I'm good? Thank you. Okay, thank you very much, all, for joining us. We put the best to the last, as we say, and we wanted to dig very deep into Qualcomm's auto business, and I'm very pleased to host Nakul Duggal from Qualcomm. I'm gonna ask you to introduce yourself and your background and what you're doing, because I'm sure you're gonna do a better job than me introducing yourself.
Thank you, Tal, and thank you, everybody for being here. I've been with Qualcomm since 1995. Today is actually 28 years on the date.
Oh.
I've been doing automotive for about, a decade, just over a decade. Engineering background, moved over to the business about a decade ago, and so I've been involved with building this business for quite some time.
It really is about, you know, how do we take, our technology, our platforms, our ecosystems, and address a brand-new end market, which it was many years ago, and obviously, very exciting, very, compelling market from many different vantage points today.
Got it. How do you define the automotive business? Just give us the high level of what are the target markets you're going after.
What we started off in the business was to take technologies that we were building for the mobile business and their applicability into automotive, so wireless technologies, cockpit technology that came from Snapdragon.
Over the years, we've actually moved over to become very focused on driver assistance, automated driving. We've made a few acquisitions. Today, we look at ourselves really as three major areas: the central compute transition that is going on in automotive, where there is a lot of integration of compute that is getting centralized.
You know, we are going from dozens of microcontroller or smaller application processor-type architectures to a few larger ones, and we are right in the middle of that. We've been moving that forward.
Everything that is about connectivity, mostly wireless connectivity, and then really all the software that builds up the plumbing for the vehicle. That would be maybe at a high level how we describe it, which is a pretty large part in terms of where the transition in the market is happening.
You're selling various products, and we're gonna talk about digital cockpit, we're gonna talk about ADAS. Is there synergy between one and another, and is there synergy between all of this and smartphones?
The one big advantage that we have, you know, and this is what allowed us to move into the market very quickly, is that there is a lot of techn ology that the car is consuming today. That technology isn't necessarily available, certainly not in the traditional semiconductor players that have served automotive, typically.
There are only a few companies who are mostly like us, the Samsungs and the MediaTeks of the world, who have similar technologies. It is really about the application of the technology as the car, as the platform, is evolving. The way we started off was, what could you reuse?
Very quickly, it became obvious that the platforms are so different that you actually have to change the technology, and then you have to position it, you have to situate it inside products that are very different from smartphone products.
That's kind of what's happened over the last decade or so. Obviously, there is a lot that you have to learn in terms of what the auto business needs. The software is different, the value chain is different, the reliability and quality requirements are different, the scalability, the cost sensibility.
It has become now a completely dedicated roadmap, but it takes from the underlying technology roadmap that we build, and we have been influencing the company's technology roadmap over the last, you know, 5, 6 years or so.
Before we go into the technologies and the products, I wanna ask a question at the high level, which is: Where are we in the deployment? What are the biggest challenges in your growth, and the biggest opportunities you have in your growth? What drives your growth? Can you talk about kind of the next five years?
Yeah.
What needs to happen for this business to continue and grow?
There are many facets about automotive that I think are not obvious when you look at it from the outside in. First of all, there is today a tremendous amount of competition in this industry. Especially with electrification, what you're seeing is that the barrier to entry, to build an EV, has actually gone down drastically.
For traditional automakers, that is a bit of a challenge as well, because there are a lot of new entrants, and you have to be able to come up with what your new architecture is gonna look like relative to what it used to be. Timelines in a traditional automotive setting are, you know, not very aggressive.
If you, for example, go to China, you will see that a lot of newcomers that are coming in don't really have any background in building cars, but there is a tremendous amount of infrastructure available to be able to get into the market. They come from the tech space, they come from software.
The barrier to building a software-defined vehicle product is actually reduced. It is a business that requires a tremendous amount of energy, because it is not like a smartphone, where you have a very fixed amount of time within which you can launch it, and you know kind of what you're doing. It is a much more complex product, and so you need to be able to operate the business at scale. We have a large-sized team that is working on automotive.
This is not a team that, you know, I mean, many years ago, when we were reusing products, it was simpler. Today, we have large, dedicated teams that are working on this. That scale is, actually, you can't really be in this business without operating at that scale, so you need enough scale velocity.
