's really the technology that not only disrupts the cell phone industry, but it disrupts every industry that's next to it. It's the first time really that cellular has had this big influence, not only in its home market, but also in new markets that are around it.
And there are large markets. So how big? We commissioned a study to talk about the economic impact of 5 gs to goods and services in 2,035. And the number is actually $13,200,000,000,000 of goods and services will be enabled by 5 gs. That was I think a $12,300,000,000 number only a couple of years ago.
So it's a very significant sort of proxy for the value that is created by the technology is really that $13,200,000,000,000 number. As I said, it's not just another handset upgrade cycle. There's a lot of great things that happen on the handset. You get in capacity, improvements in latency, improvements in data speed, improvement in the ability to deliver unlimited data speeds or data plans. But probably most importantly, you now have the opportunity to improve the connection density and the reliability of those connections.
So now wireless connectivity is really the fundamental technology that ties a lot of other industries. And it's happening. A lot of discussions about the 4 gs and 5 gs rates. The reality is 5 gs is coming along exactly as we thought it would do. In fact, it's happening faster than we saw in 4 gs.
If you look today, there are 40 operators that have already launched 5 gs networks. In the 1st year of 4 gs, that was only 4. So it's a significant thing and it's going to continue. You'll see we'll spend a lot of time talking about the migration of the 5 gs networks, how it happens worldwide and what you'll see particularly with millimeter wave and it's happening quite quickly because people see the underlying strength of the technology and the ability for economic impact they want to participate in it. So what does Qualcomm do?
So at a very high level, what do we do? If you look back at the history of the company, what we do is we invest and invent the fundamental technologies that make cellular happen. And then we scale that worldwide. We scale it through the standards bodies. We scale it through aligning the ecosystem of cellular and we scale it through our product business.
And today that sets up not only the opportunity in cellular, but the opportunity in all these other industries, the industries that enable that $13,200,000,000,000 So how do we profit? We profit really in 3 fundamental ways. Pretty easy, actually, if you think about it. Number 1, we make more revenue per device, either in the cost of selling the baseband device, the licensing revenue that we get or from increased content in that same device. RF front end fingerprint, great examples of additional components that we sell at a systems level into the device.
2nd is we have a growing opportunity to leverage that same technology roadmap that we produce in the smartphone space into new industries, while they're being disrupted by this change that we're enabling through the invention. And then 3rd and finally, out in time, our belief is that the future of the cloud and AI intersects with 5 gs. And of course, we're going to be waiting there to make sure that it's an opportunity for our shareholders. And let me give an example. So I talked about industries being disrupted by cellular.
Really, if you look 2 gs, 3 gs and 4 gs was really a story about the cellular industry with the exception of one industry, which was automotive, big established industry, established players, established supply chains and very, very attractive semiconductor opportunity for a lot of companies. But what happened was with 4 gs, gs, you started to see that supply chain and the technology systems of the car changing. 1st with telematics, so you connected the car to the internet. It changed who could play in the car. Great entry point for Qualcomm became a very good business for us.
2nd, the user experience, the way in which you drive the car, the way in which you service the car, the way in which the consumer interacts with the car is now really being driven by the experience that you've seen in the smartphone space. As a result, it's created an opportunity for us to not only sell modems into the cars, but now we can sell computing elements into the car as well. And we have a significant infotainment business, which we'll talk a little bit about today in terms of numbers. Now why did that happen? Why was that an entry point for Qualcomm?
It's because the computing that you're forced to do, the power consumption, the graphics rates, the real computing IP that's required in order to enable that user experience, which comes from the smartphone space, the traditional players really weren't prepared to deal with. And if you go at that industry without having the ability to spread R and D across a larger computing space and to do it focused on low power, you weren't going to be successful. So for us, what we saw was that we were able to go into that business and displace a lot of traditional players because we came at it really from the benefit of having the smartphone space. We see the same thing happening in ADAS. In ADAS, you've probably seen reports of us having kind of self driving cars around San Diego.
That's because we can take that same system expertise that we use in the smartphone, couple it with the IP roadmap and in particular, the low power computing roadmap that we have and offer that to customers. And so that's a budding business for us and we're excited to be able to extend that. So auto, big industry disrupted by cellular. The traditional players are at a disadvantage because they don't have the IP roadmap or the breadth of technology to compete and opens up an opportunity for Qualcomm. 1st of the the first industry to really have that happen, it happened actually in 3 gs and 4 gs, but will accelerate in 5 gs.
And it's a good example. You're going to see the same thing happen in many other big established industries. I'll point out to manufacturing and gaming. So manufacturing, the way in which you automate a factory and the benefit of connecting that wirelessly, big, big area of focus enabled 100% by 5 gs, can't be serviced by Wi Fi. Really, there's a lot of features that are added into 5 gs to allow the reliability and the really the latency required to make it happen.
And it's a big opportunity for Qualcomm. Similarly, gaming, the gaming industry will change from essentially a device that you're used to seeing on the like a console and it'll be much more streamed. You see that in China today and not it's not an accident that we are very closely enabling them to do that through really their streaming gaming service. You see that some of the $0.10 things that we have announced. It's a perfect example of the combination of 5 gs and the roadmap, the low power roadmap that we have that creates an opportunity for us to really leverage that existing IP.
And finally, if you look kind of down the road, what are you going to see in terms of the intersection between the cloud, 5 gs and AI? And our belief is that what you will see is really a second generation of AI and the cloud as the industry deals with the fact that there's so much data being created in people's business lives and their personal lives. And the goal is how do I make decisions, smart decisions about what data needs to go back to the cloud and which data needs to be addressed or make decisions locally. And of course, for us, that basically means the cloud, 5 gs and AI will live together at the edge of the Internet. Big opportunity for Qualcomm.
We think we're differentiated in terms of the way in which we go after it. And I think it's a big opportunity down the road for us to really benefit from that transition. So you put it all together, what do you see? You see, I think, a big expansion of our SAM in a way that we can address it without having to do anything that I think you're unfamiliar with us doing. Meaning, our roadmap, our core competency, the technology roadmap that we have from our cellular business enables us to go after some adjacent opportunities that really grow our business.
So if you look, we think we have about a $65,000,000,000 SAM today. In 3 years, that'll be $100,000,000,000 So a lot of opportunity for us, a lot of excitement around the opportunity for us to be able to go after the what 5 gs enables. Kind of summing all up, I think what you have to take away is we're very confident in our future. We think we have a great opportunity. As we've talked about, 5 gs is going to be a big thing for us and we have a technology road map that allows us to grow in adjacent businesses.
So you're going to hear about that today. And let me give you a quick road map of kind of what you're going to see. So Jim Thompson is going to come up. He's our CTO. He's going to talk about a lot of things.
He'll spend an opportunity really making sure you understand the technology roadmap that we have. And not only products, but IP and it's our ability to leverage that IP into new opportunities that I think you're going to enjoy. They'll also talk a little bit about the technology in our front end, obviously, an area of interest. Alex will talk about the licensing business. The way we think about the licensing business is that it is a lot of the hard work is behind us there.
We think that's going to be a good solid earner for us for a long time. And I look forward to Alex having the opportunity to talk. Cristiano will talk about the products, as you would expect, and the rollout of 5 gs. There'll be a couple of new things in there, which will be interesting. And then finally, we'll end with Akash.
She'll put it all together, try to wrap up the financials. But all in all, it should be a good story. We're excited to tell it. And thanks for joining us today.
Verizon, we are extremely bullish on this 5 gs transformation. In fact, it's the core of what we're doing with our network for our customers. Our collaboration with Qualcomm is long standing, and it remains critically important. They're a trusted partner of ours, and we can't do 5 gs without Qualcomm. We need them, and we love the partnership.
So we now have a spec. We've been deploying on that spec. And we have over 15 markets, right, as of the moment with 5 gs mobility in them, and we'll be at over 30 markets by the end of this year. And when I say 5 gs Mobility, at Verizon that means ultra wideband, millimeter wave technology, providing massive bandwidth and speeds. And we believe that that's a key differentiator that sort of makes 5 gs generational.
It's the G in 5 gs. So you can't just have incremental improvements and say that this is a generational lift. That's why millimeter wave is so important. So being first out there with millimeter wave showed us that it works. And it showed us that it works really, really well, which made us more bullish even on our deployment strategy.
So we're going fast, we're going hard. We're working with cities all across the country to place this equipment and bring the benefits to consumers, to businesses and to society.
Ladies and gentlemen, please welcome Executive Vice President, Engineering and Chief Technology Officer, Doctor. James
Hi, thanks. A lot of you don't know me, I'm sure. I've been at Qualcomm for a long time. I started in the CDMA project, and so that was very interesting experience. Lately or in recent past or for, let's say, the last 18 years, I've been Head of Engineering for QCT.
And then about two and a half years, I've been the CTO of the company, which means I've taken over all of engineering. That's what that means. So I have all of engineering at Qualcomm. So I think we have a pretty interesting technology story to tell. I'm going to start off going through our technology strategy and think of that as we have all these incredible assets from smartphone and we're applying them to other businesses, as Steve said.
And I'll explain how we do that and some of the things that we do with our products in order to make that happen. And then 5 gs, we have 5 gs leadership and the 5 gs leadership story is really about investing way ahead of the industry. I'll talk about that too. And then our mobile platform, I'm not going to there's many dimensions to our mobile platform. I'm just going to talk about a few of what I think are the most important parts.
Okay. So Qualcomm is really an innovation factory and that's has to do with the people, the culture, the organization and starting with the research, which so we have research teams that their time horizon is about 5 to 10 years. And you can think of these research teams as very similar to the original CDMA project that we had. So they're looking at technologies that go out fairly far. A lot of the work that they do feeds into the standards.
And the culture is very similar to what it was in the CDMA days when I was involved in that project where it's pretty academic, but it's grounded in practical business considerations, practical technical considerations. So it's very, very healthy culture, I would say. And then we've expanded that beyond wireless. So now we have an AI research team. We've had that for quite a while.
I'll talk about that. We also had a multimedia research team for probably almost 20 years now. So very successful teams. Then if you look kind of as the company grew, we started QCT way back when and QCT was pretty
small in
the beginning. We were doing 1 chipset a year. And then as it grew, it got much more complicated. We started out in one building and then we're in multiple buildings and then we're in multiple cities and then multiple countries. And so we have very large operation in QCT.
And so the culture there necessarily required that we be very focused on our customer on time delivery, predictable execution, which is very different than research. And so as that grew, we needed to, I would say, create some intermediate research groups, which we call technology teams. And so these technology teams, they're looking 2 to 5 years out. And these teams, we have probably 2 dozen of these teams. And examples would be graphics, video, modem development.
And so what we do is we have these teams that are focused on that. They work with research teams on one side and then deliver the products on the other side. So it's a very healthy environment. And each one of these three phases, each has its own kind of micro culture, I would say. But it's been very, very successful.
Okay. So our technology portfolio is really it's the best in the industry. And it really where it comes from is the smartphone. So as we were developing smartphone, we started working on smartphone 20 years ago around the year 2000. And so each one of these technologies that you see up on the screen are things that we initially started organically within the company.
Now I'll just tell you just go very briefly through it. So wireless, we're very well known for 4 gs, 5 gs, obviously. One technology I'm not going to talk about today other than right now is Wi Fi. So with Wi Fi, we actually have a fairly long history. We're doing quite we have very strong business there.
We're really one of 2 companies in the world that really drives Wi Fi. And our Wi Fi 6 products are just coming out. We have access points now. And since products are just coming out, we've had a chance to benchmark ourselves against that next best competitor. And I think we're doing very well.
And so I'm optimistic about our position in Wi Fi 6. I'll talk on RF front end. This has been a 10 year journey with some ups and downs. And I'm going to talk about that later on because I think that requires some detail. On the application processor, you may not be aware.
We're very well known for modem, but application processor, I think we're the strongest certainly the strongest company in mobile. Think we're the strongest company in the world. There's many, many dimensions to measure that. But like for example, mobile GPU, I think we're the best. We have the best AI dedicated AI processor.
DSP, I think we're the best there. Camera, video, a lot of these multimedia technologies are very strong portfolio there. And then there's other components that we do like fingerprint would be an example. But anyways, the real of the summary here is that we've got a very, very broad and deep technology portfolio. I need to talk about AI because it's something that is affecting everything that we do.
It's affected well, we've been working on AI for about 10 years. And we have a research team, I mentioned that before. And that research team is focused on energy efficiency or power efficiency. So that's something that maybe is different. So we have a different focus, very different focus than the cloud guys, for example.
So what we do is we have the centralized team, a research team and there's a lot of actually we're getting a lot of recognition from academic conferences and so forth at this point, because I think what we're doing right now, what we started doing 10 years ago is very becoming very relevant. So if you look at how we use that research investment, it goes into all those technology teams, virtually every technology team that we have is affected by AI. An example would be, for example, camera. So with camera, I'll just give you a quick example. If you're processing an image, if you process your face, for example, you would prefer to do that differently than processing grass.
You're standing on the grass. And so if you don't if you can determine what is a face and what is grass, what is sky, what is whatever, then you can process things differently and end up with a better result in terms of image quality. That's just an example of how we're using it all over in our technology all over in our technology teams. Also, we have something we call Qualcomm AI Engine, which is you can think of that is we're in our 4th going on to our 5th about to release our 5th generation. And that's hardware at the base.
So at the base there's CPU, GPU and then also dedicated AI processors that are super efficient. And then on top of that, we provide software for both our products today, like I would say, probably 90% of our chipsets that we sell have some AI component to it. So it's been a long term commitment and I think it's something that's very important to our future. Okay. So our technology strategy, like I said, is leveraging all of this technology that we've developed from the smartphone.
Everything that you use in your smartphone, everything you like about your smartphone is there. We own that technology. We can do whatever we want with it. And if you look, you'll see that every one of our adjacent businesses outside of mobile takes advantage of that technology, every single one. And so and then we also share products as well.
So there are products that we do for mobile that we pre plan to be used in some of these other markets. And I'll explain that. I'm going to give you an example, one example, and that's in automotive, which is our long most long standing adjacent business. So very simple example is telematics. So with telematics, that's modems in cars and at this point there's I think in the U.
S, it's more than 50% of cars are now going out the door with telematics capability. So what we do is we do a modem design, no application processor in it, a modem design. And then we pre integrate Ethernet, for example, which is not required in mobile, but we it doesn't take up much area. It's very simple to do. So we pre plan certain parts to go into the automotive market.
That's one example. So we can take advantage of the scale that we have in mobile and then just apply it to automotive. Infotainment, a little more complicated. Infotainment is a business that we've done extremely well in and I believe Akash will give you some ideas about where we stand in that, but we're winning almost everyone at the high end. And really it's surprising and it's not, because if you look at the strength of our technology, the application processor technology we have and we can apply that to automotive.
It's very powerful. Other competitors in automotive don't have the scale of investment that we have in those areas. So I'll give you just a quick example. So in a smartphone, you're running this one display and you might run an external display at the same time. So it's fairly limited.
But in an automotive product, it can be running many, many displays.
And also the aspect ratio of the
displays are much wider. And in fact, you might want to so And so there's those are just little tweaks to the design that we need to make ahead of time. And then if you look at instrument cluster, instrument cluster, that's the thing that tells you how fast you're going and gives you safety warnings and things like that. There are additional requirements associated with that because in instrument cluster, you want to run a safe operating system to run it and you want to be able to reset infotainment without affecting your instrument cluster because you don't want that to all of a sudden go away. So it's very important that it's safe.
It's considered safe from a technical sense. And so there are just simple things that we do in our design upfront in order to make it safe. And there's things like running multiple OSs. So you need to you have a safe OS, you have a like Linux, for example, on your infotainment. So you're running 2 different operating systems, you need hardware virtualization.
