Please, gentlemen. Thank you for standing by. Welcome to the call. Second quarter fiscal twenty twenty-six. Very confident call. This time, this is the second most number. Later, the first question. Answer the question. This is the first question. Very exciting. Question number one. Telephone keypad. Third question. Question number two. Please speak your phone. Please give your hands up for question number. Please answer your question. Second question number one followed. As your manager, the conference team will coordinate it. Twenty-nine, two thousand twenty-six. Play back number for this call is eight seven seven six zero six five three. International callers, please dial two zero one six one two seven four one five. Play back reservation number is one three seven five nine five five one. Hello, international caller. Two Grayson Senior Vice President on reservations. Mr. Grayson, please go ahead. Thank you, and good afternoon, everyone. Today’s call will include remarks by Chris Ammon and Josh Kowal. In addition, our executives will join the question and answer session. You can access our release and slide presentation accompanying this call on our investor relations website. In addition, this call will be webcast on Qualcomm. And we will be available on our website today during the call today. We will use non-GAAP financial measures as defined in Regulation G, and you can find the related calculations together on our website. We will also make forward-looking statements, including some predictions, business trends, trends, or business results, actual results, and the from the projections in our forward-looking statements. Please refer to our SEC filings, including our recent interview, which contains important factors that could cause actuals to differ materially from the forward-looking statements and other comments from Qualcomm President and Chief Executive Officer Chris Ammon. Thank you, and good afternoon, everyone. Thanks for joining us today. In fiscal two two, we delivered revenues of ten point six billion dollars and non-GAAP earnings per share of two dollars and sixty-five cents with EPS coming in at a high end of our guidance. Q two revenues were nine point one billion dollars, with another quarter of record automotive revenues as well as growth in IOT, licensing business revenues were one point four billion dollars. Before I share key highlights from business, I would like to provide some perspective on Qualcomm’s current customer design cycle and opportunities ahead. We are in a period of profound change, and may not yet see obvious to define opportunities. The emergence of AI workloads, open cloud, as an early example, are fundamentally changing user experiences across connected devices and reshaping our roadmap and every platform we develop. For agents to work efficiently, they must run continually in the background, use center data in the context, orchestrate multiple tasks reliably, and deliver strongly. Today’s installed base devices were not built for the new capabilities and represent a significant upgrade opportunity and expansion of our desktop market in the coming years. Agent orchestration is predominantly CPU bound, and Qualcomm has the world’s best performing CPU across smart PCs, autos, and soon the data centers. Qualcomm’s unparalleled connectivity solutions and power efficient NPUs for local models will also be key assets to delivering AI experiences. No other semiconductor company matches the breadth and scale of technology and product portfolio, which powers devices spanning milliwatts to kilowatts from smart wearables to data centers. As a result, we’re seeing steps increase in strategic customer engagement and changing how we think about AI opportunity as well as the speed of our verification efforts. Beginning with automotive in Q two, we see the five billion dollars in annualized revenue for the first time, and we expect to exceed fiscal twenty-six at a run rate of about six billion dollars. This growth is driven by four generations of Dragon Digital Chips, which comprises cutting-edge developments in equipment as well as advanced drivers and automated driving. Notably, we have now enabled more than one million cars operating ADAS and autonomy on our Snapdragon processors. By the end of fiscal year, we will begin commercial shipments of our fifth generation Dragon Digital Chips. This represents the largest generation-to-generation content increase in Qualcomm history, delivering three times higher CPUs with a three-fold increase in GPU capabilities and twelve times higher NPU performance, while supporting vehicle agents in processing for level three and level four autonomous driving. Looking ahead to fiscal twenty-seven, we expect continued gains in three content, particularly in ADAS, where we see the performance of automated driving stacks being doubled and we’re seeing broad customer engagement from other leading automakers. Our recent announcement with Bosch and Way are good examples of what’s to come as we build on our proven platforms and self-driving stack in scale ADAS. In IOT, AI workloads and AI are driving major product renewal designs. Overall, our pipeline is healthy and there is clear momentum for Qualcomm solutions. In personal AI, we expect a significant increase in the choice of new smart devices starting in the second half of the year. We believe this launch combined with rapid progress in AI will