New Delhi: Qualcomm expects to generate significant revenue from India selling semiconductors for connected cars, artificial intelligence (AI) interfaces, and 5G connectivity, Savi Soin, senior vice-president and president-India at the US-based fabless chipmaker, said.
“The revenue from automotive clients in India is currently small, but we see a lot of potential. Currently, less than 5% of two-wheelers in India are connected. Going forward, applications such as location-based tolling and others are going to make the presence of more chips and modems essential in vehicles—which is what we’ll tap,” Soin said.
Connected vehicles, or smart vehicles, are those with an internet connection that allows them to communicate with other vehicles, and external devices.
Uday Dodla, senior director and business head for automotive and AI products at Qualcomm India, said that the company is currently in advanced test phases with domestic car brands to deploy chips. “We’re installing increased amounts of memory, and chips as new as up to 5nm. This is helping us integrate voice-based AI interfaces in cars—which we expect to see become common in sub- ₹10 lakh cars going forward,” Dodla said.
Soin stressed that while the revenue generated from car brands “is not quite at the same revenue scale (as mobile phones) for now,” the company expects a significant ramp-up in the next three years.
“Gone are the days when we’d take a legacy chip, make it auto-grade and spend five years getting them to production. Now, automobiles want cutting-edge experiences, and applications need new-generation chips to work even in cars. That’s where our business growth will be,” Soin added.
Industry analysts believe that chipmakers like Qualcomm and Taiwan’s MediaTek, which leads India’s mobile chips market, have a strong growth potential in the world’s most populous country. Tarun Pathak, research director at market researcher at Counterpoint India, said, “The next phase of growth is expected to come from the low-cost, high-volume smartphone segments as AI applications become more mainstream. But in auto, the use of chips is inevitable—cars will require connectivity as they become more feature-driven. This will give chipmakers an unprecedented growth opportunity, since the automotive industry is the closest after smartphones that can be regarded as a crucial one for consumers—and not an optional one.”
Qualcomm’s hypothesis is based on market assessment that sees connected cars becoming ubiquitous on roads in the years ahead. In August last year, consultant McKinsey said that 95% of all new vehicles produced by 2030 would be ‘connected’.
Qualcomm expects presence of connected cars to grow fast in India
Besides entertainment, connected cars are also expected to change the way humans interact with vehicles. For instance, advanced driver assistance system-equipped cars are not only capable of driving without human intervention, but can also adjust their routes as per live traffic data, tap weather information to adjust climate control, communicate live mechanical dynamics of cars to service centres, and do more such actions—essentially emulating how humans function alongside vehicles. Qualcomm expects the presence of connected cars to grow fast in India, too. The company said that it is “in trials with prominent Indian car brands”, and already has public partnerships with both Mahindra & Mahindra and Tata Motors for passenger vehicles.
Soin said that as the market for connected vehicles expands in India, it can contribute a larger chunk to Qualcomm’s global revenue. Qualcomm India’s revenue, sourced from market intelligence platform Tofler, was $1.39 billion in FY22—the latest period for which the US chipmaker’s local arm has filed financials for with India’s registrar of companies. In FY22, Qualcomm generated $44.2 billion in revenue globally. India, therefore, accounted for only 3.1% of its worldwide business. The low revenue contribution from India has time and again raised concerns around India’s low value addition as a market—even though companies have insisted for long that the world’s second-largest consumer market is of crucial strategic importance.
“It’s not like India cannot generate revenue for global tech firms. It just takes time—the digitization journey for India, for instance, was launched two years ago with the rollout of 5G connectivity. Now, its connectivity and ubiquity have ramped up where connectivity is across the nations, and we have smartphones offering 5G at as low as ₹8,000 ($95). Once you get the pricing and product right, it is only a matter of time before revenue starts growing too. In auto, India’s brands are leapfrogging Western counterparts in cockpit digitization across all price points. It is also this factor that is generating increasing interest in India for semiconductor firms,” Soin said.
Alongside automobiles, Qualcomm is also eyeing a larger share of the low-cost smartphone market to increase revenue and monetization from India. “We’re now trying to bring 5G and AI across all price tiers, and we expect AI in low-cost devices to proliferate some time soon. Most devices already have AI in background operations. Now, the applications will also proliferate across devices, which will be a big market to address,” Soin said.
As of the June quarter, devices priced at up to $200 ( ₹17,000) accounted for 44% of the volume of smartphones sold in India.
Qualcomm, meanwhile, ranks second behind Taiwanese chipmaker MediaTek in terms of mobile chipset market share in India. While MediaTek had a market share of over 50%, as per market researcher IDC India, in February this year, Qualcomm’s share was 25% of the overall market.
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