Chief Financial Officer & Chief Operating Officer, Qualcomm Inc
Qualcomm Q3 Earnings
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About Akash Palkhiwala
On Qualcomm’s second-quarter fiscal 2026 earnings call on April 29, 2026, Palkhiwala reported revenues of $10.6 billion and non-GAAP EPS of $2.65, with EPS at the high end of guidance. He noted that QCT handset revenues from Chinese customers were expected to bottom in the third quarter before returning to sequential growth, attributing recent caution among OEMs to industry-wide memory supply and pricing pressures driven by AI demand in data centers. Palkhiwala also stated that the company now expects initial shipments for a custom silicon engagement at a leading hyperscaler later in calendar 2026, and described Qualcomm’s data center strategy as a “bespoke business” that would combine merchant and custom solutions using different IP blocks. In a May 18, 2026 interview, Palkhiwala discussed Qualcomm’s expansion in India, announcing two new smartphone products designed for the Indian market and launched globally from India. He described the smartphone market as experiencing “premiumization,” with a mix shift toward higher-value devices even as unit sales remained flat. Palkhiwala also addressed AI-related security risks, stating that the company runs frontier models on its own products to find and fix vulnerabilities, and characterized AI as an opportunity for innovation. He said Qualcomm is building a CPU chip for data centers, and that the company expects to become one of the largest customers for India’s semiconductor manufacturing ecosystem.
Transcript (17 segments)
✨ AI-enhanced transcript with speaker attribution
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Rex Crum0:01
This is Rex from Technology Managing Editor here at Seeking Alpha, and joining me today is Akash Palkhiwala, the Chief Financial Officer of Qualcomm. Qualcomm reported its fiscal second quarter results after the close of trading here on Wednesday, July 27th, as we're recording this. Akash, thank you for taking some time to join us. I know it's a busy afternoon for you.
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Akash Palkhiwala0:20
No worries, thanks for having me, Rex.
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Rex Crum0:22
Well, let's start with the high points here. The quarter results beat expectations, both in earnings and revenue, and things grew from a year ago. So you've got to be pleased with how things are going in that direction. Maybe you could take us through some of the high points on what went well in the last three months.
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Akash Palkhiwala0:38
Yeah, absolutely. We're very happy with the execution we've had in a relatively challenging economic environment. If you look at our results, we came in about the high end of our guidance range for EPS, and really we had strength across all of our businesses. Handsets came in very strong. We also had record quarters in IoT and automotive. That's definitely an area of priority for us in terms of diversification, and so it's great to see that play out as well. The one thing I'd also highlight is that we did end up signing an agreement with Samsung, which I'm sure we'll talk about in a little more detail, but there are several highlights in that that are relevant both to our short-term and long-term financial forecast.
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Rex Crum1:19
Yeah, and you hit on some of the main things I wanted to ask you about here. You know, handset sales doing particularly well, your bread and butter business if you want to look at it that way, but you guys have made diversification a major focus of the company, automotive and IoT in particular. Maybe you could take us a little bit through the automotive side of things, specifically as to how things are growing there and where you see the opportunities.
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Akash Palkhiwala1:47
Yeah, absolutely. I mean, if you think about the automotive industry, it's just going through an incredible transformation. It's not just electrification, but what cars are becoming is super high-performance computers on wheels. And what that allows us to do, someone like us who has a lot of technology that was created for handsets, we have the ability to bring it to mobile and be one of the key partners for automakers in their transformation journey. So one of the things we announced today was that our total design win pipeline in auto is now greater than 19 billion dollars. It was greater than 16 three months ago, so we're very happy with the progress we've made. And what we're planning to do on September 22nd in New York is we are going to have an investor day that is specifically focused on the automotive industry and the progress we've made there. So we're looking forward to it.
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Rex Crum2:38
I think that should be really interesting, kind of showing some of where Qualcomm's taking its new focus right now.
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Akash Palkhiwala2:44
That's right.
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Rex Crum2:45
Yeah. You briefly mentioned the deal with Samsung, and I know this is a very important move for you, for the company. Can you give some details about the extension or the expansion of the partnership? And in a nutshell, would you consider this a critical deal for the company?
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Akash Palkhiwala3:02
Yeah, I think it's an incredibly important deal for the company. Samsung is the largest handset maker in the world. They're also one of, if not the most important partner that we have globally. There are three parts to this deal. The first part is an extension of our patent license agreement, so we're extending it all the way through 2030 at similar terms as the current license, and it includes all technologies including 6G. So it's a great way to validate our portfolio, great comp to create for future negotiations, and so we're very excited about the support we're getting from Samsung on it. The second part of the deal is we are announcing a collaboration on premium tier Samsung phones, and we've already expanded our chip position in those devices very significantly. But this is a multi-year deal that gives us predictability and the ability to further grow revenue within those family of devices. And then the final part of the agreement is expanding our chip relationship in addition to phones to other devices like Windows PCs, tablets, and the metaverse XR devices. So there's a lot to look through there, and we're very excited about what it means not just for the short term over the next year or so, but also in the long term for the company as a result of this relationship.
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Rex Crum4:22
Well, based on your description of everything that encompasses, it sounds like Qualcomm is still very strong on the handset market in particular. But that seems to be something that has gotten a few questions raised in the after-hours here today because of the company's forecast. And if I understood it correctly, some of the comments were about looking at the handset market maybe slowing down, consumer business maybe not as strong. Take us through a little bit about where you're seeing the weakness, and are these broader economic things that are going on that are kind of outside the company's control, or are there steps Qualcomm's taking to hopefully alleviate the pressures from these concerns?
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Akash Palkhiwala5:10
Sure. So there are two key drivers of this. First is the macroeconomic conditions. I mean, clearly over the last three months we've seen a deterioration of the environment a bit, and we're seeing the impact of that on the handset market. The second is the restrictions in China related to COVID. China is obviously a very important market from a handset volume perspective, and so we're seeing an impact from that as well. And as a result of these two factors, we at our earnings reduced the forecast for total handsets sold in 2022, and our financial guidance is really a reflection of that. It's definitely not factors that Qualcomm controls, but what we've done, I think very well, is reacted to it. First, the Samsung agreement is an important way to expand our position within the market. Second, we have reacted from an opex perspective. We came in pretty favorable on operating expenses in the quarter we just reported on, and we're continuing to take action to focus our investments in the right areas that drive diversification of the company.
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Rex Crum6:14
And just very briefly looking forward, one thing you mentioned about Samsung a moment ago was the development of 6G. My goodness, we're just really getting into 5G now, so we're already looking at 6G and whatever's going to come next after that, aren't we?
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Akash Palkhiwala6:25
Yeah, it's an exciting industry to be a part of. I mean, Qualcomm has been at the forefront of innovation, starting with 3G, then going to 4G, 5G, and now 6G. And because of the length of the agreement with Samsung, which goes all the way through 2030, it was important for us to include 6G. But also it's a recognition of the contributions that we've made to the standard, and Samsung recognizing that and including that in the agreement is a validation of our strategy.
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Rex Crum6:54
Thank you for taking some time with us today here after Qualcomm's third quarter earnings. I know it's a busy afternoon for you, but we do appreciate you sparing a few minutes with us today.
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Akash Palkhiwala7:02
Thank you very much, Rex. Great to see you.
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Rex Crum7:04
And once again, with Akash Palkhiwala, the Chief Financial Officer of Qualcomm, I'm Rex Crum for Seeking Alpha.