catalyze inclusion point in customer demand across this category. Our two thousand twenty-six Snapdragon X two P platform are currently in production, and our world-class Orion CPU unlocks powerful, always-on AI experiences, making it a true competitor differentiator. Agent orchestrators such as Open Cloud Cloud Desktop Cloud Code, Open AI Codex Desktop, flexible computer, QAI, Elements, Gen, LangGraph, and QM one running on Snapdragon X two or early proof points. A recent PC Magazine review of the two ZenBook eighteen Note Qualcomm is now serious challenger in the PC space and states, “Quote: The generational leap from the original Snapdragon X elite to the X two series is particularly striking. Qualcomm hasn’t just caught up to the industry; in some cases, is now helping to set the pace.” In addition, our X two NPUs are the world’s fastest for laptops, delivering up to eighty-five tops, together with our industry-leading CPU, which has the best on-device token generation rate. Snapdragon X two delivers full AI experience into end and our forms Intel Pentium and newly turboized. In physical industrial AI, our new Dragon Wing I two ten platform has generated substantial customer interest since launch as CS. This is a significant upgrade compared to nine. Feature and NPUs were up to seven hundred tops of on-device AI performance and eighteen core Orion CPU over twenty cameras sensors and integrated safety AI. Building on our design win with bigger AI, we are now exciting multi-year agreement with Nura, reinforcing our confidence that we can become a significant player in the broad robotics market. Also during the quarter, we introduce the two new Q and embedded worlds. This is the second R we know platform built on Qualcomm silicon, and we view it as a world-class producting engine for robotics and industrial AI developers. As we expand our ecosystem across verticals, the two new Q is purpose built to bring AI into the physical world, enabling fully autonomous AI agents and a wide range of AI applications, including voice assistants and vision systems. Several industrial AI products are also moving from the design win to deployment across retail, utilities, oil and gas, agriculture, and other verticals. In data centers, the alpha wave integration is off to a great start, and we’re pursuing multiple opportunities with large hyperscalers, cloud service providers, server AI projects, and other global partners. Building on that momentum, we’re also entering the customer silicon space, beginning our ramp with leading hyperscaler, and we expect an initial shipment in the second quarter. In addition, the development of leading data center CPU and high-performance AI inference accelerators is progressing well, with further sharing more details and customer wins and investor day in June.
Regarding this, I would like to underscore two key points. First, the quarter played out as we expected, sales grew held up and our shipments materially under shipped consumer demand. We believe China end revenue is growing out in this quarter and that will provide more specifics in this financial update. Second, with AI technology slowly influencing the previous year, we expect this to move only get stronger in the fiscal twenty-seven. With examples like five and Dow power powered AI AI phones from Z newbi, Xiaomi’s recent announcement of micro AI networks and other AI assistants now in development across the Android ecosystem, we have a clear line of sight into how the AI upgrade cycle will unfold and this is going to be important when for premium demand over time. Next, I want to highlight major strategic initiatives and long-term growth drivers for Qualcomm. SixG, the next generation wireless, design for the AI will believe SixG will present one of the most significant transitions for the wireless industry. From a technology perspective, SixG will enable new classes of mobile personal devices such as smart glasses with enhanced optical capabilities to support AI use cases like C voice. Beyond connectivity, SixG will be an AI native network where AI reasoning, learning, and automation are core functions. In addition to that, as distributed intelligence infrastructure, the integrated communication and wide area real-time sensing with this new capabilities, the network becomes critical infrastructure and provides telecom industry an opportunity to develop completely new business and technology models. It will make possible new AI enabled services ranging from context relevant data data insights and analytics, low altitude aerial terrestrial and autonomous traffic management, drone detection and tracking, and three D mapping telemetry to build dynamic digital twins at scale. Qualcomm leadership in today AI processing and high-performance low-power computing position us to be one of the key architects in the future of the SixG generation. In addition to the development of foundational technologies and standards, we’re building end-to-end solutions for devices and networks from AI modern compute platforms to our own PC intelligent wearable cores all the way to the network including our efficient next-generation radio units, wide area networks, sensing platforms, and high-performance compute AI accelerators for the WAN network edge core and data center. To help shape and accelerate the SixG roadmap, at MWC we launched a SixG company coalition spanning carriers, cloud infrastructure, AI