You have to be able to be very sensitive to every tier of the market, because automakers are going through this motion of insourcing a lot of the areas that they were previously dependent upon on tier ones. Everybody's investing heavily in building software teams. Some are better than others, faster than others. You know, you can imagine kind of what that starts to go look like.
You really have to be able to service and support everyone, because the volumes are unpredictable, right? The volumes are very regionally centered. What will happen in the U.S. will not change very likely in terms of the mix.
What will happen in China is highly unpredictable. You have to spread your bets very widely. When it starts to come down to the technology, it really comes down to what is the expanse of your of your product portfolio?
How many different ways can you actually address the customer base that exists? It is actually not straightforward to be able to manage. You know, we will launch in the next six quarters, we will launch 150 programs. That's the scale at which the business is operating.
This isn't something that you can enter in and say, "Okay, let's experiment.
Yeah.
You really have to do it at scale.
How do you define a program?
For us, a typical program would be from when the business is acquired to launching it, which is between, I would say, 18 and 30 months, depending upon the automaker. It really is to the start of production. A car is actually, you know, in a dealer's lot.
Okay.
-available for sale. The complexity of the program, nowadays, there is very little reuse in terms of the program, you know, from one generation to the next. A lot changes because there's a lot of competition. Connectivity programs are, by definition, simpler, but as you go 4G, 5G, there is a lot of change.
If you start to look at the cockpit space, extremely competitive, because everybody wants to be able to do something slightly different there. There's a lot of energy being focused on how does the automaker bring their own brand in the middle of all of it?
Mm-hmm.
They also vary depending upon the region you're deploying in. As you start to move to driver assistance and automated driving, that is even more complex, because it comes down to: What is the level of automation you're targeting? What is the budget available for the program?
Yeah.
Which part of the world you're launching in? That would probably be, you know, 18 to 30 months, 36 months in some cases.
The launch date, are they sensitive to economic cycle? Meaning, what we're seeing today, does it cause auto companies to push out deployment or push out kind of program dates?
I think it varies depending upon the market and depending upon the automaker. I think one thing that has been an opportunity but also complexity, is the transition to EV, which has been pulled in pretty much by every automaker, which forces the car architecture to now change. You have to start to move to a different car architecture.
Those that are mature or those that have less complexity can embrace that much faster. Like, you know, you will see, for example, Volvo is a big customer of ours, and they're launching many different types of vehicles, a lot of shared architecture between Geely, Polestar, et cetera. If you look at someone like a GM, much higher levels of complexity in terms of what all you have to go touch. This varies quite a bit depending upon the OEM.
I think it also depends upon how familiar you are with software-.
Mm-hmm
... as a, as an automaker. How much capability you have insourced, where you have dependencies, where you are in the learning cycle. Y ou know, some are able to manage certain things very well themselves, other areas, they're dependent on other customers. Launching a car is, you know, fairly complex, effort from a program perspective, and so we get to see what the struggles and trials and tribulations are of various automakers.
Got it. Without getting into numbers, I just wanna understand how this market is gonna evolve over the next few years? Do you envision a J-curve kind of growth? Do you envision steady and slow growth in the industry? Is there a critical mass that you need to pass through, and then suddenly growth accelerates? How is this industry gonna grow?
You know, one thing that has certainly happened is, you know, after Tesla, a lot of other smaller players, especially in China, have actually moved very quickly. BYD is an exception, another larger player that has moved quickly. That is starting to get the attention of the traditional automakers in terms of the need to move to a newer architecture.
Mm-hmm.
The change to a newer architecture changes the silicon content in the car completely. Where you might have thought you have time, you could push these things out, actually it's not possible anymore, because if you want to have a footprint that is competitive in a market like China, why would you think that you would not need the same thing in other parts of the world?
Mm-hmm.
A lot of conservatism is being looked at again, and automakers that have actually bitten the bullet and are moving forward are now trying to understand what the execution complexity is. For us, you know, we've been well prepared for this because we've been actually pushing in this direction for 5+ years.
Our investments, the roadmap that we are building, is all getting ready for bigger chips, more complex software, much higher levels of integration. It really is a question of how quickly can the industry absorb them, absorb that level of complexity.
Got it. I wanna maybe go kind of into segment by segment and speak about your growth, and the first one is connectivity. Can you take us through the journey in connectivity? First of all, it's obvious what's the expertise you're bringing in, but can you talk to us, what is the expertise you're bringing in from smartphones?