So you need to have that in the hardware and then you run a hypervisor on top. That's how you do it. And then there are things like context switching in GPUs. You need to be able to jump between the 2 without affecting the other display, especially when you have a safe display. And so there's a lot of things like that that we do that we build into the design upfront so that it can be supported for infotainment.
And so that's why it's very, very hard to compete with us actually in infotainment because of we make these little changes and then they go into the infotainment product. Okay. So ADAS is something that we're looking out to the future. We've been working on this quite a while and I don't think we haven't advertised it too much other than some of the taking assets and we're taking we're actually sharing some products with other businesses and we're adding the requirements in for ADAS. And I think kind of the one of the headliners for that, maybe 2, one is that anybody who uses our infotainment is going to have a platform that they're familiar with, that they can leverage their own internal development over to.
And then also we have neuro processing is something that AI is something that is very important to those customers. And we have a very, very strong position in terms of power efficiency. And that's something that for automotive, you wouldn't think it, but automotive power is super important because you don't want to have any active cooling. So active cooling is super expensive. If you can just bolt it down to the chassis and suck the heat out that way, that's much better approach to doing it.
So I think we've got a very, very strong story in ADAS as well. And then also there's a lot of different sensors associated with ADAS. Again, we're leveraging a lot of our technology and we're working on some of the sensors. So anyways, very I think very compelling story. I'm very excited about the automotive business.
Okay. So I'm going to talk about now 5 gs, our 5 gs leadership and that's mostly again a story about us investing well ahead of the industry. Okay, I can give you a little bit of a history lesson. We are been working on wireless for 30 years. So this is something we've been doing over and over again.
And I'll try to explain to you how we go about doing this. And it's very consistent every year from year to year and how we approach this. So if you go back to the CDMA days, we had obviously a very good idea. And in order for us to convince people, we didn't just write papers and things like that. So what we we had to actually design the system end to end.
So we created this end to end system design capability, which is very unusual actually. And then we had to build the system ourselves. So we designed it, we had to do prototyping of the system end to end and test the whole system and then demonstrate the system publicly, prove to people that it actually worked. And so if you think of that's our kind of our playbook. So we have that exact same playbook.
So as we went into 3 gs, of course, a lot of you know, DO, we did DO, which is very different. It was an IP based network. And we did the exact same playbook where we did an end to end system design. We prototyped the system, proved that it worked and then brought it to the standards. And so again, in 4 gs, we had an internal program called Ultra Mobile Broadband, we called it internally.
Again, there, that was an OFDM system, MIMO system that we then continued we brought that to then the standards collapse. So 3 gsPP and 3 gsPP2 collapsed into one thing and we brought that to the collapse standard. And again, in 5 gs, same thing. This time, some of the requirements or what we're doing is different, very different than 4 gs, but there also is a lot of leverage between 4 gs and 5 gs. So leverage like OFDM, leverage like some of the MIMO concepts, but it's done very different.
But the focus on 5 gs is extremely high efficiency, opening up new spectrum and then adding these new services that Steve talked about. Okay. So we invest this chart really is to say that we invest for the long term in these in wireless in particular. And we spent $60,000,000,000 so far in R and D, which is an astounding amount when that was all added up. I have to say I was amazed.
But if you look at how we organize ourselves, it's again we have this wireless research that's done and these teams do these end to end designs. And if you look at it's not just a group of people that walk into a room and go, okay, let's do an end to end design. There's a bunch of work that goes on prior to that informing that design. For example, we have decades, actually the entire history of the company, of teams working on channel coding, for example, which is a very important part of a communication system. Also MIMO, OFDM
or I
should say OFDM probably we've been working on that for about 20 years. And so that informed our design in 4 gs and then also 5 gs. So we have these think of it, we have teams doing end to end system design, but we also have research initiatives going a bunch of these research initiatives going in parallel that feed into that system design. And then that from that system design, what we do is we take, we prototype again, we prove the system works, we typically demo, we've done a lot of demos in 5 gs at Mobile World Congress. And then we take those designs into the standards.
And then ultimately, the standards produce a result and then we commercialize. And then I think it's probably important to understand that the fact that we commercialize after that, we create products. In part we have an advantage on the product side because we understand so deeply the technology, but then we also feed that back into the research that's going on to keep things grounded. So anyways, it's very virtuous cycle, I would say. And then maybe one other point I'll make on this chart is that you'll notice that when we when 4 gs was released or 5 gs was released, it wasn't just one release.
There's many, many releases like between 4 gs and 5 gs, there was 7 releases, I believe. And with 5 gs, my expectation is it will be very similar to that or maybe even more. Okay. So when we talk about our inventions, our innovation, we our focus is very much on foundational inventions. Foundation and what I mean by that is there are things that you can do with the standard or the design of 5 gs, for example, that make it much better.
The capacity goes way up. The data rates go way up. There's some vector of dramatic increases, say. And then there are pieces of the standard where there I would call them implementation details where there's 10 different ways you can do it. And so you can pick one of them and it doesn't matter which way you do it.
Our focus because we're doing the system design is really about these foundational technologies. And I'll just run through a few of them. Advanced channel coding, remember I said that that's really the heritage of our company. We have some of the best channel coding people in the world that work for Qualcomm. And with 5 gs, we picked LDPC as the channel code.
And so why does that matter? It's because we need to, 1, be able to handle huge data rates and also very different packet sizes. So really giant packet sizes for like a data transfer and then for voice over IP, very small. And so you have to have flexibility. You want to be able to support retransmissions if you say packets or the packets get lost.
And so there's a lot of innovation associated with that. Then massive MIMO, this is actually one of my favorites. So we've been working on MIMO for a long time. We had MIMO in 4 gs, but what's different about 5 gs? So that it's really the massive part that a practically implementable massive MIMO.
And what that means is what you can do is for a given piece of spectrum is you can get a lot more capacity from it. So traditional like 4 gs MIMO, what we would do is we would take we could produce a data stream or let's say up to 4 data streams and send it to a particular phone at a particular time and what only that phone. And then we would find another person in this audience here and we could send data 4 streams to that person, maybe 3 streams. Whereas with massive MIMO, it's also a multi user. So you can send 4 data streams here, you can send 4 at the same time, 4 data streams here, 4 data streams here, 4 data streams here and not interfere at all with each of those different data streams.
So what you can do is you can create in a sense hot spots at individuals' phone and then you can for the other person you're communicating with you can know out that interference. And so it's there's a lot of math associated with it, but it actually works quite well. So it's something that will improve the capacity of these networks. And then you don't have to put in new cell sites because they'll work in the same cell sites that exist. You also can get much better coverage from it.
Anyway, it's very I think a very, very important technology. Scalable OFDM, what OFDM is part of the physical layer and think of it as these tones that are transmitted in the spectrum. And if you want to go to much have a very wide range of spectrum going from say 600 megahertz all the way up to millimeter wave, you actually want different tone spacings. And so to do that in a it's very important that you have certain numerology so that you can reuse the hardware that you have in your so you don't make the modem cost super high. And then also you can you need to have the same tone spacing if you want to share spectrum with 4 gs and that's a very important concept as well.
So anyways, that's something that's very fundamental to 5 gs. Also millimeter wave, we've been working on millimeter wave for a fair amount of time, almost 10 years, I would say. And so we've I honestly, we started off with millimeter wave and I was a skeptic, but it's actually works quite well. Some of you have probably been to our campus and done some demos. It works very well.
Then flexible slot structure, that's also something that's very important. When 5 gs was originally being proposed to the range of services we needed to support, there were a lot of proposals that said we're going to do a different system for each one of these. And what we did is said, no, let's create this framework that allows us to multiplex all of these different types of services into one system. Because if you're going to do a system, you don't want to have what's going to get deployed is the mobile system initially. And then people are going to go, oh, am I going to spend a bunch of money on the system for IoT?
Maybe not, I'll wait. So whereas if you can put it all into one system, then it gets deployed ubiquitously. So I think that's a very important concept. Anyways, these are foundational kind of these are foundational implementations or inventions associated with 5 gs. Okay.
So what I want to say with this slide is we have released 15 coming out And the releases, as I said before, are going to be going all the way out through the decade, through 2,030. So and maybe even beyond because part of what we've done with 5 gs is we've made it, we call it forward compatible. We're trying to make it very inflexibility that it had. And so with Release 15, you can think of Release 15 as being focused on mobile broadband. So that's smartphones.
And that's you can think of that's what pays the bills for the operators right now. That's why you that's being deployed so broadly because they see a lot of opportunity in mobile broadband. Some of the subsequent releases, Release 16, will have enhancements to mobile broadband, but it also there's a bunch of features associated with these adjacent markets. So for example, ultra reliable high reliability, low latency communications for some of the factory applications that we've identified, more CV to X, so car peer to peer communication with cars. We've opened up some additional spectrum in unlicensed.
So those are kind of some of the highlights. And then in Release 17 in about 2 months, that will be finalized as to what the work items are in that. But this is an ongoing thing. Think of it as every year and a half or so there'll be a new set of releases associated with 5 gs. Okay, I'm going to talk about the mobile platform.
I'm only going to talk about 4 different areas. 1 is our modem, and that includes our front end. I'm also going to talk about camera, graphics and AI. Okay. So our mobile platform or I should say our modem.
We used to think of the modem as our baseband and then our RF transceiver. And as 5 gs has come in, it's added a lot of complication, a lot of difficulty in doing design of RF components for 5 gs. I'll explain that a little bit later. And so now we think of when we think of modem, we no longer think of it as just the baseband of the transceiver, but we think of it all the way to the antenna. And so that's a very important concept.
So we have I'll talk a little bit about millimeter wave, about what that looks like and then also our front end and how that ties in with the baseband to improve performance. Start with the baseband. So if you look at products today that are in 4 gs that we can compare, so what I've got here is a picture of the Snapdragon X24 and the Intel modem, the XMM 7660. And if you look at it, the size of the our competing product is quite large. So we're a factor of it's a factor of 4 larger.
Now the process nodes are different. So our estimate is that they use twice as many from a throughput point of view. Not only that, if you measure it, where they do at their peak rate, their 16 layer and we put ours at 16 layers, then they end up and it kind of depends, there's probably 100 different measurements that we make, but you can think of it as 10% to 20% less throughput on top of the lower spec. Then you look at power and this is I think for us the biggest advantage that we have is if you like and take like voice power for example, the Intel modem measure these are measured with products and you can just go out and buy the products yourself and make the same measurement. 50% to 60% higher voice power, depending on which voice mode you use.
With data, it's I have 27% to 40% higher power. It tends to as the higher the data rate goes tend to the bigger the difference tends to be between. So we have a very, very large power advantage. Now looking over on the right side with the 5 gs comparison, so this is us compared to the HiSilicon part that's out there right now. This is in the same process node.
They're both so there's the 2.6x larger is in the same process node. So I think they're directly comparable. They're using 2.6 times as many transistors to get the same function. And then from a peak rate, they're 40% lower and they don't support millimeter wave. So I think from a design implementation from an efficiency point of view, I think we're doing very, very well.
In 5 gs because the networks aren't mature, I don't have yet, I don't have a lot of performance data to compare. But I expect that we'll do extremely well there too, power and performance. Okay. So why is 5 gs RF so much more complicated, so much more difficult? One is that there's an order of magnitude number of bands that you have to support, band combinations.
And when you have band combinations, you have to worry about interference between all these different transmitters and receivers. So it makes it very complicated. But on top of that, 5 gs is also much wider bandwidth. So it's 100 megahertz versus 20 megahertz. So that bandwidth makes a big difference.
Also the peak to average meaning the signals instead of being relatively flat, it moves up and down quite a bit. And also there are modes of 5 gs that are higher transmit power than you have in 4 gs. So that combination of things makes it very difficult to do the RF in sub-six. Okay. So now if you look at our position and we think of this chart here as our position in not just our front end, but in modem.
So we have at this point, we have every single component, so power amps, LNA switches, antenna tuners. And then on top of that, we have the modem itself. And then in each one of these component categories, we're at this point we are as good or better than our competitors in every single one of these areas. Okay. I'll just give you a quick proof point.
I'm sure the filters is something we acquired through the TDK acquisition and that's been something that we've been catching up on. So this is kind of like in some sense a weakness. But if you look, band 40, for example, the blue line at the top is Qualcomm Thin Film SAW. And then we have the 2 competitors below it. And by the way, the higher the better that's how you to read this chart.
So that's lower loss in the filter. And then if you look on the far right, that's band 41. So these bands are on either side of the Wi Fi 2 gigahertz band. And you can see that the dark blue again is thin film SAW. I put in for reference our BAW 4.0 because those are out in products today.
So it's better than our BAW 4.0 and then we have the FBAR competitor, which is the bottom line there. And I highlighted the on the left side of the chart there because what also matters about the filter is not just it's the highest, but also it has a very steep roll off at that particular point. So we also do very well there. Anyways, I thought this was an interesting proof point. Now I want to talk about how we use our front end as part of the system, our whole modem system.
So there's a lot of system optimizations that you can do if you own end to end, if you own baseband to antenna, there's a lot of things you could do. So the first one is a fairly simple example and that's antenna tuner. So if you hold your phone, there's antennas, you don't realize it, but there's antennas all inside the phone. And you hold and you can detune these antennas. And so by what we do is we have a closed loop system with our baseband that makes measurements and then adjusts what's called the matching of the antenna.
And what it allows you to do is on the transmit side, transmit up to twice as much power out of your phone. And then on the receive side, get receive as much as twice as much power or I should say twice is probably a typical kind of number. You can do much more than that depending on the circumstance. So anyways, if you see a lot of the high or almost all the high end phones use this capability at this point. Envelope tracking is another one.
Now we had envelope trackers for 4 gs and 4 gs was much, much more forgiving because of the narrow bandwidth, the narrower bandwidth. But because of the wide bandwidth, you really have to do a co design of baseband. So there's a lot of digital pre distortion that has to be done in the baseband to make this work and then also the design of the characteristics of the PA and then you have to have a very tight integration of the envelope tracker, okay. And what the Envelope tracker does is it makes it puts the PA in its optimal position or optimal bias for efficiency. So that's really what it does.
And then if you look, these are just comparisons of our envelope tracking to average power tracker. Now most other competitors are going to be supplying average power tracker. And then the top line there is max throughput. So that would be the mode, the modulation scheme that has the highest peak to average. And you can see that there's a very substantial benefit we get from that.
And actually the way to read this is it's on the order of close like close to a watt kind of savings. So that's in a phone, that's a lot. Then if you go all the way down to the bottom, that's where you're trying to get you're using the lowest order modulation. So you don't have the peak to average is not quite as high, so you don't get quite as much benefit, but the transmit power is so high there that you're also saving something like approaching a watt. So anyway, so my point here is that envelope tracking for 5 gs, I think is something that is very difficult to do and it's going to provide huge benefits.
Another one I'll talk about here is Smart Transmit. So with Smart Transmit, we monitor the transmit, the output power of everything that every transmitter on the phone very closely. And you probably are aware that the FCC has requirements about exposure to RF radiation. And based on that exposure, there are certain limits And those limits are depend on what frequency you're at. So there's a fair amount of complication associated with that.
And the typical way of handling this in the industry is you just turn down the power or you say it can't go above this level. So it always you guarantee that it stays below that exposure limit. Well, what we do is because we track it all very closely, we can actually transmit more power at times and still meet the limits. So by tracking it very closely, we can improve the overall transit power pretty significantly. And that what that does at certain times and what that does is it makes your link margin much better.
So in other words, you can go further away from the cell and it still works. But it's not just the uplink that it helps, it also helps the downlink because there's actually a lot of communication that goes back and forth when you're transmitting data. And it actually helps improve that communication, which actually help improves your downlink speed. So it's I think it's a very, very important technology that we have that it's hard to do actually. And I'll talk about one more case or one more system implementation and that's in millimeter wave.