native partners, and our OEMs. The engagement feedback on SixG vision and plans from partners, customers, and governments across the globe has been very positive and we look forward to working with the industry to deliver on this generational opportunity. Before I turn the call over to Cash, I want to note that we will provide a broader update and an update day to include data center plans and our progress in other areas including infrastructure, next-generation AI, industrial AI, personal AI devices, and SixG. We hope you join us and we will be highlighting meaningful avenues of growth to support long-term diversification story. I will now turn the call to Cash. Thank you, Cash, and good afternoon, everyone. Let me begin with results for the second fiscal quarter. We delivered revenues of one point six billion dollars and non-GPAs of two thousand sixty-five cents, with EPS at the high end of guidance. QTD revenues of one point four billion dollars, EBIT margin of seventy-two percent, came in at the high end of guidance, driven by favorable mix with global handset yields approximately flat on year-over-year basis. QTD revenues of one point one billion dollars, EBIT margin of twenty-seven percent, were aligned with our expectations. QTD handset revenues of six billion dollars came in at the expected and the year-to-year increase on handset builds due to the impact of challenging member industry dynamics. QTD IoT revenues of one point seven billion dollars were up nine percent on year-over-year basis, driven by growth across consumer and industrial products. In QTD automotive, we delivered another record quarter with revenues of one point three billion dollars, representing thirty-eight percent year-over-year growth, driven by accelerating demand and increasing content per vehicle due to the transition of new digital product and devices to our fourth generation chips. On a combined basis, QTD automotive and IoT revenues grew twenty percent year-over-year, under scoring the continued diversification of our business, consistent with our long-term revenue targets. We also returned three point seven billion dollars in stockholders during the quarter, including two point eight billion in share repurchases and nine hundred forty-five million dividends, reflecting acceleration of our capital return program. Lastly, we released the previous quarter tax valuation amounts resulting in five point seven billion non-GAAP tax benefit in the second fiscal quarter. This benefit is excluded from GAAP results. This reversal reflects new guidance on corporate alternative minimum tax, issued in February by Treasury and IRS, permitting taxpayers to deduct previously capitalized domestic expenses. The forward-looking guidance are likely to provide an update on the continuing impact of member industry dynamics on our business. Last quarter, we highlighted that the increasing demand for memory in IoT devices was driving certainty in memory supply and pricing increases to handset OEMs. As a result, the handset OEMs particularly China were taking cautious approach by reducing volumes and drawing down channel inventory. These dynamics played out as expected in the second fiscal quarter and are also reflected in our third quarter guidance. As a result, in both quarters, our China QTD end shipments are meaningful below the scale of end consumer handset demand. We now estimate that QTD handset revenues from Chinese customers will reach one in the third quarter and return to sequential growth in the following quarter. Now, forward guidance in the third fiscal quarter, we forecasted revenues of nine point two two billion dollars and non-GPAs of two thousand ten cents to two thousand twenty cents. In QTL, we estimate revenues of one point one five to one point three five billion dollars, EBIT margin of sixty-seven to seventy-one percent, with sequential decline primarily due to the operating margin of weaker low-tier handset yields. In QTD, we expect revenues of seven point nine eight point five billion dollars, EBIT margin of twenty-five to twenty-seven percent. We forecasted QTD handset revenues to be approximately four point nine billion dollars, as a result of the impact of industry-wide member dynamics in the supply. We anticipate QTD IoT revenues to grow by high single digits with the year-over-year driven by industrial and consumer products. In QTD automotive, following another record quarter, we expect year-over-year revenue growth to further accelerate to approximately fifty percent in the third fiscal quarter. Lastly, we forecast non-GAAP operating expenses to be approximately two point six billion dollars in the quarter, including wireless mobile revenues impacted by member industry-specific dynamics, with confidence in underlying fundamentals around Snapdragon product leadership and content growth opportunities in building the adoption of AI technologies. We continue to execute on our cellular growth opportunities and automotive IoT and remain confident in achieving our long-term revenue targets. In addition, we’re very excited about the progress in our data center products and customer traction. We now expect initial shipments for customers’ engagement and leading high-skillers later this calendar year. We look forward to providing updates on our growth initiatives, including opportunities in data center and physical AI at our end of June twenty-fourth. Thank you, Mr. Cash. Thank you, Cash. Operation number one. Operation number two. Please take your hand. Operation number three. Please take your hand. Operation number four. Please take your hand. Operation number five. Please take your hand. Operation number six. Thank you, Cash. Thank you, Cash. Operation number seven. Please take your hand. Operation number eight. Please take your hand. Operation number nine. Please take your hand. Operation number ten. Please take your hand. Thank you, Cash. Thank you, Cash. Operation number eleven. Please take your hand. Operation number twelve. Please take your hand. Operation number thirteen. Please take your hand. Operation number fourteen. Please take your hand. 