Yeah.
How much adaptation do you have to make into the car environment?
Yeah.
Who are the, who is the, who are the competitors in this space?
Yeah. Let me start with the competitors. I think MediaTek is really the only viable competitor when it comes to modems. The one thing that I think has served us very well is that we started to actually do connectivity in cars back in 2002.
We started working with GM, with OnStar, when they had a choice between GSM and CDMA. You know, management at that point in time pushed very hard for them to embrace CDMA, they did. We are now in our 11th generation of modems at GM, that has actually served us really well. At the end of the day, all things being equal, automakers will choose to go with us. The reason is, that it's just a tremendous amount of experience.
It is actually one of the businesses where the complexity is much higher than in the smartphone, because you have to live with your product for a very long period of time globally. We, I think, have done a pretty reasonable job in that, you know.
Yeah, you may lose a deal here or there on pricing, et cetera, but it is a business where if you don't have the scale, it's actually very difficult to be able to go support this business. We've tried many different things in this business.
We have done, you know, unique features like Dual-SIM Dual-Active . You have two subscriptions in the car at the same time. We integrated V2X inside the modem because that's something we were pushing for. We have now, you know, announced the acquisition of Autotalks.
That is still underway. It's a space where we understand the surface area pretty well. We understand all of the various technologies, products that are required.
Mm-hmm.
We understand competition, and we are building a platform that continues to keep, you know, getting richer and richer. For example, most recently, satellite communications, there has been a lot of interest in that, so we will evolve the platform to be able to go support that.
Wi-Fi was the other area that we were not as focused on 6, 7 years ago, but we have a very broad Wi-Fi portfolio, discrete Wi-Fi products, that we now design to work together with our telematics portfolio. So that, so that also actually gets a lot of lift with the overall solution. And the Wi-Fi use case in the car is quite different. GPS has become a very important use case in the car.
Mm-hmm
... for a variety of different reasons, from precise positioning to ADAS, et cetera. That's integrated. Powerline Communications was a business that we acquired, you know, about 10 years ago, actually, for the home, and back then, the team actually started to look into what the application was in the car.
We now have a, you know, we have fairly decent market share for both charging station technology and the in-car technology and power line. The connectivity business is actually, you know. There are many independent businesses.
Mm-hmm.
They work together. They also work independently. They are very broadly distributed across the ecosystem. There is a lot of history with each customer. I consider that a pretty stable and, you know, reliable franchise.
How is this segment going to grow? Is it just about penetration, meaning, "Okay, I got into this car or that car at GM," or even once you penetrate, is there an opportunity to grow within the same platform?
Yeah, we've, you know, this is an area where we are kind of trying to look for expansion of the SAM itself, so we have efforts around the two-wheeler space and the three-wheeler space. When you start to go into an electrified platform, it has to be connected. You cannot have a platform that will not be connected, that increases the SAM, that is something that we have kicked off.
We've had some early success. I think we'll share more later this year. From micro mobility to two-wheelers to three-wheelers, that's, I think, an expansion. The other area is services, which is something that we've been dabbling in and trying... We built a services platform, we are trying to figure out what types of services make sense where.
There is always, obviously, the complexity where you end up competing sometimes with what your customer is also trying to go do. Because we are building a platform versus selling components, we have a very good understanding as to what our customers are doing with that platform. That's where we are looking for opportunities, both before market and after market, to actually be able to, you know, remain connected to the platform we are selling over its life.
Mm-hmm.
As you know, because the life of these platforms are 10-15 years, and there is a lot of value to be extracted by a variety of different people. That's kind of our focus in terms of.
Got it.
... how you build services on top.
Is the majority of automotive revenues today coming from connectivity?
I wouldn't say a majority.
Yeah.
I would say, yeah, probably half and half.
Got it. Now, another segment that you have is, Car-to-Cloud. First of all, what is it, and what's the difference between this and connectivity?
Yeah. Car-to-Cloud is a services platform.
Yeah.
It serves all of the hardware and the software that we deploy in the vehicle is served through the Car-to-Cloud platform. Think of Car-to-Cloud really as a services platform that has APIs that are available in the edge, that you can essentially call from the cloud.
