Core Insights - TSMC is expanding its operations in the U.S. by acquiring land in Arizona for over $197 million (approximately NT$6.227 billion) to support its production and operational needs [1] - There are rumors that TSMC plans to transfer some mature process equipment from Taiwan to its partner, World Advanced, in Singapore, which could enhance TSMC's advanced process capacity [2] - Qualcomm is in discussions with Samsung for 2nm wafer foundry services, potentially breaking TSMC's exclusive hold on Qualcomm's advanced process orders [4][5] Group 1: TSMC's U.S. Expansion - TSMC announced the acquisition of new land in Arizona, covering an area of 3,652,651 square meters, to support its expansion plans and respond to strong long-term AI-related demand [1] - The company is currently in a quiet period before its earnings call and has not commented on the rumors regarding the transfer of equipment to Singapore [1] Group 2: Equipment Transfer Rumors - Market speculation suggests that TSMC is moving some mature process equipment to World Advanced's 12-inch factory in Singapore to free up space for advanced process equipment [2] - If true, this move could accelerate TSMC's advanced process layout in both Taiwan and the U.S., potentially boosting future performance [2] Group 3: Qualcomm and Samsung Collaboration - Qualcomm's CEO confirmed discussions with Samsung for 2nm wafer foundry services, marking a return to collaboration after years of exclusivity with TSMC [4] - Samsung is reportedly offering wafer foundry prices that are at least 30% lower than TSMC's, aiming to secure Qualcomm's future orders [4][5] - Qualcomm's upcoming flagship chip, the Snapdragon 8 Elite Gen 6, may adopt a dual-foundry strategy, utilizing both TSMC and Samsung to mitigate supply chain risks and reduce costs [5]

Core Viewpoint - Qualcomm is set to release its Q4 2025 fiscal year earnings on November 5, with analysts anticipating strong signals of recovery in smartphone and PC chip demand, as well as updates on its AI chip developments [1] Group 1: Business Expansion and AI Focus - Qualcomm has diversified its business beyond smartphone reliance, expanding into PC, automotive chips, and IoT, with a focus on high-performance AI capabilities [1][3] - The newly launched AI200/AI250 chips are aimed at the AI data center market, directly competing with NVIDIA and AMD's AI accelerators [1][2] - The AI200/AI250 chips are designed to significantly reduce the total cost of ownership (TCO) for AI inference workloads in data centers [2] Group 2: Market Potential and Growth Drivers - If Qualcomm secures orders from major tech companies like Microsoft, Amazon, and Meta for its AI infrastructure, it could generate billions in new revenue [2] - Analysts have raised Qualcomm's target stock price to $200 or above, indicating a potential upside of approximately 7.4% from the current levels [3] Group 3: Defensive and Growth Attributes - Qualcomm possesses a unique combination of defensive and growth characteristics, driven by stable patent licensing revenues and diverse semiconductor business growth [3][5] - The company is expected to exhibit both offensive and defensive traits, benefiting from a favorable market while maintaining resilience in a downturn [5] Group 4: Sales Composition and Edge AI Strategy - Qualcomm's revenue is increasingly diversified across smartphones, PCs, automotive electronics, and IoT, with smartphones remaining the largest segment [6] - The company is well-positioned to benefit from the edge AI trend, which involves deploying AI models directly on devices, enhancing performance and reducing latency [6] Group 5: AI Accelerator Innovations - The AI200/AI250 chips are designed for rack-scale AI inference clusters, with a focus on energy efficiency and performance [7][8] - The AI250 introduces innovative near-memory compute technology, significantly enhancing memory bandwidth and enabling more efficient AI inference workloads [8]

Core Viewpoint - Qualcomm is set to release its Q4 2025 fiscal year earnings on November 5, with analysts anticipating strong signals of recovery in smartphone and PC chip demand, as well as updates on its AI chip developments [1] Group 1: Business Expansion and AI Focus - Qualcomm has diversified its business beyond smartphone reliance, expanding into PC, automotive chips, and IoT, with a focus on AI capabilities [1][2] - The newly launched AI200/AI250 chips are designed for data center applications, aiming to compete with NVIDIA and AMD in the AI accelerator market [2][7] - If Qualcomm secures orders from major tech companies like Microsoft and Amazon for its AI infrastructure, it could generate billions in new revenue [2] Group 2: Financial Performance and Market Expectations - Analysts predict that Qualcomm's diversified business model will lead to robust growth, potentially exceeding Wall Street's expectations for Q4 and the entire 2025 fiscal year [2][3] - Recent analyst target prices for Qualcomm have been raised to $200 or above, indicating a potential upside of approximately 7.4% from the current average target price of $194 [3] Group 3: Defensive and Growth Attributes - Qualcomm possesses unique defensive and growth characteristics, driven by stable patent licensing revenues and diverse semiconductor business growth [3][5] - The company is expected to perform well in both bullish and bearish market conditions, leveraging its diversified portfolio to mitigate risks [5] Group 4: Market Trends and AI Integration - The semiconductor industry is experiencing a positive outlook, particularly in high-performance AI chips and edge computing, areas where Qualcomm excels [5][6] - Qualcomm's strategy focuses on edge AI, integrating AI capabilities into smartphones, PCs, and automotive applications, which is becoming a key growth driver [6] Group 5: Technical Innovations in AI Chips - The AI200/AI250 chips are designed to enhance data center performance, emphasizing efficiency and total cost of ownership (TCO) [2][8] - The AI250 introduces innovative near-memory compute technology, significantly improving memory bandwidth and enabling efficient AI inference workloads [8]