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But here’s a couple things that I can tell you to some side what we said in in the script. I think we have spent time building assets, and we were building our CPU accelerator. We have a solution for for memory in the accelerator. We have added a lot of capabilities for customization with acquisitions all the way from the beginning. We have been pursuing customization. We talk about having agreements with number companies in previous engagements several quarters ago, and I think giving the the capabilities for the solution was happening in the market to celebrate. So we’re very excited. The only thing I can say is a large accelerator, and we’re we’re thinking about, you know, multi-generation agreements. But I think that’s all we can say this morning. Okay, excellent. Thank you. Let’s follow up. Can you maybe walk through your wire conference? Thank you. Let’s go forward. Order that you were trying to get forward. Why wire conference? Let’s go forward and get the order for for Android. Android TV deal in China. Definitely, a number of orders. Definitely, how the ability is right now over all the handset market. I’ve been curious what you’re seeing in the conference and the bottom in the quarter. Thank you. Sure, sure. So if you think about the back to you see the from my Chinese and Saudi Amazoners of the memory, now it’s it’s really two parts. The first part is the scale of the handset market, and there we’ve seen some small decline in it, especially in the mid-lows. But by far the largest back have been the OEM making decisions to slow down their build and draw down channel inventory. So both of these factors have been in our market results that also represent our June quarter guidance. And so what we end up doing in both quarters is really significantly under-shipping the end consumer demand for handset as a result of the channel inventory drawdown factor. So as as we look forward, we we will concentrate the the quarters now the bottom, and and so as we as we go forward, the revenue is going to be much closer to the scale than the numbers. The inventory drawdown factor can’t be more forecast. Interesting question. Just one thing because there’s another way to look into this. As you know, because our licensees and we do have the ability of what happens in the market. So we know, we know how the handset market is behaving, even when we’re surprised on the end. So we give us real good idea on the visions and customer demand versus what we’re shipping, so that I know my client back is kind of where we’re set. Great question. Come on, why us? The answer is we’re people. This is the question. Thank you. Thank you for the question. So maybe just going back to the the center of the deal, and just think about if you can sort of help us think about the comparison. If you mean you had which the like we provide now and now the one to one to one to one to make sure you had in the now the the focus on the different markets. Where how you thinking about the comparison that may where they are maybe three months ago, six months ago, that you now are going and trying to deliver the wins and have a good follow up. Thank you. Great, great question. I I’ll give our perspective and thank we have now. Thank more clarity than ever. Have we where can we are in the space? So a little bit maybe at a very high level, right? In the in the beginning, was about training, was about creation. I I want to give you very GPU centered environment. Infrastructure scale, and the conversation changed to I’m going to use my GPU from training on on the cluster there, and when I’m not training, I’m going to use that for infrastructure scale. We started to say dedicated solutions. The data center becomes more disaggregated. We have separate computing solutions, some for compute, bound some for memory bound. And now we enter the next phase, which how AI is really going from infrastructure tokens, how you generate demand for tokens, which all the gigantic experience and the infrastructure is one into larger devices. So when you think that landscape and look at our IP, the places that we can be very differentiated. I was started by our CPU. I think when you think about it, CPU becomes very important now. Or do we were one of the companies that have a pretty good CPU asset. We proven that CPU performance, leading performance on on the market that we are right now such as PC, smartphone, and also we have built, we provided thousands of days dedicated, you know, CPU for gigantic experience in the data center. So the metrics, the performance, people will be better compared. And you know, we have our texture license, and we have very very high performance CPU. So