So millimeter wave is we do in a module. So it's connected to our modem, but the module has a phased array antenna built into it. And then inside the built onto the substrate of the phased array antenna are power amps, LNAs and switches and also a little power management module or chip as well. And what that module then we sell and there's different antenna configurations and we sell that module to our customers and they put them in most cases 3 modules. And that's kind of the typical configuration.
And then what this these antenna modules do is they can steer a beam to track the base station. And that's why and maybe I'll say not just track the base station, but they can even track multipath. So if you have if the antennas or the base stations in that direction and then you turn and your back is to that base station, you can pick up a multi path off a wall, a post, another person even. And so that's why it's pretty robust is because of this beam steering capability and the beam management and it's also very, very complex. And so having baseband understanding the whole system and how to manage those beams is very important.
Okay. Onto another topic, graphics. We sell 100 of millions of graphics cores a year or products with graphics in them. So that provides us a fairly big advantage in that. Our platform is so ubiquitous that all of the developers optimize their software and tools for our platform.
So that's a big advantage we have. And what is our advantage? It's really the most power efficient graphics core in mobile industry or I should say blanket statement, most power efficient graphics core. And that's really the metric that we use. The other internal metric that we use is most area efficient as well.
And those two statements are true. We if you think about graphics, you can always get more graphics performance by putting down more silicon. Okay. So absolute performance is really more like a design choice. But what you'll find is because of power efficiency, you end up it ends up limiting your performance if you're in something like a smartphone because there are thermal limits.
You can only dump so much power into a smartphone. And then I put this plot here to help you understand that. So this is a measure of the Manhattan benchmark. So think of this as a game and the benchmark runs for about a minute. And so the blue line is our performance over time and you can see this goes out to 20 minutes.
So this is something like think of this as your kids playing a game, they don't play games for 30 seconds, they're playing for 30 minutes. So think of it as our product has the performance stays. That's how we design it so that it stays flat or continues on. This is our next best competitor. And what they'll do is they'll provide a benchmark that says, hey, look at how good we are, and they'll be way up here.
But then if you look at it over time, it And so it moves the performance up and down and up and down. So that's a very big difference between us and our competitors. And I think that's probably the most important thing. And so with graphics, we can use this in not just mobile, but that power advantage also, I mentioned that automotive. That's something that's super important even in automotive in almost every industry that we go into.
With camera, we may not realize this, but we're the best image processing company in the world. And we if you look at cameras, there are more cameras in the world today powered by Qualcomm than any other company in the world. That's pretty shocking, but that's true. Recently Xiaomi came out with their DxOMark score for their camera. And DxOMark is a benchmark that is a standard benchmark.
And what it does is it just looks at image quality plus a lot of video features, electronic image stabilization. There's all sorts of different measurements that go into this. But it is really where everyone goes to benchmark their phone or benchmark their camera, sorry. And so with Xiaomi, they just came out with that a couple of weeks ago. We worked very closely with them and they have the highest benchmark score in the world.
And then also from an image quality point of view, we spent a lot of time benchmarking our own ISP and comparing it to everyone else's. And so we're I think we're in very, very good position there. And then I'm going to show you just one of the measurements that are made in this DxO mark and it's image stabilization. So electronic image stabilization, as you're taking a video, how much does it move up and down? So what we did here is you just have 2 phones.
1 is Xiaomi and 1 is the next best competitor. Every other one is worse than that next best competitor. And it's on a board. So we're not taking the competitor and shaking it up and down and making it look bad. So it's actually exactly the same movement.
And what you'll see is that we're walking along, you can see the other ones rocking a little bit, but as you go down the stairs, you can see it's very, very different. And this is the next best competitor. So that's just an example of the kind of things that we do with camera. So anyways, John, very proud of where we are with our camera and our camera team. Okay.
A little bit more about AI. AI is going to change how networks are implemented along with 5 gs. Those kind of those two things are going to change things quite a bit. Maybe I'll just explain. If you look at the way you experience AI today is mostly through the cloud.
So a lot of it is you click on things, you send pictures in, you do things that is monitored essentially by the cloud companies and what they do is they try to profile you, which is how AI is primarily used today. They try to get you to buy things, advertise, things like that's what it's mostly used for. But I think that AI is going to have the biggest impact on the edge of the network. So if you think about on the edge of the network, there's all these sensors that are being we're digitizing the world. So there's all these sensors.
And like, for example, video camera is probably the most prolific sensor that exists out there, but there's lots of different types of sensors. And so what AI does super, super well is it can make sense of data. So you get all this data coming in and it's very good at making sense of huge amounts of data. There's no amount of coding that you could do that as well as AI. So it's very, very powerful in that respect.
So then what we believe the way things will play out is that so AI has become super important on the edge. I mean, I'll maybe I'll just give you a quick example like automotive. AI for autonomous driving, it's going to be something that's kind of a fundamental technology to make this stuff work. And you would not, for example, do that AI processing in the cloud and then send it back to your car because there's a latency issue there. So what you want is you want all that processing to be done on the device.
In this case, the device would be the car. Just so there's and there's a lot of there's privacy reasons, performance reasons, latency reasons to do that. And so then what you're going to find is that because of that latency to the cloud, there'll be these what we call edge clouds. So you'll start seeing cloud extending itself very close to the network to take advantage of the low latency that you have with 5 gs. In that cases, for example, you could do computational offload, for example, that you could send from your device, not just a smartphone, but many, many different devices, cars, and you can do a computational offload.
So there's a lot of different I'm not going to go into great detail here, but we think that this is going to be a very, very significant driver of the future. Here we go. Okay, we've been spending a lot of time, like I said, 10 years on AI and we have a what we call our in mobile our Qualcomm AI engine, that's it, Qualcomm AI engine. And these are just to give you a sense, this is a measurement of power efficiency relative to our next best competitor. And so you can see there's different benchmarks here, Like for example, ResNet is on the left.
ResNet is a very kind of heavy image classification benchmark, but these are the standard benchmarks that are used. And you can see our performance in Power. MobileNet is really the kind of a lighter weight benchmark. And you can see we do very, very well in terms of power because that's always our focus. And also from an absolute performance point of view, we also I could show those as well, but we with almost all cases we're leading as well.
Okay. So why is that important? So we've developed this neural processor, it's a dedicated engine And that dedicated engine is much more capable than a CPU, for example. CPU is horrible at AI processing, neural processing. If you look at graphics, it's much better than a CPU, FPGAs can be much better than a CPU by a factor of 10.
But then if you go to a dedicated engine like we've developed, it's yet another factor of 10 in performance or power. And so it's very important that you do these dedicated engines for neural processing. And then one of the we have a product, it's called Cloud AI 100. I'm actually that's one that I'm really excited about actually. What we did there, that's for I should say it's for inference in the cloud and inference on the edge cloud.
And what we did is we took our AI engine, specifically that neural processor that we do for mobile and then we designed it so that it could be expanded up. So we expanded that. That's what the little brain to the big brain means. And then what we did is we laid down multiple instances of that neural processor on a chip with lots of IO. And then we're working very closely with some big customers.
And our feedback to us is that we're better than 2 times the performance for a given number of watts. And in the cloud, the watts are that matters a lot. And so we think we have a very, very strong position going into this market. So key takeaways from my talk. Scale of mobile investment gives us an unmatched technology portfolio.
We effectively leverage our large scale technology investment into other businesses. 5 gs leadership comes from a 30 year commitment to research. 5 gs strongly benefits from a modem to antenna design approach. There we go. We are driving the powerful intersection between 5 gs and AI.
Thanks.
The innovation that Qualcomm brings across global communications is fantastic. I mean Qualcomm is the front runner of innovation, leading innovation. So it's for us it's quite natural because we are a innovative brand. We are we want to provide an exceptional customer experience and change. And so the values of these 2 companies, BT and EE with Qualcomm is a natural collaboration.
1 of the biggest technology challenges that we had in order to launch 5 gs is to set up the ecosystem. And thankfully there, there was a great ecosystem to bring together, working with Qualcomm who are driving the chipsets, also the evolution of the smartphones and devices. So we were really quick to engage with that, build our ecosystem. DT and E, we are the first to launch one of the first to launch not only in Europe, but globally, definitely first in the U. K.
And it's part of our overall strategy for a fantastic network experience with our customers in the consumer space or in the enterprise space.
Ladies and gentlemen, please welcome Executive Vice President and President, Qualcomm Technology Licensing, Alex Rogers.
Good morning, everybody. Thank you for being here. So I could actually stay here for 5 seconds and leave and simply reference back to what Jim just said. If you want to understand why the licensing business is foundationally strong, just go back and listen to what he said. That is the basis of the licensing business.
But it is good to be here. And for me, it's actually personally interesting because I sat in my seat over there and I could look through the windows of the New York Times building to the ancestral home of the Rogers family business. So my father and my grandfather owned a bowling alley and a bar in the Port Authority. And unfortunately, they wouldn't let me take over the business. So I did what any of you would have done.
I packed up and moved to California. But that business unfortunately is no longer there. But you can still go bowling. But we don't own it. All right.
Let me talk about the licensing business. There are 3 key attributes. $60,000,000,000 investment, Jim talked about this a little bit. The focus is that we develop technology that enables cellular. And the focus of that is systems level innovation.
We've been doing it for 30 years and we continue to do it. We're good at translating innovation into legal property rights, into a patent portfolio. 140,000 patents and applications pending worldwide. And we're good at the mechanics of getting deals done. 13,000,000,000 devices licensed.
But again the bedrock is what Jim said, enabling technology. We create enabling technology that the industry wants and that the industry uses. So let me dive into it a little bit more. So three timelines here that matter. There's an R and D timeline.
There's a standards timeline. The R and D timeline is in blue shading. The standards timeline are the steps that you see across left to right rising up. Those represent individual standards as they're promulgated by the standards industry by the standards organization. And then there's a commercialization timeline.
And each of these timelines is important to the licensing business because each of these timelines and Qualcomm's activities in these timelines creates strength in our intellectual property portfolio. So first of all, R and D and Jim mentioned this, I'll just refer back to it. It's really critical. Ongoing early investment and he described to you how the machine that Qualcomm works. It's very theoretical to begin with, but very practical, okay, at the end of that R and D timeline.
And so we create enabling technology and we create the technology before the standards are contemplated, before a requirement is set. We're years ahead improving cellular systems, so that we have something to bring to the standardization process. That foundational technology creates IP strength. Then the standards timeline. We have tremendous experience continuity in participating in the standardization effort.
There's a skill set involved in participating in the standardization effort and we're very good at it. When you bring technology to a standard, it can't shouldn't be merely theoretical. We're very good at building the technology before we bring it to the standard organization. We're very good at testing and simulating and proving the technology and proving its merit. So when the standards organization, when the industry adopts Qualcomm technology, it adopts technology that the industry in that technology and the IP associated with that technology.
And then finally there's a commercialization timeline and this is very important. Qualcomm is unique in the industry. We understand the technology at a very, very deep level. And then we work with the entire ecosystem to enable the rollout, the implementation of the technology. We work with mobile device manufacturers.
We work with infrastructure equipment providers and we work with operators. So we work with the entire ecosystem. And we work across all geographies. There are very few companies in the world that can take this technology and work as broadly as we do to implement it that also have the depth in research and development that we do. And so this also creates IP strength because we bring to the industry technology and associated intellectual property that actually works and works very well.
So our IP is foundational. It's relevant. It's adopted due to its merit and it's useful and therefore valuable. So let me talk a little bit about culture. I think Jim said more about culture than I can say and spent I think gave you a great overview of Qualcomm's culture.
But when you walk into the front door of Qualcomm's main building and I know a number of you have been there, this is what you see. You see a 2 story wall of patents. These are actual Qualcomm patents. And it reflects our culture. It's not just a culture of innovation, but it's a culture that prizes novelty, getting out ahead, creating technology that is groundbreaking.
And there's a tremendous focus on being an inventor and being an inventor that matters. And when in the history of our company we hear the words that problem can't be solved, you can't commercialize that technology, it will never be successful. It's like a call to action for Qualcomm. It's a rallying cry. It's just part of the culture of the organization.
Everybody's familiar with the story relating to CDMA and Doctor. Jacobs and the early engineers. But it happened again. If you talk to Roberto Panavani, a former CTO had Jim's job some years ago, he'll tell you that when he first came to an industry organization to propose high data rate capability for wideband mobile telecommunications, wireless telecommunications that is bringing the internet to cellular. His response was not just you can't make it work.
His response that he got from the industry experts in the room was we don't need to do that. Think about that for a second. Wireline is good enough. I've got voice. I've got text.
Cellular is never going to enable internet. And so Qualcomm just kept pushing forward. And we have a similar experience that we're dealing with today, maybe not quite as dramatic as the first two, but there's skepticism about millimeter wave. Great. Good.
Right up our alley. It's exactly what we want to do. We want to solve these problems. What does it mean for the licensing business? If others want to clear the field and allow us to solve these problems with groundbreaking inventions, we're happy to do it.
Creates strength in our patent portfolio and that's a good thing. So we build the portfolio to tailor it to a licensing business. And that involves a couple of things. One of the things is that we have very broad geographic coverage. And so what you see filled in in blue is the coverage geographically of our patent portfolio.
Now there are countries out there that don't even have a patent system. So
there are
some countries that aren't actually covered with patent filings. But we also have a very diverse portfolio. And I don't need to get into the details of that because again, when you listen to Jim talk about what we do, you can see how much innovation we put into technology aside from standard essential technology development. It's enormous. So we're constantly harvesting and managing the portfolio for efficiency, coverage and cost effectiveness.
Let me focus in on 5 gs for a little bit. What is leadership in IP in 5 gs? So one of the basic points, I think, that you should understand certainly is our view, we think it's technically true, is that leadership in IP relevant to 5 gs starts with leadership in IP relevant to 4 gs. As Jim mentioned, we have the same AR interface. There's some of the same features in 4 gs that carry over into 5 gs.
There are dramatic improvements that occur in 5 gs, but there's a lot of commonality in technology that carries over from 4 gs to 5 gs. And when we look at our portfolio, we estimate that approximately 75% of our portfolio that's relevant to 4 gs is also relevant to 5 gs. So there's tremendous amount of depth there. But on top of that, Qualcomm has been extremely prolific in driving new innovation into 5 gs features that will provide the performance benefits, the user experiences, the efficiencies and the gains that operators want very specific to 5 gs, very specific to Release 15, Release 16. And so there's a tremendous amount of innovation that Qualcomm has been driving that we think is foundational, as Jim mentioned, to 5 gs Release 15.
And let me go over this chart that Jim went over, I can't come close to describing the particular areas of technology and their usefulness, why they're important, the way Jim did. But I want to emphasize from a licensing perspective that this provides strength to the licensing business, because it's again the R and D efforts that are years ahead of standardization activity, enabling fundamental benefits for 5 gs. Massive throughput, spectral efficiency, network capacity, low latency, ultra low latency and tremendous reliability. And having IP associated with these fundamental pillars of 5 gs is very important. And then again, it's very important to the ongoing strength of the licensing business.
It's a continuous process. And it's important that for example every data packet that's going to be transmitted in the 5 gs system has Qualcomm IP because the channel coding that we put into it. It's very important for example for the licensing business that we solve problems to enable millimeter wave to be made mobile. It adds value to the patent portfolio. So it continues to be valuable and we see a long runway going forward.