We can call them directly. We can build our own solutions. We can partner with companies who we can extend those solutions to. We support everything from fleet management solutions, OTA solutions. We are able to manage the configuration of the hardware, so if you don't want to buy the fully dimensioned platform, if you want to buy a certain portion now, and you wanna pay for that later, that is something that Car-to-Cloud would support.
We've announced partnerships with Salesforce, for example, where if you want to actually be able to look into what is going on, you know, bring CRM all the way down to the edge, what does that look like? It's basically a services platform that gives you a tremendous amount of visibility into the edge.
... is, within the context of what we spoke so far, before we continue into the other parts, is there an opportunity for Qualcomm to have recurring revenues, or is it still about the old model of smartphones? Here is a chip, put it in, it works, or maybe there is a software piece-
Yeah.
that goes with it.
You know, there is always an opportunity for recurring revenue. I would say the way that we think about it is, first of all, because the life of the platform is much longer than, say, a typical consumer device, we always look for, you know, over-dimensioning the platform, because we know that the customer is going to need more over the life of the platform. For example, we have the ability to be able to sell you 60% of the capability today, knowing that you will come back for more.
Mm-hmm.
That is something that is supported, that's part of the business model. We have the ability to add software capability on top, post the sale of the hardware, so the capability is built in. If it is needed because some kind of regulation kicks in, or, you know, like in ADAS, this is fairly common, where you need to be able to meet with a certain level of compliance today, but over time, that compliance requirements may increase. I can push more software for you because I have additional hardware capability built in.
Yep.
Those are all software-based. The services and recurring revenue, those are very spec-- For example, in the two-wheeler space, that actually In those cases, we lead with the services model. We'll actually package the solution as an end-to-end service, where the hardware is built in as part of the service.
Mm-hmm.
It depends upon the specific opportunity.
Every company that buys, every manufacturer that buys connectivity from you, will also buy Car-to-Cloud, or can it be unbundled? Meaning, to buy from your connectivity and buy from another software company, the ability to provision the car.
It is unbundled. They have the ability to buy it any which way. Maybe I'll be a bit specific there. The Car-to-Cloud provides a wide variety of capabilities. For example, if you want to be able to control the configuration of our hardware, you obviously have to be able to get Car-to-Cloud access.
Yep.
If you want to run your own OTA solution versus ours, you're free to go do that. It is highly flexible in terms of what the business model is.
Mm-hmm.
Which you have to be, because this isn't a space that, you know...
Got it.
This is a space that we are still building.
The question also is: we are saying that in the future, very far future, probably, but automakers will make as much money from upselling software and services than making the car. Is Qualcomm benefiting from any upsell?
You spoke about, you know, to sell various levels, or are you now selling the full-fledged hardware to the company with the software capabilities to the automaker? They pay full price, and then it's up to them to price it differently and upsell in the future, different software packages. How do you participate in, if at all?
Yeah.
Do you participate in the upsell opportunity later on?
We would participate, definitely, first of all, at the hardware level.
Yep.
If I sell you a configuration that has additional room to grow, and for you to be able to get access to that, you have to pay.
Right.
That would be one way to go-
Right
to participate, which we do. That is a fairly standard configuration.
Got it.
you know, if you want to, for example, have a standard configuration that you want to deploy across all of your vehicles, you don't need the full performance on day one for every single SKU.
Right.
We can come up with an arrangement that allows you to be able to pay for when you actually go use it.
Right.
That allows us to be able to participate.
Let me define the question a little bit different, because I'm referring more to Tesla, for example. Tesla sells you a basic software for... with the car, but if you want the autonomous driving, whatever, it's not autonomous, but if you want the autonomous, right, it's another $13,000.
The question is, you provide the same capabilities to companies. I want to understand if the car makers put the initial hardware already fully fledged so they can upgrade the software in the future, or that they put basic hardware today, then you go to the mechanic, they upgrade the hardware so they can... How does it work from the car manufacturer, and how does it work from a Qualcomm perspective?
From where we sit, think of it like this, if we provide a product that is going to go into a premium-tier vehicle.
Yep
that is not fully equipped when it is sold, the hardware has to be made available by the automaker.
Right.
Not all of the functionality is actually needed to be sold.
Right.
We would essentially, at that point in time, come up with an arrangement that would say: You are buying this kind of capability. Over a period of time, you will pay when you upgrade.
Right. That's software, right?
That's software.
Software.