that’s one of the answers. The other answer is how you think about this scale of a semiconductor company like Qualcomm, we’re not small, and the ability to combine the IP with ability to do custom silicon, make sure that yield, make sure it’s delivered quality, and combine a lot of the connectivity IP, which I believe all the way because we’re a license IP company has leading IP. The more you license, the better your IP becomes. The number three is how we think about accelerator. You go and need you go and need high compute-intensive loads. And we think that we have something unique, which is focused on on on cluster that is disaggregating for very specific, you know, function, specific loads. I think that what you’re seeing with companies like Rock and Silver just prove that you have opportunities for dedicated infrastructure, and and the last point is how we know this comes. The position that we have on on the edge, if you actually track what’s happening, where for open claw and all of the different that’s happening core solutions, you you rely a lot on on high performance CPU, the right for so-called not great cycle for us. So we look at that whole landscape, and that’s how we feel so good about the gigantic transition of AI, what it means to Qualcomm, and hopefully on June 24 we show the details on the roadmap, and and in fact we’ll be able to see where we stand, and please reserve seats. No, please. The follow-up question. More than that today, maybe for my follow-up, just going back to the end. Just just mind us the multi-growth team will be have with your friendly, premium support customer service. We have some sort of different the market to share with them. This you I think some more indication for for the second share, more users in house, more just the next year. Just mind us how you’re thinking about the development long term and what the multi-growth sort of capture. No, absolutely. I love answering questions. So this is a very very stable relationship with Qualcomm. I want to remind you all that we have reset the framework. The relationship is totally. We always said this is with around seventy percent share between us, and and only how silicon that has changed to greater than seventy percent. As you know, we have been the framework. Sometimes we get more than that. We plan our designs in greater than seventy percent share, which exactly what we said is expected is the framework this year, and that is also the framework for next year. I would say that that’s probably one of the most stable relationships that we have. We have the ability of what what that entails, and we feel good about the position on that. Right? And Or do I think given what’s happened, where for agents we have not done it to that we have caused the bias on that. Great question. Come on, why us? The answer is we’re people. This is the question. Yes, I, I, I get the first question. Just returning to the data center really, and clarify what’s mentioned in terms of the high-scale engagement in December quarter. Is that an engagement for next year or for this year? I understand you’re targeting both. It sounds like what what what the particular engagement. This particular engagement, which we don’t have shipments in December, is is a custom product we working with for high scaler. Okay. No, no, no, that’s the same. Okay. Um.
Just with regard to QTL, uh, it looks like modestly down and slightly down what we’ve been talking about with regards to what’s going on in the handset market. What’s the right way to think about QTL? Is it really going into second half of the year? The effect that we maintain levels and just for seasonality again in the year, what the effect in that QTL uh to be more significant in the second half? Yes, of course. Um, so as we as we saw in our results for the second quarter, year-over-year handset units were flat. Uh, for the for the global global units, and this was really kind of impacting uh our guidance as well. Right, true as well. Um, as we’ve got quarter quarter guiding is some weeks in the mid-low years in the market, and this is obviously something that we are projecting forward and we’re not close to what we’re seeing is the premium higher of the market is continuing to hold, and we’ve done the low years, and that’s what reflects in our guidance. That’s a reasonable way of thinking about the market going forward. Next question is from the United States with first years. Thank you for the question. So if the second half of quarter three and then two four, um, September September quarter, I think one of the first thing the Apple stepped down would maybe also suggest how are we thinking about handset seasonality in the September quarter, even though it’s competing against the next we be thinking about. Yes, first of course, you’re right. I think in terms of handset revenues for QTD for Chinese we do expect that to go down, and you will see it quite slow growth there. Um, and Apple, right as well, typically it’s a growth quarter for Apple product revenue, and we do not see that at this point given given share of the market. So those two factors would be important to focus. I mean, I mean, you think you think handset growth is primarily September not given that, people are not specifically guiding that point at this point, but I think those two factors would be would be important to focus. Okay, and for my follow-up, we talked about like the uh devices