And then as you move from 4 gs to 5 gs Release 15, we're pushing into finalization of the specification for we're pushing into finalization of the specification for Release 16, the 2nd release of 5 gs. And we're continuing this never ending process that Qualcomm has been engaged in of driving innovation to drive improvements, in this case dramatic improvements into the cellular industry. And then in this case in particular with Release 16 into other industries that are going to adopt cellular. And so aside from enhancing and improving the mobile broadband experience, Release 16 is directed towards very specific improvements that will enable cellular and other industries. And Qualcomm has again been extremely prolific in innovation in this space.
And it's not a recent activity on our part. In these fundamental innovations that enable Release 16 and will enable technology in the cellular space to move into other industries. We've been working for years to develop technical solutions and developing IP around these technical solutions. And so I could call Jim back up here and he can go through each one of these for you, much more detail than I can. But I'm just going to touch on them very, very briefly.
High precision positioning, extremely important in the automotive industry. And the level of precision is mind blowing, okay. The specs are really tight. The technology is difficult to do And we've been working on this for years and we brought to bear R and D and tested our technology to make this possible. Unlicensed spectrum, really important operators.
Okay. Bringing cellular technology from licensed licensed spectrum that operators own into unlicensed spectrum and doing it in a way that doesn't disrupt the current technologies existing in the unlicensed spectrum space. We've been working on this for years, okay. And we're able to enable the industry to pick this up, increases capacity for operators and creates opportunity for private networks to adopt cellular. So there are a number of different things that we've done, that we've been working on for years And we've been very prolific in pushing technology into the second release of 5 gs.
And again, that is a strength of the patent portfolio going forward and fundamental to the licensing business. So increasing complexity is good for Qualcomm. The more complex, the better off we are because we solve complex problems. And that's good for the licensing business as well. Because the goal is to not simply bring technology to the industry and create a standard.
The goal is to then drive the technology out into the world and actually build optimized mobile devices and optimized networks that actually deliver the performance that everybody expects, that users expect. And in order to deliver that optimized performance, it requires implementation innovation. And Jim talked about a couple of these things. You have to optimize these devices for power efficiency. They're mobile devices.
They're battery operated. So you have to have innovation around that to ensure that you're continuing to drive commercial success. And Qualcomm is very good at doing Again, we don't just bring technology to the industry and ask the industry to adopt it. We build devices, we test them, we conduct simulations, these are proven. And then when the technology makes its way into the standard and when the technology makes its way out into the market, we continuously work on optimizing the technology to ensure peak performance.
And that's good for the licensing business because it creates more depth and breadth in our portfolio. So we have valuable implementation patents and that process is a continuing process. So on this side of the talk I'm going to give, this sums it up. Decades of R and D and Standards Leadership, Fundamental, Foundational, Systems Level Innovations and IP across all of these generations of standards, continuing very, very robustly, very active innovation in driving 5 gs, Release 15, Release 16 and moving forward and continuing very, very actively to drive innovation and implementation, which is good for the portfolio, good for the licensing business. So let me talk about a timeline.
So for the last few years, maybe the last 4 years or so, there's headline news about this timeline. And the headline news has always been the challenges that we faced. But I'm going to step down and step back from that headline, which you're all very familiar with, And I'm going to talk about the story. I want to at least remind you of the story underneath the headline. And there are 2 critical stories about execution, continued execution.
1 is executing on innovation, continuing innovation and you heard that from Jim. Never losing sight of the fact that we're a technology company and that our goal is to develop enabling technology and we continue to do it, Never lost sight of that fact and we never lost the execution edge. And then continued execution and licensing. We actually continued to get to agreements. And so when you look back towards the front end of this timeline, coming out of a China resolution, we've signed up over 150 Chinese patent license agreements.
And then after we announced or after we disclosed our rates for 5 gs, we've now signed up in the last 2 years, I actually think the disclosure occurred 2 years ago today, over 75 5 gs agreements. And then 3rd, before, during and after the FTC trial, we've signed what we refer to as anchor agreements, important agreements. And if you look at what we've managed to do under this timeline, under the headline news, if you look at what we've managed to do in this timeframe and you compare our execution and signing up 5 gs agreements to the same timeframe when we first disclosed rates for 4 gs, the score is 75 to 7. That's how many we had signed up by the end of that 2 year timeframe in 4 gs. So we've continued to execute.
So key takeaways. Unmatched patent portfolio value, continuous R and D and standards leadership, system level innovations and foundational IP and critically fundamental innovations and inventions enabling 5 gs. And continuing strong execution, 75 plus agreements to date and multi year anchor agreements recently signed. Thanks very much.
Qualcomm and ASUS have a long history of strategic partnership that has built on the shared and persistence for creating the world's most incredible technology. Over the years, this partnership has produced a wide range of impressive devices, including tablets, wearables, always connected PCs, flagship smartphones, and most recently, the world's most powerful and authentic gaming smartphone, the ROG Phone 2, 5 gs will bring both evolutionary and revolutionary change to how we interact with our devices, platforms, services and environment. Our collaboration with Qualcomm on 5 gs gives us access to the most advanced, reliable and competitive connectivity.
We will now take a short break and be back in just a few minutes. Thank you.
For decades to come. We are working with Qualcomm to bring 5 gs capabilities to more devices and create new experiences for consumers.
Partners like Qualcomm is really key to us on this journey. They help us to solve complex problems and bring amazing new experiences to our users. By working together, we'll Lenovo as the number one PC manufacturer in the world and Qualcomm as a leader in computing and connectivity, together we're able to meet the needs quicker than by trying to do it on our own.
And now, we're working with partners on a new class of incredible devices built on the Snapdragon 8 CX. All of these devices will be able to take advantage of Windows 10 Enterprise Security, Privacy and ease of management. With Qualcomm and the Snapdragon ATX platform, we can really move the industry forward. 5 gs absolutely promises to transform the way that we live, work, play and learn. And it can impact every industry, every vertical, our global economy and frankly our global society.
A year ago, we would have been talking about 5 gs in the future. And now, we're able to use the present tense.
Thank you all of our partners for the hard work and for the belief that we will bring innovation and excitement again to the mobile industry. Congratulations.
Ladies and gentlemen, please welcome Qualcomm President, Cristiano
Aman.
Good morning, everyone. I just ask you to be patient with me. I kind of lost my voice going party after the earnings call. No, actually, even though I wanted to go party, but we're busy working on the RF front end. So I just recovering from a cold.
I'm going to try to do my best. Hopefully, you can hear me okay. Have a good set of information to tell you today. We're excited to have this Analyst Day we haven't had in a long time. And hopefully, we'll give you an idea how we're thinking about the company in the future.
Everything that we have been busy and focused on the past 2 years putting together and preparing and looking into this transformation, not only at the industry with 5 gs, but really a transformation of Qualcomm. And when we look of the opportunities ahead, it's really one of the great set of opportunities we had in the history of our company, as Steve outlined. And I will break the presentation today in 3 parts. How we're executing in our core business and what are the opportunities coming to us from 5 gs and the smartphone transition. Then how we're building on our adjacent platform and business, which is part of the company growth and diversification of our revenues.
And then we're going to give you an overview also on some of the long term bets we're investing right now to thinking also what we're going to be doing beyond 5 gs. I will start the first part of the presentation about 5 gs. And anything, I ask you to be patient with me because there's so many things I want you to understand about this transition. You hear a lot about 5 gs in general and how broad it is, how fast it is and then what it takes to be a leader in 5 gs. And I hope my job will be probably walk you through each one of those steps.
So first, I'm going to start with 2019, this year that is ending right now, just to show a comparison. We really like to show that comparison because I remember in the 4 gs transition, we had 4 operators that launched, it was the 3 operators in Korea, one operator in the United States with Verizon Wireless, 3 OEMs, LG, Samsung and HTC. And at the time, granted was the right before the smartphone transition, I had everybody on their BlackBerry sending messages saying, who needs 100 megabits per second? There's really no use case for this. When we look at 5 gs, the reality is completely different.
As of right now, there are 40 operators that launch. There's over 40 OEMs. And those operators that indicated that they're building 5 gs have about 2,400,000,000 subscribers that they current serve. So the potential for faster transition is much higher. I also want to point out a couple of things that you can see in this map.
Geographies such as China and Europe, unlike the 4 gs transition, they are now coming online at the same time. So that will change also the dynamics and the scale of the transition. And if you look at the mobile ecosystem today, China has a big component of the mobile ecosystem that's going to accelerate the transition as well. But the point is when we look at the scale, it's also to highlight how 5 gs is going to be deployed. So you look in 2019, you have millimeter wave in the United States.
But by 2020, a couple of other things happen. More markets and operators come with 5 gs, but also millimeter wave happens in markets such as South Korea and Japan. And with that, we're going to start to see the real deployment of how 5 gs was designed to be implemented. But if we keep going by 2021, we'll see millimeter wave now coming to a number of other markets. I'll highlight Italy and Germany, Hong Kong, Singapore.
And as of today, we're working with China Mobile on 100 verticals for industrial applications, many of which with millimeter wave. So our expectation is by 2021, all the developing economies will have millimeter wave as well. So that's how we think about the expansion of 5 gs around the globe. It's fair to expect by 2020, you're going to have all metropolitan areas with 5 gs coverage, a list with the mid band or sub-six as well as reform bands. That's going to be part of the conversation today.
And then 2021, you see millimeter wave expanding beyond Japan, Korea and the United States markets. I also remind you, I like to go back in history. I actually had the opportunity to work in DriveTest on the Japanese PHS system, the cordless telephone system. Japan, for example, the base stations are for PHS were 100 meters apart with fiber backbone. That is perfect.
It's like Lego build out for millimeter wave. So expect to see the rollout of millimeter wave to actually be quite successful in dancing markets such as Japan and Korea. So with that, I want to tell you how we think 5 gs networks are going to be built. And there is a lot of confusion in the industry today when there's reference to 5 gs sub-six or millimeter wave. This is not like CDMA and WCDMA.
Those are not like different choices that operators are making. 5 gs has been designed, so you have a combination of all of those spectrum that you have available for you. So the way you should think about it is you're going to have those new spectrum that being allocated. The mid band in the case of 3.5, that's going to get deployed on top of existing macro sites. That's what we call the sub-six.
Then the high band millimeter wave gets deployed as well. And then the existing 4 gs spectrum gets reformed to 5 gs with a feature called dynamic spectrum sharing. And dynamic spectrum sharing is going to be a feature that we're going to hear a lot as we go to 2020 as you allow the reforming. And unlike the densification of the network in 4 gs that happen for capacity. Millimeter wave, which does require new sites or a more dense network, is really for not only capacity but performance.
Some of the new use cases will require millimeter wave. But let me just walk you through some metrics, how the networks get deployed, and then I want to walk you through the phased approach. So if you look how easy it is to deploy some of those technologies, and I want to use this opportunity to challenge the thought process that millimeter wave is really difficult to deploy. If you look at a city like San Francisco, existing cell sites, because remember, many of the dense areas have been through a process of 4 gs capacity build and that creates more sites. So if you look at existing sites in San Francisco, you can basically get millimeter coverage with about 65% reliability, which is pretty especially has been a technology that's designed for the dense areas.
And then when you apply, for example, in the case of Germany Frankfurt, existing sites, you apply the new band of sub-six, you have 78%. Once you start refarming refarming the spectrum with dynamic spectrum sharing, then you get to 96% coverage reliability. And the way you should be thinking about this is every operator that is deploying 5 gs will make use of all of their spectrum assets through reforming with DSS plus the new bands and deploy millimeter wave when that spectrum becomes available. So we're really excited about the ability to do this. And when you look at millimeter wave in itself, the performance is really what makes millimeter wave shine.
So there's some stats now. We have signal research is 3rd party assessment of millimeter wave. And I wanted to have that information here because a couple of things that was said about millimeter wave that you don't have the ability to have an all day battery life. 14 hours of usage of millimeter wave meeting power and thermal requirements, 10x the peak performance of LTE. And then you get known line of sights with 200 plus megabits per second.
So it's a significant improvement in technology and the enhanced mobile broadband. But in the bandwidth and the latency, we'll really allow new use cases. In certain use cases, in the smartphone will not be possible without millimeter wave. And I have some examples for you in terms of compelling use cases. One thing that we've been saying since the beginning of this 5 gs transition.
In the same way, the 4 gs changed the music industry. I'm sure nobody here, if there is, will be an exception, take CDs to their car today. And people just stream music. No matter where you are, you have enough 4 gs coverage and performance to stream music. That's going to be the issue of video, but not only with the ability to consume video streaming in high resolution, but the ability to upload video is going to change video creation.
It's not far fetched for you to imagine that today YouTubers will be broadcasters. It's a big change for the broadcaster industry, especially when you think about sporting events. But high density venue, how you're going to consume media and how you're going to generate media, you need millimeter wave. You need that for bandwidth. The other use case that I like to display, and I think all thanks to Epic Games Fortnite, the industry understood that mobile gaming is a much larger addressable market in console.
And the advent of cloud based gaming, Millimeter wave will allow you to actually and especially form factor changes with bigger screen devices like foldable devices. We're starting to see in the case of Republic of Games and the Tencent device that we work with Tencent in China, special devices for gaming, but millimeter wave will enable for you to play mainstream console gaming into a mobile device. The transformation of the enterprise is a big one. It's going to be a big topic of this conversation, especially as we think about new business. But millimeter wave in an enterprise alongside Wi Fi 6.
Indoor build out not only will enable a lot of the industrial cases, and you can only do it manufacturing robot, for example, you cannot do it with sub-six in terms of amount of data and the latency and the mission critical requirements, but also the ability to remove data from hard drives and move it to the cloud. Millimeter wave bandwidth and latency allow you to actually move stores to the cloud, really feeding into the strategy of many of the big cloud companies, like Microsoft Azure, as you think about the potential of OneDrive and other services going forward. So millimeter wave is an essential part of 5 gs. It is happening and it's going to happen across multiple geographies, and it's going to be fundamental to drive new services. So with that, I want to go over a build out and won't take a long time to do, but I have 2 purposes in walking you to this build out of 5 gs networks.
1 is to show how 5 gs networks are being built right now in a phased approach. The other one is to also raise awareness about what competitive leadership means. A lot of people say I have a 5 gs chip. I've seen that in the 4 gs era. When we started with 4 gs, there's a lot of people have chips.
And for some reason, they never get to commercialize and scale because the feature set keeps changing and keeps changing very fast. And this is where we really focus on when we think about the build out of network. So you have an LTE network today, and you're starting building in 2019 5 gs, try to you have this alphabet soup of NSA, SA, FTD, TDD, you start building the higher bands of 5 gs using the existing 4 gs cores in a non standalone mode. The next step as you start to bring some of the mid bands and you basically have a lower 5 gs bands, also they exit lower bands with FTD. And you use a technology called DSS to reform.
And it really works like magic is the ability because both systems use FDMA modulation. You can actually deploy an existing site at 5 gs base station or eNodeB and the devices will coexist. So operators don't have to clear the spectrum. So they can start building 5 gs on existing 4 gs spectrum, and those systems will coexist with DSS. Then the next step, you upgrade the core of the network into an SA, and then you start to bring capabilities like carrier aggregation, which basically make use of all of your spectrum assets that you have in 4 gs plus the 5 gs, so you can have wider channels as well as extend coverage.
So successful rollouts of 5 gs technology, you need all of the above. And especially when you think about the chipset and device development, the device as we build the device ecosystem ahead of the network, you need to have a chipset capability that has all of those features. They're going to be required, and especially they'll be required in 2020 as you need to bring the reform spectrum with DSS and you need to bring the carrier aggregation, so you have the ability to use existing spectrum. So that's how the networks are going to be built. That's we've been through the 2019 phase.