That's software. The hardware, so you get paid for a certain amount of hardware, and then the rest of the capability, hardware plus software, is unlocked over time.
Got it.
Another way to think about the same thing is, automakers do not want to have too many platforms, so they will pick one standard platform and use it across all tiers.
Got it.
They know already that for the lower tier, for example, you don't need all of that functionality. How do you go pay for that? There are plenty of opportunities...
Got it.
... to be able to say, "The software allows me to be able to unlock more capability, that allows me to be able to monetize over the life of the platform.
Got it. We didn't speak yet about digital cockpit. Can you take us through it, number one, and what are the products that are involved? Again, same question as I asked you before: How did Qualcomm-
Yeah
... come to this market? You know, what's the strength that you brought from the other worlds into this market?
Back in 2012, you know, we were focusing on our connectivity business, and Audi, who had been a customer, they were doing 4G with us at that point in time. They asked us to look into, explore with them, if we would be interested in getting into the cockpit business.
Yep.
We took them up on it.
Cockpit, just for those that don't know, cockpit is the-
Cockpit is the instrument cluster and the, you know, the screen where you have your maps...
Yep
and your other controls. Usually today, if you think about a typical vehicle, you will have four displays. You will have the instrument cluster, you will have your infotainment system, maps, et cetera. You'll have a passenger display, and you will have an augmented reality heads-up display. Those are the four things that you might have in a mid to high-tier vehicle.
Back then, they actually were using NVIDIA for, I think it was an NVIDIA graphics product that they were using for the infotainment business. They invited us to say, "Hey, we would like to start to see what kind of technology you can bring." It was a great opportunity because it wasn't something that we knew really anything about. It was, this was back in 2013 or so.
We learned how to do automotive quality, and we learned how to do automotive software. The realization was that if we made enough changes to the technology that we are developing in smartphones, the application of the platforms that we build in a car are actually very rich.
Mm-hmm.
If you think about our standard products that we sell today, we are driving 8 displays off of 1 SoC. Various resolutions for various things. You know, mirrors are going away for various, you know, aerodynamic-type use cases. They're getting converted into displays. You have all kinds of cameras inside and outside. All kinds of visualization is going on. It's all running off of the same technology foundation that we have created.
There is a tremendous amount of synergy between what we are building for the smartphone space, now to a point where what we are doing in the car, especially in the cockpit, has far exceeded what we are doing in the high-end of the phone. The concurrencies are extremely complex because you are actually serving 3 customers.
You're serving the car, you are serving, the real-time nature of how you are engaging with the driver.
Yeah.
You are serving an external application ecosystem that is coming in. We've been at this, you know, for now close to a decade. The one big advantage that we had, was that we were able to look at our smartphone roadmap, pick the right parts, make the right changes, and make available very quickly, solutions that serve the needs of every tier.
Over time, we were able to influence the direction of how do you actually design this cockpit? Because it is really about integration, you know, reducing the total cost of ownership, bringing more functionality to lower tiers of the vehicle, and that has made us, obviously, you know, a very strong platform provider. What we also had to do, because this is not just hardware, there's a tremendous amount of software that is needed.
We have to serve a wide variety of fairly fragmented software ecosystems, which we learned. We've actually invested in the software teams that are needed, we have the ecosystem partnerships. That allows you to be able to have, you know, a set of customers that are very comfortable with the platform, the teams, the software that they have built, and then you have a lot of repeatability in terms of how you build the business.
Got it. What I noticed is that some car makers make an announcement that the rear infotainment system is Qualcomm, the front is someone else. Are we gonna Is this market now is being defined, so we see multiple vendors in a car, et cetera, and then they're gonna choose one? Or we're gonna live with this kind of fragmented environment for many years?
That example is happening less and less. I think, at large automakers who have a very large difference between the tiers of their vehicles, you know, entry-tier vehicles that need something very basic.
Yeah
... versus more advanced systems that need something more capable. We are not focused on the entry tier.
Yeah.
I would say that most automakers are centralizing on really one platform...
Uh-huh
... that goes across most of their vehicle lines. If they have a second one, it is really for an entry tier that is kind of a different-
Got it.
... affordability level.
Got it.
You don't see as much of that anymore.
Got it. Okay. Who are your competitors in digital cockpit?
