Chipmaker Rally: Qualcomm Jumps on Strong China Demand, AI Growth

Qualcomm shares rose 10% to a more than two-year high on Thursday, boosted by signs of a revival in demand driven by artificial intelligence (AI), notably in China, after a protracted downturn.

The smartphone-focused chipmaker saw a 40% boost in sales to Chinese smartphone manufacturers in the first half of its fiscal year, as Chinese consumers preferred higher-priced smartphones with AI chatbots, Reuters reported.

According to IDC researcher Nabila Popal, as they focus on AI, Chinese suppliers, previously relying on MediaTek, are switching to Qualcomm's premium processors. Popal also noted Qualcomm's tremendous upside potential, with Chinese OEMs projected to lead the comeback this year following two years of tough conditions.

Qualcomm's automotive division, which supplies automakers with semiconductors, indicated growth of 35% year over year to $603 million, as CNBC reported. This division is expected to gain double-digits this quarter, according to the firm. If the increases continued, the largest smartphone chip supplier was prepared to raise its market value by nearly $18 billion.

The Internet of Things division, which includes lower-cost processors and virtual reality chips, saw revenue fall 11% to $1.24 billion.

AI, Foldable Smartphones Demand Drive Robust Sales

After a 3.5% drop on Wednesday, the Philadelphia Semiconductor Index climbed 1.4% after AMD and Super Micro Computer reported poor results.

IDC preliminary data showed that AI and foldable devices are helping Android smartphone suppliers, particularly high-end ones. Chinese customers were more interested in this differentiator from Apple in Q1 2024.

A man uses his mobile phone near a Qualcomm stall at the China International Fair for Trade in Services (CIFTIS) in Beijing on September 4, 2023.

Snapdragon X Series Processors: Possible Gamechanger

The positive development in Qualcomm's sales comes after the tech firm revealed its Snapdragon X Plus laptop processor and Snapdragon X Elite chip specs. Qualcomm has previously used its CPUs in laptops, but this is the company's first attempt to compete with Apple, Intel, and AMD in speed.

According to The Verge, Qualcomm's entry-level laptop CPU, the Snapdragon X Plus, has 10 cores, 42MB of cache, and 3.4GHz multithreading. It supports powerful generative AI with a 45-tera operations per second (TOPS) NPU.

The Snapdragon X Plus also includes a 3.8 teraflop (TFLOP) Adreno GPU and LPDDR5x RAM with 8448 MT/s. TFLOP, an arbitrary performance term, measures the chip's trillion floating-point operations per second.

Qualcomm will also launch three twelve-core Snapdragon X Elite processors with up to 4.6 TFLOP integrated GPUs and 3.8GHz multithreaded frequencies. Both CPUs feature NPUs and RAM, like the Snapdragon X Plus. Like Intel's Turbo Boost or AMD's Turbo Core, the top two SKUs have Dual-Core Boost, which dynamically adjusts CPU frequency for power efficiency, reaching 4.2 GHz.

Notably, these Arm processors lack a hybrid design, unlike Apple Silicon and Intel chips, which assign cores for performance and efficiency. Qualcomm calls all Snapdragon cores "performance cores," boasting better performance, power efficiency, and battery life than competition.