2020, you're going to hear a lot about coverage build out using existing spectrum, hear a lot about DSS, and that's why we're excited about the speed of the 5 gs ramp and our position in this space. So with that, I will shift the conversation to kind of where we are in the market. And the way I look at this is the 5 gs acceleration was a very important milestone for Qualcomm. Unlike 3 gs or 4 gs, we got the devices ahead of the network. And as devices are already ahead of the network, the best 4 gs phone you can buy today, even if you don't have service is a 5 gs phone.
So devices move on, especially on the Android ecosystem. We are being consistent and conservative in our sizing of the market. I think we said in the last earnings call, because we've been calling the market down as we get to the tail end of 4 gs, we're assuming that some of the drivers in the market remain constant. However, when you analyze that, I think that builds a lot of confidence in the 5 gs rollout because replacement rates are low today. You have 3 plus year old 4 gs phones.
When we did the 3 gs to 4 gs migration, phones in some markets were just 2 years old. You have about 3, in some cases, in market 4, even 5. Unlimited data plans. As soon as an operator launches 5 gs, unlimited data plans goes into 5 gs. That's the lower cost per bit to deliver data, worse than the operator economics.
The device already switched. So the 5 gs devices in the high and premium tier, those are the ones range in all of the operators, especially in all developed economies. And we do have new experiences of service that are coming with 5 gs. Consumers also responded. Korea has been an enormous success, I think exceeded all expectations.
In China, with their projection of 1,000,000 eNodeB base stations by the end of 2020, The 10,000,000 subscribers are now 15 on the pre launch. And the projection to go in China alone, 150,000,000 subscribers by 2020, those give us indication that we're going to have a successful rollout of 5 gs. And I want to point to this slide. I'd like to point to the Samsung roadmap, especially on the Android ecosystem is the number one player. And you can see that the device ecosystem already move regardless of the time that it takes to build coverage.
You can see not only the Galaxy Note 10 5 gs, you see the A Series, below that, the A90 as well as the Fold, which is their flagship product, all of those already moved to 5 gs. So and that's the consequence of having the devices ahead of the network and a benefit the operators are going to have in terms of build coverage that they can rely on features such as DSS. And as we get to the end of this first session, one important topic to highlight is the changes coming with 5 gs. Every generation of wireless, we saw changes, changes in the form factor devices, kind of early to predict, but we do see signs of changes in the form factor as screens get a little bigger and video and gaming become mainstream for consumers. But we have completely changes on how we think, for example, in the case of 4 gs, how to think about computing, mobile computing.
The way to think about the changes coming with 5 gs is a simple way to describe 5 gs for mobile device is 5 gs is going to connect you with the hyperscaler cloud companies 100% of the time in a reliable manner. So that will change the capabilities of the applications. The capability of the applications are going to be less bound by the OS and the storage and the processing power you have in your device. So if you look at the China domestic mobile market and you look at the super apps like WeChat, we see the potential for that to happen in 5 gs as you're going to be always connected to the cloud, you have unlimited storage and on demand computing. So what we're going to see in the 5 gs era will be a consolidation of the applications given by the power and scale of the hyperscale or cloud, less dependence on the OS.
So the concentration that we have on the OS with the app stores and all of the long tail of apps that will remain, but we're really going to see the separation between the more and more of the casual apps and the apps that are going to drive the user experience as basically the cloud and your device are 100% connected in a reliable manner. And that creates a lot of opportunities for innovation and for things to change. I'll point you to one detail. We celebrated pretty hard at Qualcomm even though we got unnoticed by the market. In the 5 gs transition, unlike 4 gs, Android operational systems now give developers the metric before in the 4 gs era is whether you have or you don't have an Internet connection.
It doesn't even in some cases, it doesn't even make a distinction between cellular and Wi Fi. Now an application developer know what your bandwidth and what's your latency that you have. That allows you for you to change behavior of applications based on the barrier, creating value for the connectivity, but also improving performance. So we're just at the beginning of the curve, and we're excited about the opportunities that we're going to have for transformation even in the mobile space. And I think it's fair to say if you just look what happened to every generation of wireless, one thing that we know is you can never take anything for granted in mobile.
It always changes. We're happy to be a constant in each one of those transitions as OEM change position in the market, and that's because we invest early in leadership. The last slide on this session before we go into execution of our mobile business is for us, it's not about building a chip. It's not building a chip. And I would say we have a 5 gs chip.
It's really about building an ecosystem. And that's the approach that we took within 5 gs. You saw Qualcomm in every single pilot and trial about 5 gs with every operator and every infrastructure vendor, the platform of choice was Qualcomm. Every single development of infrastructure in the labs, how the infrastructure gets developed, the other side of the radio is Qualcomm. We have basically worked across all geographies with all industries.
We have been the platform of choice for this technology to be developed, and that would give us all around leadership in the 5 gs transition. So starting with the all the development all the development platforms across modem and front end to building chips and to building devices and working with service providers. So we're very proud of what we're able to accomplish through a lot of hard work in 2017 2018 to accelerate this technology. The launch in 2019 has been a busy year bringing this to market and now ready to really achieve scale of this ecosystem in 2020. And with that, I want to tell you how we're thinking about execution on the core with the opportunity we have with 5 gs.
So the first thing is a big expansion of our SAM. As in addition to what we're doing in the core chipset, we add our front end. So we see the ability to grow our SAM in mobile. We've been looking for growth in mobile now for a while, and we're very excited with this 5 gs transition. And basically, between 2019 to 2022, we can have compounded annual growth rate of double digit in mobile.
And the execution to drive that is going very well. We have talked about the number of device designs that we have. 230 is not a small number. And 230, I will repeat, of the 230 designs that we have, no exceptions for the 5 gs content, not the legacy 4 gs. For the 5 gs content is Qualcomm RF front end end to end.
We look at our designs that are broken into 3 categories: 5 gs smartphones driving not only our existing customers, the China ecosystem into the flagship devices in the high tier, also driving 5 gs into other industries. And with embedded modules that going into industrial, going to automotive, going to computing and also driving a lot of the designs for mobile fixed wireless access on the carrier case for mobile broadband and some other designs that go into new applications, which I will single that out in the next slide. So we're very proud of that. And the reason I want to bring the separate slide to you is there are a lot of discussion about 5 gs. It's beyond phones.
And phones are going to drive a lot of the volume and the growth in the company in 'twenty. The easiest thing is to go upgrade the smartphones. But when you think about 5 gs beyond phones, we became the platform of choice for all of those companies. Many of those companies and services, you need a reliable solution and you need a global solution. And as a consequence, we have over 30 technology suppliers that are designed specifically for the other industries, industrial IoT, automotive, enterprise, fixed wireless and compute as well as mixed reality devices.
All of those promises of 5 gs going into other industries. I mentioned the project that we have, for example, in channel of 100 different verticals experimenting as 5 gs use cases. The good thing about being early and you have a mature platform with generations ahead of our competition that we became the platform of choice for those use cases. And that will create opportunity for the business beyond mobile. And as we look to scale 5 gs, we've been building a comprehensive roadmap.
So we started in the first half of twenty nineteen with our first Snapdragon X50 modem. We are right now working on the 2nd generation X55 Snapdragon modem. You're going to see a lot of details in the coming weeks. As it's going to be driving a lot of the new set of devices throughout the end of the year, the beginning of 2020. But in 2020, you're going to see 5 gs across our entire portfolio of products.
So not only the 8 Series, the 7 Series, the 6 Series integrated SoC and beyond, you'll see us driving as fast as possible the entire device ecosystem to 5 gs. And there is, as you heard from Jim Thompson, there is no question that the benchmark for mobile SoCs is Snapdragon. People ask me sometimes, and I think the question came up in the conversation yesterday. We have been leading in a number of technologies, and I won't list them all. But Jim highlighted a field like camera and AI and graphics.
And when people ask us how well are we differentiated in those areas and what leadership means. When you apply a mobile SoC into a high definition head mounted display for virtual reality devices. The technology needs to perform because those you don't have the when you're fully immersed in VR, motion to photon matters when you get nauseated. The ability for you to exercise your GPU really matters. That's why Snapdragon has been the only choice that you've seen in head mounted display, whether it's Microsoft HoloLens or is the Facebook, Oculus Quest, it's just because we have the lead in performance.
And we expect that to continue, especially for the capabilities that will drive 5 gs use cases. So we'll continue to be pushing AI as a key feature on the Snapdragon AI engine. Gaming, the promise of mobile gaming and as use case is very high as we can really expand the addressable market of gaming with cloud based gaming as well as having the lead camera. And as we talk about Snapdragon and digital and we talk about execution in mobile, it leads us to the conversation on front end. And our strategy is working.
As Jim outlined, we took the necessary steps to make sure we'll have every single piece of technology, and we have the ability at the component level to have equal or better performance than the competition, but also innovate substantially at the system level. It's been a multiyear investment for the company. We completed the acquisition of very important asset that was filters from EPCOS TDK. We had invested in this business to increase performance, so we could actually exceed the benchmark of FBAR in terms of filter performance. And we have had success in 5 gs.
So what I'll show you is not all of them, but 3rd party report, I think IHS teardown came with devices that did teardown and you can see kind of where we are. It's in addition to modem and transceiver, some of those devices you can see power amplifier, our gas PAs in those devices, diversity modules, envelope trackers, filters, antenna tuner and in the case of millimeter wave, our antenna module. So it's a comprehensive mode into antenna. It touch every single part. And my favorite slide is the next slide.
The Galaxy Fold is being launched by Samsung Sub-six globally with Qualcomm in all geographies, not yet with millimeter wave. So Sub-six, you don't require you require a lot of advanced technology. It's not as complex as millimeter wave. And they chose the Qualcomm front end components for the Fold Sub-six. And you can see a lot of the components that we have.
We have 5 gsPA module. We have that DRX diversity modules, envelope trackers. We also have the 4 gs diversity modules, antenna tuners, aperture tuners, filters, duplexes and extractors. So that's an example of what our execution has been. We're excited about that.
Akash will give you a little bit more color, but we feel that we took the right approach of make sure we had a highly differentiated solution across how we think about our test platforms, how our solution is tested and certified, how it performs better than the competition at the individual component level, and we have system level features because in the 5 gs era, it's not enough to basically be thinking of the modem digital only. Successful companies in the 5 gs era will be addressing modem to antenna because the complexity in RF is very high and is a Qualcomm sized problem to solve. So with that, I will shift to the next part of our presentation, talking about how we're executing beyond mobile. And I want to remind you of what our strategy has been. And that's the strategy that we put in place for about 2 years as we chose how to diversify our business and how to generate growth beyond mobile.
The easiest way to describe this strategy is to look at this diagram. And RF front end is a great example of that. We have a strong channel. Our channel in mobile, our Snapdragon channel is a very strong channel. It's a channel that spans not only from the Snapdragon So in that channel, we continue to push the technology boundaries and we invest in a lot of new technologies as we continue to expand content.
That's where you saw our expansion towards our front end and you saw our expansion into new areas, for example, as biometrics. Then on the right side, we look of industries that are being disrupted by mobile. The scale of mobile is enormous. And those industries get disrupted by mobile. Automotive is a good example.
We can go create that channel and tailor made our products in a highly leveraged R and D way, so we can execute and generate growth in our industries. And with that, we've been expanding our SAM and well positioned to address large opportunities for the company with incremental investments, basically building scale on our large R and D that drives both our licensing business and our product business. And I have one diagram that hopefully explains where we're heading and how to position the different investments and business that we have set up in the company now. So if everything starts with the phone and with the Snapdragon SoC, as highlighted by Jim Thompson presentation. That was driving in case of mobile, our 5 gs leadership in the 5 gs transition They will hope to grow and generate a lot of earnings for the company in the mobile market, which is our core business.
As we push new technologies into that channel going from the left to right at the bottom of this diagram, you'll see how we continue to create add content from what we successfully did with Wi Fi, Bluetooth, going to the RF front end, biometrics and integrated modules. Then going up from the mobile platform, we apply that to automotive, compute and IoT business, and we're making some new bets, leveraging the technology for the evolution of the data center, the edge data center, which has some new parameters of total cost of ownership and performance per watt as well as evolving our automotive business to autonomous. So that's how we structure ourselves, how we are leveraging R and D and making investments that allow many of those bets to grow accretive to QCT and diversify our business while maintaining leadership in mobile. And building on each one of those, I will start with the automotive as we look at the adjacencies. And automotive is one that we're very proud, has been a success story for Qualcomm.
And in addition to add that SAM to our semiconductor business, we see that we have a road map to get there. Start with the consolidation of multiple ECUs in the car with a high value SoC. So we started with our telematics and we have an opportunity on the telematics to add also connectivity on Wi Fi and Bluetooth, but that's evolving to cellular V2X. Cellular V2X is making good progress of being standardized Recently in Europe is now in a good position with the SRC. It's been in China, it's been standardized, it's been deployed.
That changes safety on cars and create new opportunities to continue to evolve in the telematics. The digital cockpit transformation with infotainment was also a very good opportunity for Qualcomm as eliminate not only multiple discrete systems into the car, but allow modern cars to deal with the fact that consumers are driving, looking at their phones. You have a much change experience as you rethink about the digital cockpit in the air of the connected car. We've been quite successful there with Snapdragon. And from there, we see opportunities to go to different places.
As we develop safety requirements, especially as we do mission critical dashboard, We're building our ADAS platform and also cloud device management building on the automotive. So we're in the automotive business to stay, has been a successful story for Qualcomm. And this one in particular, we're going to give you a little bit more metrics for you to see how we're doing and how this business is going to evolve over time. And our scorecard is really all of the designs that we have received for our platform in automotive. We're the number 1 in telematics.
We're going to be now in 2020, the number 1 in premium next generation infotainment, 18 automakers working with our Qualcomm platform and our pipeline is now $6,500,000,000 So we had increased the pipeline of design wins within our automotive segment. The other segment is compute. I know there's a lot of skepticism because it's been one that has not yet happened before competition in the PC space. But we feel very good about where we are right now, which was about the ability to create not a second class Windows PC. And the evolution of mobile and the evolution of computing and productivity, which has been changing because of mobile devices, create a real opportunity for us to grow into this market.
Anything for Qualcomm is growth since we don't participate in the market today. We have done successfully a partnership with Microsoft. And the point that I want to make, and it's just not unique to Microsoft, but if you believe in the digital transformation of IT with the enterprise cloud, if you look many of the drivers of growth in Azure, you will see a connected PC on the other side. As you move your entire enterprise data to the cloud, as you move everything to Office 365, as you manage PCs like you manage mobile devices with Intune, As you move your hard drive to the cloud, you need a connected computing experience. And the next transformation of the enterprise with the hyperscaler cloud is going to create an opportunity for more value of a connected PC experience and that creates an opportunity for Qualcomm.
And I would like to summarize that with our partnership with Microsoft. As you can see in this picture is the new Microsoft Surface X. There's no backup plan in this one. It's just Qualcomm Surface. There is no X86 version.
We have a custom Snapdragon that we work with Microsoft and is branded Microsoft SK1. Microsoft has taken responsibility for the whole experience from the application compatibility, the device all the way to the chip. And the PC industry has turned this page into the connected PC. We feel that the ability to create a Fin like category, we now match performance with the core i5 and we exceed in some of the applications that make use of GPU and the other capabilities, especially AI that we have into our processor. We are working to basically embed connectivity and make it seamless for connectivity to be activated in those devices and align ourselves with the message of digital transformation of the modern enterprise IT.
And our scorecard here is the number of designs that we secured today. You can see now we had multiple commercial launches. We have dedicated enterprise ready platforms being built, 1 by Samsung, 1 by Microsoft. There's going to be more coming. And it's already switching to 5 gs with the Lenovo announced 5 gs PC.
So this one, it's a good opportunity for Qualcomm. We can grow another Samsung type volume in this opportunity with premature devices, very accretive to our earnings, and we're optimistic about the PC transition this time. Now as we get to the last part of our conversation of Jason's, I wanted to bring you to the IoT. IoT is really about 8 segments for Qualcomm. And it is a good business.