We have many competitors. We have Samsung, we have MediaTek is now starting to play. We have Renesas at a certain level. Not so much NVIDIA anymore, we have some Chinese-
They're busy with ChatGPT.
We are. Yeah. ChatGPT is a good thing. we have a number of Chinese competitors-
Yeah
... that are starting to show up now, locally. It is a market where you need to be able to have a lot of different assets-
Yeah
... to be able to operate at scale. I think so far, I think we've been able to do a fairly good job in holding.
On that, I'll ask you, what's your differentiation?
Yeah.
What do you bring to the market that the smaller Chinese don't have or the others don't have?
Well, I think first of all, I think it's a lot of experience.
Yeah.
We've kind of taken this market in the direction that it has gone. We control the set point in terms of what the integration is, how do you do a lot of the concurrency? How do you actually define a feature set for what the next generation cockpit looks like?
There is a lot of software integration you have to do. You are running safety software with an Android app, side by side. You have to be able to support this globally, because automakers are all, you know, developing their solutions all over the world.
Yep.
You have to be able to have teams that can actually make that happen. You have to work with a large number of ecosystem partners, because a cockpit is built by between, you know, a dozen and two dozen different software providers that come together.
You have to build a roadmap that scales. One of the reasons why we built the roadmap that we did is, you can't afford any more, in my mind, to have a cockpit roadmap and an ADAS roadmap separately. There's just not enough. The size of the opportunity is not big enough, so you have to be able to consolidate those two.
Mm-hmm.
That requires you to make choices. We, you know, in this generation that we are in, we actually, spun out the roadmap completely. We no longer use mobile chips; we only use the technology.
Mm.
These are all automotive chips that are built from the ground up, just by our business. You have to be able to make those kinds of bets. I think once you go do that, you're always going to have competition, where somebody's going to want to try to do something on the cheap or, you know, experiment, et cetera.
These are systems that are very complex because you have to be able to keep the software updated over its life, and so you kind of need a custom. So you need a partner that the automaker is going to say, "Okay, these guys have a lot of the experience, the people, the understanding. What do I need to go do when I'm making my choice.
Yeah.
-on who I..." You know? I think that. It's a number of differences there. It's much more than just the product.
Got it.
There are many other things that come into play.
Got it. Okay. From before I touched on three areas so far where Qualcomm was able to bring expertise in smartphones into the automotive market. Very clear synergy between the products. The next area is something you had to make an acquisition, which is Snapdragon Ride platform, ADAS, right? Autonomous driving, et cetera, for those that don't know. Take us through the journey again of Qualcomm in the space. What did you bring in internally, and what did you acquire, and where are you today?
Yeah. You know, maybe five years or so ago, it was pretty clear to us that, if we had to be relevant in the automotive space, a reuse strategy, take from mobile, use in auto, that got us to where it did, but that was not going to be good enough. If you recall, we were in the middle of the NXP acquisition back then.
Yeah.
The thinking was, we will acquire NXP will bring a lot of the things that we don't know about automotive, and that will kind of complete the picture. It became clear to us a year or so, you know, before we finally parted ways, that was not going to pan out, we doubled down, and we said, "We don't need to have silicon that will work in the automotive space from a safety perspective."
At that time, we had to start to think about what kind of roadmap do we need to build for ADAS? We started to do what you might normally expect. We took the right chips that made sense, and we started to make sure that they had the opportunity to play in the ADAS space.
It was a very good decision because it actually won us the GM business on ADAS. We won that back in 2019. We learned a tremendous amount because really, the ADAS use case is about taking a large number of sensors and processing them in a fixed delay budget for a variety of different use cases, whether it is, you know, real-time processing, apply AI to it, obviously, based upon the action that you have to go take.
We had to figure out how we were going to go do this as a roadmap. It was pretty clear that the roadmap we would have to build for silicon would have to be a safety-ready roadmap, so that decision we took fairly early on.
The question was, do we build our own stack, or do we just support other people's stack? The decision we took there was, we had some assets internally that we had been building on the stack side, but nothing that we could get into production with, so we had to go acquire a team that had that experience. The path that we are now on is that it's a flexible roadmap. We can host other people's stacks. We're obviously building our own. What I like about this market is that this is headed towards a 100% attach.
Every single car is going to have safety software and safety hardware. It really is going to come down to, you know, it is not that different from the cockpit, in that to be able to get to where we are is not going to happen in 1 or 2 years.
