Qualcomm CEO Cristiano Amon said Tuesday the chipmaker’s move beyond smartphones is working — but we want to see the Club holding’s upcoming earnings report before we rethink our cautious approach. In a CNBC interview from Davos , Amon said Qualcomm is positioned to capitalize on the growing need for semiconductors in products well beyond cellphones — a key prong to the Club’s investment thesis in the company. At the same time, he said, Qualcomm is able to serve, as needed, important longtime customers such as Apple (AAPL), which uses Qualcomm’s modem chips to enable cellular communication in iPhones. “We realized the technologies we developed for mobile are finding its way into a number of other industries” that need computing power and internet connectivity outside the traditional data center, Amon said. This generally refers to the “internet of things,” covering products such as smart appliances. In a similar way, Qualcomm also is expanding its presence in the automotive industry as cars become more technologically advanced. Those end markets combined for less than a quarter of Qualcomm’s $9.9 billion product revenue in the three months ended Sept. 25. But Amon expects that share to grow in coming years to offset the challenges to its legacy smartphone business — including weakened demand and elevated inventory — that recently have weighed heavily on the company’s overall results. QCOM 6M mountain Qualcomm’s stock performance over the past six months. Amon also downplayed the company’s reliance on Apple, which has been working to replace Qualcomm’s chips with its own 5G modem chip . However, the iPhone maker has reportedly hit some hurdles in this process , delaying its deployment of the in-house technology. As a result, Qualcomm now expects to have “the vast majority of share of 5G modems” in the 2023 iPhone, CFO Akash Palkhiwala explained on the company’s November earnings call. That’s way more than the 20% share Qualcomm initially projected in 2021, and it’s likely to provide a near-term boost to earnings . Qualcomm, nevertheless, still projects “minimal contribution from Apple product revenues in fiscal 2025,” according to Palkhiwala. Instead, the company — currently in its fiscal 2023 second quarter — is betting on its long-term growth to come from automotive and industrial internet of things. Amon said Qualcomm is “very proud” of its automotive push . “I think we’re not working with virtually all car companies in a number of things — connecting the car to the cloud, the digital cockpit experience, autonomy and [advanced driver assistance systems],” he said. Bottom line Qualcomm’s first-quarter earnings are due out Feb. 2, which should offer investors a fresh look on whether those headwinds are dissipating at all. The Club has generally adopted a cautious approach to Qualcomm in recent months, particularly after that November earnings print with weak guidance. Other areas of the market simply seem like better places to commit new capital while the smartphone correction plays out. Qualcomm shares fell roughly 40% in 2022. Over the past three months, QCOM shares are up more than 7%, roughly in line with the S & P 500’s gain over that time period. (Jim Cramer’s Charitable Trust is long QCOM. See here for a full list of the stocks.) As a subscriber to the CNBC Investing Club with Jim Cramer, you will receive a trade alert before Jim makes a trade. Jim waits 45 minutes after sending a trade alert before buying or selling a stock in his charitable trust’s portfolio. If Jim has talked about a stock on CNBC TV, he waits 72 hours after issuing the trade alert before executing the trade. THE ABOVE INVESTING CLUB INFORMATION IS SUBJECT …….
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