The way you need to think about this business is a business that we have been leveraging our technology and products into many other industries, be able not only to diversify QCT, but generate growth. It is growing at double digits. And it's very accretive to QCT margins as well. And it's another expansion of SAM for the company leveraging our technology. And I will highlight just a few things as the first four segments.
It's connectivity, small cell fixed wireless and industrial IoT. Couple of interesting data points, 11,000 customers. So during the past 2 years, as you know, we did not complete the acquisition of NXP, but the company move on and been actively working how to create a channel so we can repurpose our technology into many different segments. And we're very happy to tell you today that we now have 11,000 customers. For a company that in highly concentrated in mobile space, which is highly concentrated, we have tens of customers with a B2B engagement.
Now over the past 2 years, now we do business directly with 11,000 customers, which is a big gain in scale in an efficient manner that allow us actually to continue building this business. A lot of the earnings power of the company in the coming years will come for this 5 gs transition. But this business, as we continue to grow this business, highly leveraged on R and D, after the 5 gs transition is completed will be a significant business for the company together with some of the long term bets. And we're very pleased with what we accomplished in this category that we call IoT today. A few highlights on connectivity.
WiFi 6 is a big transition for Qualcomm. We have the 1st certified Wi Fi 6 products in the both the access point and the mobile devices. We're very happy with our position in retail and in enterprise, and we're starting to see Wi Fi 6Mashes coming to the market. Fixed wireless 5 gs CPE is a new area. 5 gs creates an opportunity for many operators.
We announced our high power CPE for range and rural areas. They create opportunities for operators to augment their business case. Small cell, it's something that we see a lot of traction right now, and I want to highlight this. This has a lot of strategic value. Base stations are they don't have as much units as you have in the phones market.
But they're very important, especially on the strategic side for modem leadership and the creation of some of the demand for devices. So two areas worth mentioning. One is a lot of the private 5 gs industrial networks and enterprise networks. Countries like Germany pioneer with the allocation of dedicated spectrum for private 5 gs build outs has been followed by other geographies. We see our small cells being selected to build private networks in partnership with existing companies.
We also design our small cells in all of the big infrastructure vendors with the exception of 1. And there is this transformation or transition is a better word of the industry to flexible RAN architectures and Open RAN. The very first Open RAN public networks being built in the industry is Rakuten in Japan, has been built with the Qualcomm small cells for 5 gs. In industrial IoT, we see that an opportunity, very defensible business, global business across industrial handhelds, retail transformation, robotics and surveillance camera. So those are the 4 first segments.
The other 4 segments of this IoT is what are we doing in wearables, across watches and trackers, voice and music. Think about the technology. We can provide the technology on the Android ecosystem that can compete with the Apple AirPods is our high fidelity, high performance earbuds, and we started to see some OEMs now designing together with their smartphone. We've been very happy with the R and D that we did in this area. Also, we have consumer IoT and mixed reality devices.
And beyond that, we are making some long term bets for the company. And I want to highlight 2. First, it continues to expand our SAM. And you see the opportunity here for cloudedgeAI and for autonomy. So I want to start with the CloudEdge AI.
So the way for you to think about the cloud today, you have all device AI. I think Jim Thompson in his presentation talked a lot about that. And you have the cloud. 5 gs not only brings us 2 together, but also moves the cloud closer. If you look, companies have been well positioned.
I think, for example, YouTube with all their CDNs for video, it put them in a very good position for Google to provide gaming streaming. You're also going to see as a lot of the IT infrastructure goes to the cloud, you're going to see the build out of the edge clouds, and it's going to be a necessity from industrial and some of the consumer applications. As we look at the opportunity of expansion of the SAM within the data center, we've been working to develop this product, which we announced and is the Cloud AI 100. It's really addressing those industries with an optimized design, high performance and low power for the automotive industry, the data center, the 5 gs edge and 5 gs infrastructure. So we see now 4 type of applications.
Application in infrastructure as you look of virtualize some of the RAN in some of the controllers. You see this as a very good opportunity to replace CPUs and FPGAs. We see opportunities within the data center for inference processing. We see opportunities for high efficient and computation in the automotive sector, especially for autonomy. And we see this for 5 gs edge with mobile operators and cloud providers.
That's the card that we're now shipping to many of our customers that they're being evaluating our data center product is built on 7 nanometer, is designed really to handle inferencing workloads. And we feel we're very well positioned, especially as you think about the equation of performance per watt. And Verso is the existing incumbents. It's over 2x the performance and 2x the performance per watt, especially as you think of total cost of ownership. So you can see one of the benchmarks of our PCI card versus the competitor PCI card.
So we're very excited about that. That's a long term bet for the company, but it shows the power of the technology and the IP that we create for mobile, how can that actually scale to many industries and allow the company to generate growth in a highly leveraged manner. The other bet I want to share with you today is the autonomy. When you think autonomy, there is the larger portion of the market is really highway autopilot and thinking about going Level 3, 3 plus, level 4. And we have a basket of technologies going from multiple processing elements in sensors plus the ability to have an SoC that will meet safety standards, which is in part of our development as we build our infotainment business.
So we're making a lot of progress. The initial feedback has been great. Unfortunately, there's not so much I can announce this, but I highly encourage you to watch what we're going to do at CES. I think you're going to see substantial progress in how we had turned our autonomy research into products and how that's going to turn into design. So it's another new bet for the company.
We're very excited about it. And as we get to the end of my presentation, we talk a lot about 5 gs being transformative for many industry. It goes beyond phones. And as it transforms many of those industries, it really creates a very big tailwind for many of those Qualcomm adjacent and growth paths. So it feeds in each one of those creating new use cases across automotive, across compute, across our IoT segments and some of the long term bets, basically making what we do more valuable, more defensible and accelerate the opportunity for growth.
We also have more news to come. In the 1st week of December, in our Tech Summit, we're going to announce the new family of Snapdragon products, our next flagship with 5 gs Modem will be announced. And you're going to see those in devices coming in 2020. And in CES, you hear a lot about what we've been doing in ADAS. Really excited about this opportunity we have ahead for the company.
Is one of the best opportunities we had in the history of Qualcomm. And what I want you to take away when you think of this Analyst Day and what we're doing with our product business is we now hedge our bets on 5 gs. It doesn't matter who wins. If Apple wins, if Samsung wins, if the China ecosystem wins, we're well positioned. We have a global customer footprint for 5 gs with multi year agreements across multiple customers.
So we feel very confident about our position in 5 gs. 5 gs is accelerating across sub-six DSS, which is going to push the boundaries of performance and capabilities on modems and as well as millimeter wave. Modem to antenna is real. Performance is significant when you design as a system and the designs that you see on the front end. I understand that that's an area that many of you will face with skepticism, but we're very happy we accomplished today.
We actually have conservative targets, but we feel very good about the potential. And we're going to continue to make progress in RF technology, designing modem and RF as 1 in the 5 gs era. We have become the platform of choice for other industries as 5 gs go beyond phones and we're well positioned to expand and diversify and have a much more diversified company after the 5 gs transition. It's really a significant opportunity ahead. Thank you for your time.
Thank you for being here with us today. Thank you very much.
We'd like to invite everybody to please join us for lunch downstairs. We will resume
China Mobile has maintained a very good partnership with Qualcomm, which resulted in significant achievement in driving 5 gs development. China Mobile looks forward to working closely with Qualcomm to boost the device innovation. We hope to strengthen joint efforts on technology and standard to ensure the continuous optimization and evolution of 5 gs. Moreover, we will extend the collaboration onto the study of customer demand, user experience and the new applications to build the new 5 gs ecosystem.
For Bosch, 5 gs is a key technology for the digital transformation of our business. Bosch is a big company. We are active in many different vertical industries, automotive, manufacturing, agriculture, building automation and so on. And in all these domains, 5 gs may have the potential to transform and even to the rough disruptive industries. We are very happy and excited about the collaboration with Qualcomm because it combines the best of the 2 worlds.
So on the one hand, Qualcomm is one of the leading 5 gs technology providers. And on the other hand, Bosch has an industrial giant. And in order to unlock the potential of 5 gs in different vertical industries, we need this very close collaboration because one player alone cannot really do that.
For the first time ever in a long, long time, we're very, very excited about what 5 gs can really bring to society. I think at Rakuten, our approach is not to only focus about what 5 gs means, but also fundamentally transforming the underlying network architecture. Probably one of the most exciting projects that we are undertaking is the work that we are doing today with Qualcomm, which is fundamental creation of So this is the world's first open RAN architecture for 5 gs.
So this
is the world's first open RAN architecture for 5 gs. That is incredible, never happened before. We think millimeter wave is a vital part of the ecosystem. And that's largely why our relationship with Qualcomm is so impactful. I think there is like an unbelievable wealth of opportunities that millimeter wave could bring for enterprises and industries.
Ladies and gentlemen, please welcome Executive Vice President and Chief Financial Officer, Akash Palkiwala.
Good afternoon, everyone, and thanks for coming to our Analyst Day. And thanks for coming back after lunch. I was a little worried that after the really good presentations in the morning, no one was going to come back for the financial discussion. And so it's good to see you all back here and interested in the financial information. It gives me job security.
So I'm very excited to be here in my new role representing Qualcomm and had an opportunity to meet several of you yesterday and looking forward to meeting more as opportunities present themselves. We started working on 5 gs a long time ago, and it's great to now see networks being launched, devices being deployed and what that brings to us in terms of growth. So you've heard a lot about that from the speakers before me. What I'm going to focus on is how do you put a financial framework around the data that was shared previously. And so that will be the focus of my presentation, all right?
Okay. So this is effectively the 3 set of topics I'll cover. I'll go through the revenue forecast and growth opportunity, things we're doing on the margin expansion side and then capital allocation and then address capital return and M and A as a part of that discussion. With the investments that we've made over the last couple of years, we have really strong growth vectors in place with 5 gs, RF front end, adjacent markets and then QTL as well. And so I'll go through each one of those, and I'll start with the growth discussion first.
Okay. So think of our business in 4 parts. And the first two effectively represent QCT as you know it. So you have the mobile handset platform and the adjacent platforms. And so what is included in the mobile handset platforms is the core chipset, and I'll provide more details on that.
That's the platform that will benefit from the transition to 5 gs. That's the RF front end and fingerprint. And the total revenues for that segment is $11,300,000,000 in fiscal 2019. Going over to Adjacent's, we'll talk through Automotive, Compute and IoT. The total revenue for that segment in fiscal 2019 was $3,400,000,000 You'll see that we've included RFFE connectivity mobile connectivity and fingerprint in the mobile handset platform, because we just feel like especially RF front end, the growth of that market is so closely tied to our mobile chipset business that that's the right way of thinking about RF front end going forward.
Long term opportunities, I'll briefly touch on ADAS and cloud edge AI. I know the rest of the presenters have talked through it already. I'll give a quick financial lens on how we think about it. And then finally, I'll finish talking about licensing, just the overall status of the program and then how to think about 5 gs impact. As you know, QTL revenues in fiscal 2019, dollars 4,600,000,000 Okay.
So I think for mobile handsets, of course, the key driver for us both for the QTL and the QCT chip business is the market. So the key assumptions as we look at the market, we are forecasting a market that's consistent with its current form, both in kind of the total scale of the handset market and the mix of OEMs across the board. And so we're assuming that market carries forward. We don't have a market growth assumption built into our plan. Within that, the way we thought about the 5 gs forecast, we mixed a combination of tops down analysis and bottoms up assumption.
So tops down, we looked at how the transition from 3 gs to 4 gs happened and what could we learn from that. And we applied that to the transition from 4 gs to 5 gs. There are 2 key differences. The first difference is the availability of chipsets across tiers in 5 gs. When 4 gs was launched, we had a premium tier chip and premium tier devices only in the 1st year.
As 5 gs, you're well aware, we have chips across multiple tiers all available in 2019, late in 2020. The second difference is China. In 4 gs, China started 2 years after the rest of the market. In 5 gs, we're expecting China to really not just start at the same time, lead in some cases the 5 gs deployment. So you have that deployment curve pulled in.
So when you take a combination of those factors, we are forecasting the market to go from the $200,000,000 midpoint that we gave for 2020 to greater than $750,000,000 in 2022. In order to kind of test these numbers, we also looked at the bottoms up plans of our OEMs, which operators are deploying in what scale of the deployments. So we considered that and the design pipeline the scale of the deployments. So we considered that and the design pipeline for each of our OEMs. We've been working with them and we have a pretty good idea of when they're going to launch their phones.
So this is kind of the baseline assumption for our financial plan in terms of 5 gs devices. It's obvious, but just to clarify, we expect this kind of transition to continue. So as you go beyond 2022, we'll see the additional remaining devices at our 4 gs transition over as well. Okay. So talking about core chipsets.
And when we say core chipset, what does that mean? It means our modem, application processor, PMIC and connectivity chip. So it's the first set of chips that we've been selling for a significant period of time to our customers. That SAM, we expect to grow from $26,000,000,000 to $35,000,000,000 at a CAGR of 10%. If you think about the driver key driver for the CAGR, we have 5 gs is very complex.
It's not just as you heard, it's not just sub-six and millimeter wave. There's TDD and FDD, there is NSA and SA, There's carrier aggregation. There's DSS. And then you have to do all those things at the same time in a device. So there's tremendous complexity.
It plays to our strength. And that's one of the key drivers of the growth in the market. Also as you look at the bar for calendar 2022, you'll see that about 2 thirds of the bar is 5 gs. So while there is a certain curve for unit penetration, when you look at the SAM, the dollar SAM, we expect a much quicker acceleration to 5 gs and which given our position in the technology, it allows us to participate in it in a good way. In terms of our traction, we've quoted this number before.
We have over 2 30 design wins across all devices in 5 gs, which is a great starting point as we look at this ramp going forward and the transition happening and our ability to participate in it. The last point for this transition as we've announced before, we have a multi year deal with Apple. And so when those products get launched, we will have an incremental benefit as well as revenue scales up. So overall, when you think about this growth opportunity, it's in 2 parts. We grow with the SAM.
And on top of that, we have growth driven by gaining share at Apple when they launch phones with our chipsets. So on this page, we'll talk through RF front end. When you look at a similar metric for RF front end, we see a growth from $13,000,000,000 to $18,000,000,000 at a CAGR of 12%. And if you look at the technology or content mix, we expect the growth to be all driven by 5 gs. As devices move from 4 gs to 5 gs, we'll continue to have 4 gs content in those devices, but the growth is all driven by 5 gs content.
And as we have discussed earlier through the day, we have a very strong portfolio and strong position, especially in the 5 gs content. And so it will allow us to participate in that upside. In addition to that, we also through dynamic spectrum sharing expect 4 gs bands to be used in 5 gs mode as well. And as that happens, more content moves from 4 gs to 5 gs and increases the 5 gs portion of the pie. And it sets us up in a really nice position to further expand our position in terms of share.
From a design win perspective, the same metric as we quoted on the handset side, we have over 2 30 design wins for 5 gs chipsets and virtually all of them have our RFFE. So we already have a strong design win pipeline that we're going to benefit from. As you look at the SAM, our target for share in this is greater than 20%. And we feel like with the transition happening to 5 gs over the next year or so, it creates a chance for us to go achieve that and then become a much stronger player in the RF front end ecosystem. So when you take those two things together, the RF front end growth and the chipset growth and look at it, we wanted to kind of bring it together and reiterate the metric we had given before that as we go from 4 gs to 5 gs, we expect content per device to grow by 1.5x.