It's going to take a long time, and you have to be at it. The more synergies you can create at the product level, and the more you focus on creating software that is very tightly coupled with your hardware, we know how to do those things. We've done that for a long time. I think that makes you a very attractive bet for a customer to make.
I think if you spend enough time with automakers, what you will realize is it really comes down to make versus buy decisions, where they're concerned about handing over what they might think is a very important part of their differentiation to a supplier. Very quickly, the question is: Is this expertise that they can have at scale internally?
If they have to make a choice, would they trust a supplier that is going to give them the flexibility that they need to have? For us, these are all, you know, bets that we are making for the long run. I think so far, I think they're playing out well.
Yeah. One of the bigger player in this space is Mobileye. I'm not an expert on Mobileye. I don't cover them, but I know they have, north of 60% market share, if not more. They do have a very proprietary approach, where you have to buy the entire platform from them.
Yeah.
Everything from soup to nuts. How do you intend to take market share from Mobileye? How are you different from their approach when it comes to modularity of the product, et cetera?
Yeah. You know, in automotive, once the product goes to 100% attach rate, the only thing that automakers focus on is the cost of ownership.
Mm-hmm.
Control points. There is nothing else that they focus on. One of the big challenges that the Mobileye model has is that the system is not programmable. It is designed for Mobileye software.
Yeah.
That will always have, you know, it's, you know, it's a target that you can aim at because you're always going to get attention. For us, really, the starting point is very different, right? We are building heterogeneous SoCs.
That has been our history. We have proprietary hardware that is highly accelerated, and then we have, you know, CPUs and GPUs and DSPs that you can program on. We have a very broad ecosystem that can develop on our platform. The example I gave to you about the SKUs, for example-
Yeah.
I can sell you a platform that competes with Mobileye, and then I can open it up and charge you a little bit if you want to run a parking stack on it. If you want to do something more, I can allow you to do something more as well.
For us, it really is about what are the areas that we want to differentiate on with a hardware and software solution that is ours? Allow the ecosystem to be able to go develop on top. Because the platform is highly programmable, and we are going to be, you know, lack of a better word, opportunistic in terms of how we enter the market, we build platforms that are very broad.
We will build certain technology areas that we want to excel in. Over time, we will figure out which market we want to focus on. The cost of ownership question is always going to be a better equation with us because it gives the automaker a lot of choices.
Got it.
Mobileye has done a fantastic job. They're a great company, but I think the, kind of, the, you know, the black box part of the solution does, I think, pose some challenges.
Nakul, the good thing is that we have a great discussion. The bad thing is that I only covered three questions out of 35 questions I prepared, and I know I had a lot of sub-questions. I wanna stop for a second to see if there is any question from the audience before I continue. We only have two minutes left, but I want to at least have the opportunity of any questions.
I can just ask, but, over time, how should we think about potential content per vehicle reduction? Kinda what have you seen in terms of changing dynamics over the past few years on that?
Content per vehicle reduction. Could you elaborate that a little?
Yes. We've heard about vehicles and autos moving from decentralized ECUs to more centralized ECUs. In that context, how should we think about potential content per vehicle reductions? It's obviously on the semi side.
Yeah
... perhaps lower quality chips and maybe potentially older chips as well.
Yeah. I don't know if I can answer it in terms of dollars and cents, because there isn't really a way to kind of normalize it. Maybe think of it like this, I think one is, the example I like to use is a BMW 7 series, used to have, like, 150 different ECUs, five, six years ago. Today, it probably has more like 10.
Obviously, there is a big difference in terms of what the ASPs are, but you can imagine all of the peripheral cost of carrying all of those, 150 ECUs obviously starts to go away. There is certainly a system-level savings that a BMW gets benefit from. The bigger benefit is you can take those same systems and now scale them down to a 5 series and a 3 series.
The overall silicon content across the entire vehicle lineup is going up because you're able to bring functionality to lower tiers. Is the total amount of electronics content going down? I think it probably is, just because you are comparing with something that is fully equipped and perhaps not the norm, to something that now becomes the norm.
I do think that the amount of electronics that is going into vehicles is just massively increasing, just because so many more cars are getting access to that capability.
Great. Any other question? We only have 20 seconds left. I think we better finish it here. Thank you so much.
Thank you. Really appreciate it.
Thank you.