and the smartphone market, right? Yeah, in the twenty twenty-seven, do you think memory is going to be generally like how much memory does the smartphone need? And that’s something that is going to be interesting to think about because we know in the twenty twenty-seven, probably the broader general market for memory is going forward. Thank you for the question. It it’s a little it’s a little early to talk about twenty seven. I think one thing is this: I think the the pace of change of in AI is still high. When I think about the time more that I talk about before, we go from inference to now you know how you generate and for tokens with more agents. I think what we see is two things: one is the devices, the devices are changing requirements and the designs and in the players we see interesting relationships now starting to form between smartphone and AI companies, which I think is very interesting and understand with the change in the nature of designs, we see designs moving towards products that have much more capable CPU to run those type of products, and it’s a lower noise in the memory environment right now. I I wish to make a prediction for twenty seven is a little early, but we see a combination of some of the same the same companies want a lot of demand for data centers, also getting involved with some of the devices and the edge as well, and we see new memory players coming and building capacity, so we can have the monitor the situations and and and see what happens in twenty seven. Next question is from the United States with first years. Thanks a lot. Um, I want to ask also about the custom uh business in the fourth quarter this year. I know you guys see that from Apple, we see a little flat in the handset market, including your ID, but in this year, given cycle times, so I think that’s just something that is consistent. Yes, that that sort of thing you’re talking about is truly something that includes a big portion of your your ID, which is able to uh churn around in the the quarters. Look, I think that’s two answers. So we have, you know, I’m pretty positive where the the past several quarters will be talking about engaging with customers and data centers. So when we start engaging and talking about some of the quantum capabilities, probably a thing even before the decision on hardware, think the decision on hardware increases execution capabilities and in the portfolio of ID. I think you should expect that we will have longer multi-generation agreement with those companies that bring some more of quantum capabilities to the table. I wish I could provide more details, but I don’t want to run what we’re going to do in twenty twenty-four, but uh, I think we will provide details over the months for customers when and our roadmap and ID. Thanks a lot, and then I guess this is a follow-up. Is the assumptions still the same that uh, like, like I’m just sure Apple and the handset does have a little more aggressive display than is uh, assumptions still going to be twenty percent of the um of the launch? Yeah, no change to our directional very fast twenty percent of the quarter percent for phones that launch in fall this year, and no product relationship beyond that. And this is this is directional because this for the last couple years. In terms of for Apple product revenue for this twenty-seven, we see Intel models in the range of a little over two billion dollars in terms of QCT product revenue in the year, and we think that’s a reasonable price to model this. Next question is from the United States with first years. Yes, thank you. Um, you would too. We are seeing more in the medium year and in the medium year things grow. And something you can see is we’re taking limited memory allocation and sort of drives to sort of limit that. To see the higher tier, what are you seeing from what’s happening here moving forward? Yeah, I think the actions from the OEMs are obviously very logical. The if if you had to choose between which devices you would do memory allocation, do you would pick the premium and the higher tier? That’s where the profitability sits, and that’s what you’re seeing happen in the market. Okay, and thank you. And what about sixty twenty twenty-nine and that what is that timeframe represent? That’s the actions of the G’s and and anything you can tell us about sixty’s becoming. Yes, and and thank you for the question. We’re going to broaden that because sixty still I think very different than the other G for Qualcomm. I also believe that sixty creates some very interesting and exciting developments and and data center opportunities and for Qualcomm as well. Um, you should be thinking about our timeline and we’ve been consistent where we will have, you know, product-based demonstrations in twenty twenty, likely we’re going to have first silicon in in twenty eight, and we want early launches in two thousand twenty-nine, and then we expect that to scale by two thousand thirty. Thank you. Next question is from the United States with first years. Okay, thank you for the first question. What about the handset? And can you just modify us to what the second quarter, first quarter, what percent of the handset is China? And you mentioned about that name, so how far are you under shifting versus true demand? Are you believing that true demand, the way you’re trying to account for, is truly weakening, still or is that slightly equating stable despite