And this the 1.5x growth includes sub-six and millimeter wave for RF front end and for the core chipset. The way to think about this metric is if you take a 4 gs premium tier device with our 800 tier chipset to a 5 gs premium tier device with our 800 tier chipset, like for like device, we expect our revenue opportunity to grow by 1.5x. As 5 gs goes into lower tier devices, that carries over. So the same increase in opportunity would apply to the 7 100 and 600 tier as well. Turning to adjacent platforms.
So this slide shows a revenue breakdown of the 3 categories we are including in the adjacent platforms. We have auto, compute and IoT. So I'll just quickly talk through each one of them. Auto, what SAM for auto means telematics, connectivity and infotainment. Then we'll talk about ADAS separately later in the deck.
But this is an existing business that we have. I have a slide on auto, so I'll wait to that for that slide to give more details. The second is compute. Cristiano talked about the very significant opportunity we have in the compute market. From a financial perspective, this is clearly a large profit pool that we are not participating in.
And it's an area where we can reuse technology from mobile. So at very low incremental cost participate in a big profit pool. And so we'll look for the opportunity to do that. In terms of our financial assumptions, we are not assuming a big win in compute and the guidance we're giving. We're just excited about it as an upside opportunity.
For IoT, we've split the IoT market here, our revenues into non cellular and cellular. And clearly, with 5 gs coming in, it's going to be a big advantage for us as we focus on the cellular market, cellular IoT market in addition to the non cellular. I have a slide later in the deck on that as well, so I'll talk about that a little more. The key part for there are 2 key points for us as we look at these adjacent markets. First is these markets are demanding technology from mobile.
And so we can leverage our R and D base with limited incremental costs, bring the technology to these markets and grow our revenues. And then the second thing I would say is these because of that strategy, these markets are margin accretive to QCT. We're able to address these markets in a margin accretive fashion. Okay. So transitioning to auto.
Just to reiterate for us the SAM here is telematics and connectivity and then infotainment. The way we think about telematics SAM, we started with 4 gs, 3 gs and 4 gs chipsets in cars. Now we are going to 5 gs. We can bring in RF front end now that we have that asset that can attach to cars as well. Jim talked about CV2X, cellular V2X.
As that technology comes in, we'll be able to address that on top of those. So what happens is what used to be a chipset sale suddenly became a platform, telematics platform where we can add more content on top of it. Connectivity includes Wi Fi and Bluetooth and we've been in that business for a while and we got a portion of that business through the CSR acquisition. The light blue is infotainment. And I think kind of Cristiano went through some significant detail on what the infotainment revenue includes.
And so we feel like there's a very big SAM that's available to us and we have all the right technologies to go access it. In the middle, we are showing the design win pipeline. You've seen this number before $6,500,000,000 But what we tried to do in this presentation is take one step forward and help convert it into what it means for revenues. So in fiscal 2019, we had over $600,000,000 in revenues in auto and we are forecasting that goes up to $1,500,000,000 in 5 years. Of that $1,500,000,000 approximately 75% of the revenue is related to designs we've already won.
So those are not there's obviously high predictability in those revenue streams and the remaining 25% is based on designs that we'll win. Also as you think about beyond 2024, this is not the peak year for us in auto. As we have the strong design win pipeline, we continue to have a steep growth profile beyond 2024 as well. So that we really like the growth profile of that business because it complements the 5 gs growth profile in mobile and adds more tailwinds to that growth. From a financial perspective, the other thing that's very interesting about this opportunity is and I think this was discussed earlier is we are reusing technology and chips created for mobile and we are planning them in such a way that they can be used in auto in later stages.
So it just allows us to really leverage the R and D. And then there's some auto specific software work and other work done that allows us to bring it to the auto market. So from a margin perspective, as this business grows, it will look very interesting to us. So turning to IoT. Cristiano mentioned our total customer base here.
We have over 11,000 customers and the revenue is split across a lot of different segments, geographies and different types of customers. So there's really good diversification within this pie from a customer perspective. And then as you break down the CAGR on the market and you look at cellular versus non cellular, for the areas we are addressing, there is significantly higher growth available in the cellular part of the market. And so that is our opportunity to go and participate in that use 5 gs as the lever to increase our presence and grow revenues. Overall, as we think about this market, we think we have an opportunity to grow with the market and that's our financial planning assumption.
Okay. Turning to long term growth opportunities. Same premise as you've seen before. We're going after the ADAS market and we are addressing the cloud edge AI market and we are reusing all the technologies available from mobile and chips available from mobile to go to that. So again, while this is a market these are new markets for us, we are leveraging so much technology and for ADAS, we're leveraging our channel as well.
So it gives puts us in a pretty good position to be able to access the market. One interesting metric that I wanted to leave with you is to address this total SAM of $18,000,000,000 we are investing an incremental $200,000,000 So it's a very small incremental investment to address the SAM. And this $200,000,000 is already in our spend run rate. So this is not something that's incremental to what we've guided before. It's within our spend run rate.
And it's an example of how we can really leverage the R and D in mobile to address larger markets. So turning to QTL. As Alex mentioned, we've signed over 75 licensees for 5 gs. And then we have some multiyear anchor agreements around which the program will evolve. So we're in a pretty good spot and very good start on the 5 gs licensing program.
From a guidance perspective, we've provided guidance for the December quarter. We provided guidance for the March quarter. I think you have the actuals for September. So you should be able to use those numbers and the seasonality around those numbers to forecast QTL revenue for fiscal 2020 and really use that as the baseline going forward. There are 2 upside opportunities to that revenue base.
First is Huawei. When that gets resolved, it will get added on top of that forecast. And then second is 5 gs benefit. We are not planning for any 5 gs benefit in QTL at this point. But there are 2 ways in which you could see significant benefits could accrue to QTL.
First is replacement rate. So when we went from 3 gs to 4 gs, and I think Cristiano mentioned this as well, there was a significant increase in the replacement rates. And so if we could see a very similar phenomena with 5 gs and that would increase the size of the market benefit QTL. The second benefit is as devices at the mid and low tier, those users upgrade their devices and they buy more expensive devices to take advantage of what 5 gs offers, that will be another incremental benefit to QTL. So those 2 would be upside benefits to the program.
Okay. So moving over to operating expenses and leverage. This is obviously an area of key focus for us. We want to realize operating leverage and realize increase in margins as we go forward. If you look at the cost reduction plan that we just concluded of $1,000,000,000 the way we approach the plan is we cut things that were non core to us.
And then we focused on driving SG and A efficiencies. And we tried to do this in a way such that we can preserve the investments we needed for RF front end and 5 gs and execute on those things. So we're pretty proud of how over the last couple of years we've been able to execute on RF front end 5 gs while reducing our cost structure. Going forward, our focus will be continue on to look at SG and A efficiencies, focus on R and D productivities and then really be selective about any new investments that we make. And any new investments we'd make would be consistent with the philosophy we've outlined of being able to leverage the mobile R and D base into new markets.
So transitioning to capital structure, we're very happy obviously with how we've done with our capital return program. Over the last 3 years, we have returned $36,000,000,000 to the shareholders, dollars 10,000,000,000 in dividends and dollars 26,000,000,000 in buybacks. When we started our incremental buyback program about 15 months ago, since then we've bought $23,000,000,000 stock back at a price of $65 And with that, we retired 22 percent of the shares outstanding. So that program has worked out extremely well for us. We're very happy about how that played out.
Also during this time, these 3 years, we invested $17,000,000,000 in R and D and a lot of it was around the concepts Jim outlined in early investment kind of making 5 gs happen, taking a systems approach and then driving chipsets and royalties licensing at the end. Looking forward, it's we're focused on strong balance sheet, investment grade rating, obviously, kind of keeping our balance sheet strong is extremely important to us. We will grow dividends over time. And then from a buyback perspective, our baseline will be anti dilutive buybacks. And then opportunistically, we will consider buybacks on top of it.
So that's kind of our overall capital structure policy going forward and then very happy with how things have played out over the recent past. From an acquisition perspective, we've done 21 acquisitions over the last 5 years. And as you can see, most of these acquisitions were much smaller. We've done 2 large acquisitions in the 5 years. The last one being acquiring the Appcos asset from TDK, which we recently completed the transaction.
And then one of the things we are proud about is how we were able to acquire that asset and a couple other companies. And together, we were able to build a portfolio of RF front end technologies that complemented our internal R and D investment. So we feel pretty good about the portfolio that we created partially through M and A. Looking forward, we'll keep looking for tuck in acquisitions, buying small technology teams, buying assets that fit with our existing strategy and help us execute on it. So that will be the primary focus.
And then opportunistically, we'll evaluate other M and A as well. Okay. So going to 3 year financial targets. And what this slide really is, is a summary of what we've said on all the other pages. So that's how you should think about these numbers.
One of the key things for us is as we grow going forward, a lot of the growth vectors are driven by QCT. And so you will see a shift in the mix of businesses between QCT and QTL, where QCT will become a larger portion of our profits. From a revenue growth perspective, when you take the SAM growth of our existing markets, again, I'm excluding the longer term bets, our existing markets, it's around 10%. And so from a revenue perspective, we plan to grow with the SAM plus have Apple revenues on top of it, right? So that's how if you think about the longer term modeling, it should be the SAM growth SAM related growth plus the Apple related revenues.
From a QTL perspective, I think I already outlined that the way to think about the business going forward is the baseline profile, opportunity from Huawei resolution and then opportunity from 5 gs on top of it. From an operating margin perspective, QCT, we think we have an opportunity to grow over 20%. And so we are very optimistic about where this takes us, our existing growth vectors. And then as some of these large markets materialize, we would have an ability to grow beyond that target. From QTL perspective, we are guiding 70% operating margin and you should think of a band around that number, where lower than 70 percent is effectively reflective of the current run rate that we've provided to you.
And then as we resolve Huawei, we would be higher than the 70%. So just maybe summarize the key takeaways from my presentation. We are assuming a mature handset market in existing macroeconomic conditions. We see an accelerated move transition to 5 gs happening versus a transition to 4 gs. On the mobile handset platform side, we feel like we are in a very strong position with RF front end and the 4 gs to 5 gs transition, the chipset opportunity for us.
And then beyond mobile, we have growth vectors in all the markets we are addressing, including auto, IoT, compute and then the longer term opportunities, ADAS and AI. And then finally, QTL, we have over 75 licensees completed for 5 gs, and that will serve as a base for the expansion of the licensing program. Overall, when you look at this, we feel like we're in a very strong position to grow earnings faster than revenue and hit the targets that we've outlined. So that concludes my presentation. Thanks for coming here today.
And with that, I'll call the Qualcomm management team to come back on for Q and A.
Hi. Hello? Hi. It's Mike Walkley with Canaccord Genuity. I know there'll be a lot of questions about RF, but I might just switch gears here.
Just on QTL, just how should we think about maybe the next steps or the timing on the FTC case, the appeal case with the 9th Circuit Court? And how might the business be contained given your 75 plus agreements and licensing deals, your recent deals with Apple and Samsung? Are those deals set no matter what the night circuit rules? Or just how do we frame about the risk of this case and the timing?
I'll start, Mike, and then turn it over to Alex. So in terms of timing, so as you know, we have the stay in place. Unanimous panel from the 9th Circuit ruled that we were entitled to a stay, which has obviously been extremely satisfying to us. The timing currently is that oral arguments on the merits should take place in February, perhaps March. All depends on the court scheduling and their dockets.
But it won't be earlier than February and it is possible that it will move into March. We'll do the argument then. And again, based on the court's history and schedule, it looks like it would take anywhere from, I don't know, 7 months to 1.5 years before they make their ruling. That sounds too specific than I want to be, but that's a range I've basically been given by several people. And as you know, Alex and his team have continued to not actually all through the FTC case trial, They were continuing to, as we showed you on the timeline, negotiate license agreements.
And I'll turn it over to him to fill in the rest of that answer. Yes.
So I think 2 things, Mike. First, tremendous amount of confidence in our position on the appeal. The second thing is, I think you should just consider the fact that as we were entering into these agreements, including some of the key agreements that you mentioned, we had a very clear understanding of what the FTC issues were. And so the parties entered into these agreements with those in mind. Both parties understood what these issues were.
And I think that kind of the best way to think about it is we're smart enough to understand how to resolve and how to get to long term deals taking those issues into account.
I think just to be clear, picking up on Alice's point, we have and continue to view the FTC's complaint as without merit entirely. Nothing about it we think was meritorious neither from a legal perspective or from a factual support for the legal perspective. And that will remain our position until we are successful here. But what Alex was essentially saying is even if you look at some of the things they've accused us of, we're dealing with those effectively.
Thank
you. Hi. Chris Castle from Raymond James. I have two questions regarding millimeter wave. One, if you could address the incremental cost and I think this is one of the concerns of putting millimeter wave solutions on what's the incremental cost of the phone will that be prohibitive make the phones too expensive?
And then secondly from a Qualcomm perspective, it sounds like you've got very good penetration on that and the sub-six in the next generation. What's the competitive moat that you have such as you have these designs you'll hold on to them as you go on to the next generation?
Yes. I'll address that question. Look, when you add millimeter wave to the phone, you increase the number of antennas. And it has been an increased bill of materials, and we see an increase in the overall cost. However, having said that, we bring in millimeter wave to all of our tiers, including we have now our 700 tiers designed with millimeter wave.
And when we look of some of the price point of the devices, especially as the technology is getting scale, we've been positively surprised by the fact that it's probably to be viable. And I expect cost to go down as we go to next generation modules. So like any technology, you have a technology premium, but it's you have efficiency gains and inability to reduce the number of modules per device. And the metric will be our 700 tier device coming with millimeter wave within the 2020 in the first half. I think your second question was about a competitive landscape.
If I understand, do you want a competitive landscape in millimeter wave, so 6 or both? On RF, modem or both? RF. RF. All right.
So we have 3 vectors of differentiation. I think some I will put them in the technology category, another one is in the scale category. So let me start with the technology category first. We've been very focused on 5 gs. And I think as Jim Thompson pointed out in his presentation, we work very hard to make sure we could win the performance comparison at the individual component level, whether it's a gas PA, a filter in the low band, a filter in the high band.
And we feel now we have a very competitive solution at the individual component level. As a matter of fact, we are winning some discrete, especially what we call agnostic on the high silicon platform or even in the axons platform because of our performance at component level. So that's how we could compete with the existing players. But what we actually done, and I'll say the technology differentiation is really implement capabilities at the system level. And I'll walk you through a few examples.
One is this technology that we call smart transmit that basically take measurements at the millisecond level and basically adjust power. And we've seen delta of multiple dBs is the difference between have coverage or not having coverage. I would say in the days of feature phones, whether you have a good antenna, you don't have an antenna and a good antenna and you have significant performance at the edge of the cell. The other capabilities that we have is how efficient we can make envelope tracker in 5 gs versus APT. The other driver of differentiation is what I call the scale model.
So in the 4 gs era, we were not yet ready to enter the RF space. So we never get much credit for, but our test platforms end up having an influence about market share in some of those players. When we develop a chip, a baseband chip, and that chip, we have simples that go to our customers. We build mobile test platforms and we build reference designs. And before we have commercial software on the baseband, we take this into every geography across every infrastructure vendor, every software version, whether it's a Huawei based station, ZTE, Datang, Samsung, Ericsson, Nokia, you name it, and across multiple operators implementation.
And then we have a commercial software on the modem. We, in the 4 gs era, we'll do this with our test platforms and we'll pick who goes into the board, whether it's Avago goes or Murata goes, Skyworks goes or Qorvo goes. Now our test platforms are only built with a Qualcomm front end. So when an OEM gets a commercial software chipset, our front end is tested and certified. He can do build that with different solutions, but he has to test himself.
So I think that gain on scale and time to market is also a big differentiation on Qualcomm as well, because now the name of the game is a little different since we have a 5 gs front end solution across the entire chain.