Core Viewpoint - Morgan Stanley's latest report highlights Qualcomm's (QCOM.US) strategic shift from a heavy reliance on smartphone business to diversification into PC (especially high-performance AI-enabled AIPC), automotive chips, and IoT, showcasing different growth dynamics and future drivers, which is expected to lead to robust growth and exceed Wall Street's expectations for Q3 and FY2025 [1][2] Qualcomm's Business Diversification - Qualcomm's revenue composition is increasingly diversified, covering smartphones, PCs, automotive electronics, and IoT, with smartphones remaining the largest segment driven by Snapdragon chips and 5G modem patents [2][4] - The company is benefiting from the unexpected strong demand for AI-enabled high-end smartphones, particularly in flagship Android devices, achieving low double-digit year-over-year growth despite a slowdown in the overall smartphone market [2][4] Edge AI Strategy - Qualcomm's core strategy revolves around Edge AI, deploying AI models directly on local devices for real-time processing, which reduces latency and bandwidth usage [3] - The PC segment is emerging as a new focus for Qualcomm's Edge AI strategy, particularly with the introduction of ARM-based platforms like Oryon CPU and NPU, targeting the AI laptop market [3] Automotive and IoT Growth - Qualcomm's automotive chip business has shown impressive growth, maintaining approximately 30% growth driven by the digitalization and electrification trends in the automotive industry, with over $30 billion in orders [4] - The IoT segment, covering wearables, AR/VR, smart home, and industrial IoT, is also experiencing stable growth, contributing 20-40% of Qualcomm's revenue and growing faster than the core smartphone business [4] Resilience and Valuation - Qualcomm's diversification strategy enhances its resilience against market fluctuations, allowing it to maintain revenue guidance even if it loses major clients like Apple [4][7] - Morgan Stanley has reiterated a bullish stance on Qualcomm, raising the 12-month target price from $190 to $200, reflecting confidence in the company's long-term growth potential and the unique defensive attributes of its diversified business model [2][6][9] Semiconductor Industry Outlook - The semiconductor industry is viewed positively, with a focus on opportunities in high-performance AI chips, automotive electronics, and edge computing, where Qualcomm's expertise positions it uniquely [10] - Qualcomm's technology leadership in Edge AI across multiple sectors, including smartphones, automotive, and IoT, is expected to gain greater market recognition, enhancing its valuation [10] Investment Considerations - Qualcomm is seen as a balanced investment choice, offering both defensive characteristics and growth potential, with a valuation that has not yet fully reflected its long-term growth prospects [11]

Investment Rating - The report gives Qualcomm an "Overweight" rating for the first time [5][15]. Core Views - Qualcomm is a global leader in wireless communication technology, with mobile chips as its core business. The company is expected to maintain its leading position in high-end smartphone SoC and smart cockpit SoC markets, while also expanding its presence in AI smart glasses and data center CPU businesses, which may become a second growth curve in the long term [5][15]. Summary by Sections Company Overview - Qualcomm was founded in 1985 and went public in 1991. The company focuses on mobile, IoT, and automotive sectors, with mobile business accounting for 63.81% of total revenue in FY2024, generating $24.863 billion [1][38]. Technology and Patent Strategy - Qualcomm builds a strong patent moat through a combination of self-research and acquisitions, holding approximately 5,600 families of 5G SEP patents, ranking second globally. The technology licensing business is the second-largest source of revenue and profit, maintaining a pre-tax profit margin of over 60% for nearly a decade [2][43]. Business Growth Opportunities - The smartphone market is showing weak recovery, but IoT and automotive businesses are expected to create a second growth curve. In IoT, Qualcomm is enhancing its presence in PC and smart glasses markets, with a forecasted revenue growth of 20% in FY2025. In automotive, the company is expanding its share in smart cockpit and advanced driving chips, with projected revenue growth of 34% in FY2025 [3][12]. Financial Forecast and Valuation - The report forecasts Qualcomm's net profits for FY2025-2027 to be $10.819 billion, $11.506 billion, and $12.477 billion, respectively, with growth rates of 6.7%, 6.3%, and 8%. The current price corresponds to a PE of 16X, 15X, and 14X for FY2025-2027, which is below the average PE of comparable companies [5][6][14]. Market Position and Competitive Landscape - Qualcomm is positioned as a leader in the smartphone SoC market, holding a 59% market share in the high-end Android smartphone chip market in 2024. However, the company faces challenges from Apple's self-developed baseband chips, which are expected to significantly reduce Qualcomm's revenue from Apple by 2027 [1][4][11].