the memory years? Yeah, Ross, when you think about the total handset market, and this is more of a QTL comment, right? That’s where we’re seeing that the the slide decline in the low years for the overall scale of the handset market has not changed much in the March quarter, and we’re going to obviously pull even more into that going forward. In terms of QCT shipments to Chinese customers, it’s a fact that I said earlier, off doing the numbers, the scale of the handset market, but the OEM decision to draw down channel inventory, and so my comments earlier about that draw down of channel inventory will end soon, and that’s probably the bottom of the quarter, and then we’ll be shifting to back into the size of the handset market. Okay, and I guess for my follow-up question, six years is the automotive side of things. You mentioned that the A side started ramping quite a bit for this year, so uh, I think this second quarter is doing very very well. As you go from more of a product business to the
It has increased. How does that change the revenue trajectory and perhaps the gross margin trajectory in your automotive business? Yes. So, how did this question? I think what you see is it is accelerating revenue dramatically because it’s a lot, a lot more silicon content. Is in, in that it’s true, actually on both sides. I think what you saw is when we went from generation three to generation four and zero carbon, we, I think we keep mentioning the core is really becoming computing first. We saw a step function increase in the capabilities of content you expect another one. When we go from four generations to five generations, and as we add processors, you started to see more and more in the development of L two plus plus and and direction towards level three. You starting to see the amount of computing power going up. So for us, it’s basically a significant revenue accelerator within automotive. And specifically on your question on gross margin, the highlight would be two additional factors. To what question? I think we have the transition from chip sales to sale, and as we go to module, it increases the revenue opportunity for us as well. And then addition, we have software opportunity on top of the the chips that would also help our margin profile. So net, we still model the business in line with our corporate average, but it really is a business that has several vectors of growth as multiple supply. Thank you. The last question is quite a bit higher. With thanks for your expertise. This is your question. Thanks for the question. For the first one, as you mentioned, our product is a two billion plus for computing seven. What about the royalty content and how does that evolve during the the kind of the renegotiation, the negotiating that business? Yes. So depending the renegotiation, the royalty we don’t expect to change. Right. It should, it should be in the same scale as that, and then in the business separate from the chip business. And from my follow-up question, I’m trying to understand whether the content are you able to get more detailed on this? But was it Qualcomm intention to approach from an ASIC perspective? I thought you plan to enter the enterprise from a margin perspective. But I understand that now the goal is to approach from an ASIC perspective, and that is the you know what impact does it have on margin? Like are you really going to compete on with the ASIC suppliers out there? So do we do the more kind of one-on-one side approach to the market? The approach approaching the market and a broader margin business. You know what is kind of the broader side of the go to market side of Qualcomm’s business? Very good, great question. I think the answer is all of the above. We, first of all, when we enter, I think we were very flexible, but we also look at the reality of what’s happening in in the hyperscaler. You can see the majority of of the revenue for some of those companies is heavily concentrated in a few number of very large companies, and those companies have now have indicated clearly that have different as the data centers aggregate, you have different approaches to compute to connectivity, and you should assume that Qualcomm will play on margin on custom, and it’s going to be combination of how we can configure our IP and different IP blocks for for different solutions is going to be a bespoke business. And specifically on your question on the custom engagement, we talked about we do expect that to be a creator at the operating margin. Thank you. The next question is a session. This is one very important for very much. I think the obvious thing I want to say is please ask everyone to attend or join twenty four event investor day. We intend in at investor day to really highlight not only everything that’s happening with the new Qualcomm, but also things the details of the products and technologies we’re developing for the data center space, provide an update and how Cisco AI is transforming our business and provide the clarity that we have today how really agents and a generative experience exactly has brought innovation in our enterprise. And I look forward to all of you and all of your partners, our employees, for you know a great quarter as as we continue to transform Qualcomm. Thank you very much. Please, gentlemen, this concludes today’s conference call. You may now disconnect.
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