It's Rod Hall with Goldman Sachs. Thanks. Two questions. 1 would be regarding the millimeter wave unit volume. So I don't think we question whether you have a competitive advantage in millimeter wave.
It's more when do these units ramp. And I wonder if you could help us understand within the 200,000,000 units next year and the 450,000,000 the year after, and and then maybe even the 750,000,000 if we're really getting really greedy about data. If you could help us understand how these units ramp through time. So that's question number 1. Question number 2 relates to 5 gs penetration in total.
So the penetration rates that we calculate based on not just your numbers, but industry numbers suggest that 5 gs by 'twenty one would be over well over 10%, 12%, 13% penetration of the smartphone installed user base. That number is significantly higher than what we would have calculated the same year for 4 gs. And we know that conditions are different and so on. And as you pointed out, Akash, the chip availability is different, but it's still a much different number. And even if we back out China, penetration is still a lot higher in the rest of the world than it would have been at 4 gs at the same time.
So I'd just like to get a little bit more color on why that's the case.
Sure, sure. So I'll maybe start with your second question. As I said in my comments, the biggest driver in our minds and there are 2 drivers, the biggest driver is China. And it's not just the China market, the intensity comes from the China OEMs. And the OEMs wanting to take the 5 gs phones that they make in China and really export it in different markets.
And they see it as an opportunity to be there first and gain share from other players. So the China phenomena is not just about the China market, it's Chinese OEMs as well. The second is you have phones across multiple tiers and maybe that also speaks to the question that Cristiano answered earlier is we'll be able to go down the price premium curve much faster because you don't just have the 800 tier chips, you have 706100 as well. And so it gives the OEM options to be able to hit aggressive price points with 5 gs, gs, which will drive adoption rates. So those are the two factors I'd look at.
From a forecast breakdown perspective, we're not giving that insight at this point in terms of what's millimeter wave versus sub-six. But the way I would recommend you think about it is think about the key markets and Christiana outlined which markets are going sub-six and which markets are going millimeter wave, U. S, Japan, Korea in 2020, those are the 3 key markets that will have millimeter wave deployed. And so you would expect premium tier phones and these are mostly premium tier markets. Those phones to have most of them to have millimeter wave capability.
And so maybe that's a way to think about scale.
Thank you. It's Matt Ramsay from Cowen. I'm not sure if this is for Akash or Cristiano, but you walked through the slides and you guys lay out a pretty compelling case of 50% content per device. I think that back to some numbers in my head, I think it was a 20% growth rate in automotive, some pretty big numbers around edge computing and auto. And yet, SAM growth at 10% seems pretty conservative to me.
So are there things on the negative side that we should think about that are depressing that same growth rate? And maybe if my assumptions are correct that things could be better than that, what keeps QCT op margins at 20? Why can't they be higher? Thanks.
So maybe from a SAM growth perspective, that weighted average of 10% is a combination of 10% growth for the chipset market, the core chipset. We had 12% for RF front end. And then we have the adjacencies growing in the 10% range as well. So really, that 10% was just math based on the growth rates we have in those three markets. We are not including, as I mentioned during my prepared remarks as well, we are not including the upside opportunity that we could have if we had a home run win in compute or we had a significant win in ADAS, which has a timeline to it, by the way, and then also in AI.
So those are incremental things from a revenue and margin
Hi, over here.
It's Ross Seymore from Deutsche Bank. Akash, another one for you and kind of following up on Matt's question on the EBT side of things. Can you just talk us a little bit about some of the moving parts to get to that 20% or higher? Is it mix? Is it the adjacencies coming in with higher margins?
Same thing with RF. And then on the other side of the equation, but also sticking with EBT, is on the QTL side. Why is that only 70% when I think historically used to be in the mid to upper 80s for your operating margin in that segment? Sure.
So on the QCT side, I'd say that maybe the 3 vectors that are most influential in getting to the 20% margin target is the 1.5x premium on a like for like basis that we talked about, which includes core chipset and RF front end premium for 5 gs. And then the third factor would be Apple when that business comes in and obviously, it will be incremental to our margin directly because we've already done the investments in the process of doing the investments required to scale them. So those would be the factors that improve the QCT margins. And that probably matter the most in getting the margin targets. On QTL, you have to recall that versus a few years ago, the scale of the business is a little different.
So I think that impacts the operating margins a bit. And then in terms of R and D, we've been investing on 5 gs and really making sure that we have a very strong portfolio. And so that impacts the margin some as well.
Thank you. Stacy Rasgon at Bernstein. I have two questions on chipsets. First, how much of that 10% SAM growth for the core chipsets from 2019 to 2022 is simply because you weren't selling chips to Apple in 2019 and you presumably will be selling chips to Apple in 2022?
That's like to like. So it includes Apple in both the 'nineteen and the 'twenty two SAMs. So the growth is not being driven by including Apple in there.
Is there Huawei in that SAM as well?
Yes.
There is. Okay. So I guess to follow-up on Matt's question, if you're like so much of the growth I think the market was going from almost no 5 gs now to like twothree or 70% of it in 2022 was 5 gs. And your revenue opportunity is up 50% from 4 gs to 5 gs. I guess I'm still struggling with the 10% also.
Why shouldn't it be a lot more than that? What else is going on, Doug?
Yes. So just to confirm, the way to think about it is growth because of the sand growth plus Apple business on top of it. So what we're guiding towards is not 10% inclusive of the Apple business, it's incremental.
No, I understand it, but the 50% upside is in the core business, doesn't include Apple. That's going to be extra presumably because right now it's 0.
Yes. So as we said earlier, our assumption is that the market structure remains the same. Our share, our position remains the same as we go forward. And that when you take as a result, we would grow with the market at the same rate as the market with Apple incremental on top.
So 10% without Apple and then throw Apple on top?
Correct.
Okay.
Thank you. And again, because of reasons like auto and RF front end, we could do a little better than 10 and then Apple on top.
Yes, thanks. It's Brett Simpson of Arete Research. You talked a lot today about the adjacency opportunity in QCT. But my question really is about QTL and how the non smartphone opportunity plays out in the next couple of years. And my understanding is that you've done a lot of deals with guys like Avanci where you've got patent pools, you've got caps on things like IoT, autos.
So can you maybe talk a bit about how you monetize the non smartphone part of QTL? What portion of the volume today might be non smartphone? And what sort of growth do you expect? Or what's the contribution from that going forward?
So let me address kind of just generally non smartphone part of the market. It currently is actually a very small percentage of our overall revenue. And so right now, we're not guiding anything significant happening in the non smartphone space. With respect to these deals that we entered into with platforms, for example, such as Avonci, We actually haven't done a lot. We've done a couple and there are alternatives.
So for example, with respect to the Avanci 3 gs, 4 gs licensing opportunity for automotive, We actually have an automotive program currently in place. We've had a program in place for 10 years. A licensee can opt to stick with a Qualcomm license directly or opt out and take a Novasi license. And so that actually the automotive licensing business has remained largely intact without a lot of difference from the Avanci platform. So there hasn't been a lot of experimentation in these other platforms.
But I think the overall takeaway is, right now, Akash can comment on this, we're not putting down any markers for a real shift in the revenue makeup for licensing.
CJ Muse with Evercore ISI. I guess, Akash, back to you, a couple of questions on the margin side. I guess, first off, for PBT, exclusive of QCT, QTL, I think that's been running at about $800,000,000 loss. What are you projecting into fiscal 'twenty two? And then back to the PBT margins for QCT, it looks like it's an incremental PBT margin of 30%, 35%.
I would think that if the chipset business were growing around 50% over the next kind of 3 year type CAGR that we would see more leverage there. So are there investments that need to be made? Is there a time period beyond fiscal 'twenty two where we see the real acceleration in
terms of margins? Thank you.
So on the first part, I think you're referring to the corporate other column in our results. So there are 2 things to it. 1st is the net interest expense that we have. And we've guided during the earnings call that on a quarterly basis that amount would be $100,000,000 So you should expect that as kind of the run rate going forward. That's a net interest expense, so $400,000,000 for the year.
And then for the OpEx, which is long term investments that we're making, we expect that to be roughly flat going forward. So there is no specific plan to increase the scale of the investments. So you should be able to use that to model it. Can you repeat the second question, Ian? Sorry.
Sorry.
I mean, if you add up what you've given us in terms of adjacencies, etcetera, it looks like QCT revenues are growing roughly 50% over that 3 year time frame. So I would think that the incremental PBT margins would be above 30%, 35% implied in the guide for PBT margins.
Yes. So as we think about our growth profile, we don't have a specific scaling on OpEx assumed that the goal is to continue to invest judiciously and really recognize the benefit of the operating leverage as the revenue grows. So we feel like having a target of greater than 20% is the right place to go for now. And then as different markets kick in, maybe there's an opportunity in the longer term.
Hi. Ivan Feinseth, Tigris Financial Partners. Thank you for taking my question. What were your original thoughts in the acquisition of NXP? And how do you feel like what would have been different if you were able to complete the acquisition?
Government will continue to issue waivers to do business with Huawei? And the government will continue to issue waivers to do business with Huawei? And what would happen if they don't?
Sure. Why don't I take that? I'll do the second one first, then I'll do the first one. So the second one, I think one thing with Huawei you should remember, we have a pretty small product business with Huawei. And so for us, we're actually somewhat insulated from all of the news cycle with Huawei from the product side.
Obviously, on the licensing side, we're trying very hard to get them and their agreement done. But we tend to have less of the ups and downs based off of that. I don't think long term you should think of this business the opportunity with Huawei on the product side to be very, very significant. On the NXP question that you had, you should really think about the NXP acquisition in the context of when we started it, which was several years ago. At that point, our position in the auto market was very different than what it is today.
If you look at what's happened, particularly in our infotainment business, it's grown dramatically over that time period in part because we came in with really differentiated technology really from the roadmap that Jim Thompson described and we were able to build that business really without some of the things that we wanted to have with the NXP acquisition. So you go forward 3, 4 years later, many of the channels or technology entry points that we were trying to get, we've been either able to do ourselves or because we're so much closer to 5 gs, the need to get them has probably become lessened. So I think for us, we have the ability to leverage our existing roadmap. Of course, we're looking at M and A and we're trying to get ourselves in a position where we can take advantage of that from a balance sheet perspective as you've seen from Kashy's presentation. But we've been happy with the markets that we've been able to drive in the meantime since the time when we initiated that NXP acquisition.
It's Vijay from Mizuho. Just on the 5 gs side, you talked about 175,000,000 to 225,000,000 units for next year and 450,000,000 units a year after. Just wondering what's the attach rate you're assuming for RFFE and millimeter wave that you build into your core chipset, etcetera? Thanks. So just
to confirm, the forecast we gave is for the total size of the market rather than our units. I think millimeter wave, I answered Rod's question earlier. That's probably the right way to think about what the attach rate would be for millimeter wave overall for the market. And then we would obviously expect and hope to win the millimeter wave attached for our platforms. And we feel like we're in a very strong position on millimeter wave from a competitive landscape perspective.
And then from an RF front end perspective, again, the forecast was the market. Obviously, all those devices will need RF front end capability for 5 gs. And so it really comes down to our ability to win the core chipset and then offer an end to end advantage and be able to kind of have a performance advantage that allows us to win the RF business as well.
Hi. Sriniv Bajuria from SMBC. Nico, thanks for the presentations. Akash, I want to go back to the margin question again. You said that I guess for the March quarter, you're guiding mid teens margins operating margins for QCT and your longer term model is 20% plus.
But at the same time, you're not spending much in terms of your OpEx. I'm still confused as to why it's only 20% plus. I know you said plus, but why not 25% or 30%. Is that because your gross margins in 5 gs are somewhat below that of 4 gs? Or is there anything else going on?
No. I think it's really we're trying to be careful with our margin target. We there are a lot of variables in the 5 gs growth rate, right, as when it happens, how it happens, in terms of which tiers. So there are several unknowns. So as this plays out, we feel like having a greater than 20% margin target is a reasonable place to be right
now. And then I have a question for Alex. On 5 gs licensing, I mean, you talked about how strong your portfolio is. Can you put that into perspective as to compare that with your 3 gs portfolio and 4 gs portfolio? The reason I'm asking this is that I've read a few times that Huawei has at least more 5 gs patents than you guys have.
So I'm just trying to understand that. What does that mean? Is it a matter of number of patents or how strong that patent portfolio is? And then along the same lines, if you could talk about since the trade war has begun, have you seen any change in behavior in China in terms of compliance?
So taking the first one, so there has been a lot of discussion about quality versus quantity and probably a lot more on the quantity side. And so one of the things that I tried to do today is actually provide some insight into quality. And I don't want to get into a kind of battle on who has more patents where. I think I try to give some of the key foundational points. Early R and D, very strong foundation in 4 gs.
And I think the points that were made, not just in my presentation, but primarily in Jim's presentation, about driving some of the key fundamental features in 5 gs that enable the performance benefits, the benefits to operators and users, benefits to book to device manufacturers that we talked about are really indicative of the heft and value of the portfolio we have going into 5 gs. Again, it's just not really worthwhile to start getting into debate about quantitative metrics, who has more here. One of the things we came across recently, and it's not with respect to the company that you just identified, is somebody that said, look, I have a lot of in a discussion, I have a lot of patents on 5 gs. And we started taking a look into them and all the priority dates are after the date of the finalization of the spec. So there's a lot of noise out there that I think we're trying to cut through a little bit, but it's kind of an endless debate that doesn't really go anywhere.
With respect to compliance, compliance is good. Actually, we're not laying out the data on compliance. But it's actually been quite good. And we're not seeing any pushback on compliance relating kind of the overall geopolitical issue. We obviously have the Huawei issue, but we're not seeing any pushback on compliance.
I'd just add one thing to Alex's first answer with respect to your Huawei question. As Alex said, there's a difference between quality and quantity. And there have been studies, and it's quite clear that the quality of our patent portfolio, in addition to the quality of the contributions we make versus others make to the standard, in particular in 5 gs now, given all its complexity, it's a big difference. And so you can't look at numbers because numbers can be very deceptive, deceiving. And we're confident that we have real strength in both the patents and the contributions to the standard.
We have time for one more question.
Hey, Mitch Stevesma, RBC. So I just have one just kind of clarify on the 5 gs side. So it looks like a lot of the growth is predicated by a pretty substantial ramp there. So I guess I have two points. So first is what gives you guys clarity in kind of the unit growth rate there?
Essentially, what are the chances that we see kind of inventory build in China? Because it seems like that's kind of the big driver. And then secondly, kind of dovetailing off into a prior question, when you get to, let's say, 450,000,000 or let's say, 700,000,000 units, what's the margin trajectory look like specifically to those phones?
Yes. So I think from a forecast perspective, as I said, there's a lot of things in play right now with 5 gs. So the best we could do is look at how 4 gs played out and what can we learn from that. And then also, as I said, there are 2 key differences where China is starting earlier and then we have chipset across tiers. And then we've been talking to various customers as well and we are aware of what their plans are of launching handsets.
And so we're trying to make an educated estimate based on the data points we have on how the growth rate will materialize.
I just want to we got a lot of question about the 5 gs. Maybe I just want to reiterate one thing we said in the earnings call, especially as you look at the projections we make of SAM growth. We had assumed in our projections that the market as the market is and we've been calling down the mobile market, we're assuming the market stays as is and our current share situation stays as is. So any change and we're assuming that we're going to have competition, the competition is going to execute. Any change in replacement rates, any change in share will change the dynamic and will be upside for QCT.
I just wanted to probably reiterate what are our assumptions on the market and the rollout, but we feel good as a very high confidence number.
Okay. Well, thank you everyone for coming. I think this is going to be the year for 5 gs. We're excited about it and we're very happy to be able to share the story. Thank you.