Core Insights - The 2025 ChinaJoy event showcases the growth and innovation in the digital entertainment industry, with a focus on high-quality development and digital consumption [1][2][4] Industry Overview - The Chinese gaming market is projected to reach a sales revenue of 325.78 billion yuan in 2024, marking a year-on-year growth of 7.53%, with mobile games accounting for 238.22 billion yuan, over 70% of the total [4] - The user base for Chinese gaming has reached 674 million, a historical high, while the global gaming market is expected to generate total revenues of $182.7 billion in 2024, with mobile games holding a 55% share [4] Regional Performance - Shanghai's gaming sales revenue is expected to hit 155.8 billion yuan in 2024, reflecting a 7.8% year-on-year increase, and the esports industry in Shanghai is projected to generate 6.13 billion yuan, accounting for 46.9% of the national esports revenue [6] Technological Innovations - Qualcomm's Snapdragon 8 Gen 2 is highlighted as a performance benchmark, featuring a 45% increase in single-core and multi-core performance, a 40% enhancement in GPU performance, and a 45% boost in AI capabilities [7] - The Snapdragon Elite Gaming features have been upgraded to enhance gaming experiences, integrating advanced technologies for improved graphics and performance [7][11] Ecosystem Development - Qualcomm is building a comprehensive ecosystem by collaborating with upstream and downstream partners, integrating leading mobile technology into various devices, including smartphones, PCs, and XR headsets [13] - Partnerships with companies like NetEase and Tencent have led to significant advancements in gaming experiences, including the introduction of AI capabilities in mobile games [14] Esports Growth - The Chinese esports market is expected to exceed 300 billion yuan by 2026, with the esports industry generating 27.57 billion yuan in 2024, reflecting a 4.62% year-on-year growth [15][18] - Qualcomm's Snapdragon Pro Series has become a leading mobile esports event, attracting millions of viewers and showcasing the potential of mobile esports [18]

Core Viewpoint - Qualcomm is officially entering the data center market and addressing the impact of Xiaomi's self-developed chips on its business [1][2]. Group 1: Data Center Market Entry - Qualcomm signed a Memorandum of Understanding (MOU) with Saudi AI company Humain to develop next-generation AI data centers and cloud-edge services [2]. - The collaboration aims to leverage Qualcomm's advanced CPU and AI solutions to support Humain's AI cloud infrastructure [2]. - Qualcomm's CEO highlighted the company's capabilities in high-performance, low-power CPU architecture, indicating a strategic shift towards energy-efficient computing in data centers [2][4]. Group 2: Historical Context and Challenges - Qualcomm previously launched its first Arm server chip, Centriq 2400, in 2017 but faced challenges due to a weak Arm server ecosystem and legal issues with Apple [4]. - The company had to scale back its server CPU business after a series of financial cuts and layoffs in 2018 [4]. - Following the acquisition of Nuvia for $1.4 billion in 2021, Qualcomm began to re-enter the data center CPU market, focusing on high-performance Arm server chips [4]. Group 3: Upcoming Products and Specifications - Qualcomm is reportedly developing an Arm server processor codenamed "SD1," expected to utilize TSMC's 5nm process with 80 custom Oryon cores and a maximum frequency of 3.8GHz [5]. - The processor will support 16-channel DDR5 memory and include 70 PCIe 5.0 interfaces, indicating a robust design for data center applications [5]. Group 4: PC Market Challenges - Qualcomm aims to capture 30% to 50% of the non-x86 Windows PC market within five years but has faced disappointing sales, with only 720,000 units shipped in Q3 2024, representing 0.8% market share [7][8]. - The company has adjusted its expectations, targeting a 12% market share by 2029, contributing $4 billion in revenue [8]. - Qualcomm has launched or is developing over 85 PC designs and plans to expand its offerings to over 100 models by next year [8]. Group 5: Collaboration with Taiwanese Suppliers - Qualcomm maintains a strong partnership with TSMC, shipping approximately 40 billion chips annually, and is expanding its team in Taiwan to enhance collaboration in the PC ecosystem [11]. Group 6: Relationship with Xiaomi - Despite Xiaomi's development of its own 3nm flagship SoC, Qualcomm's CEO reaffirmed the long-term partnership with Xiaomi, stating that Qualcomm will continue to supply chips for Xiaomi's flagship devices [12]. Group 7: Future Market Expansion - Qualcomm is exploring opportunities in the robotics market, drawing parallels with its automotive sector, and has already partnered with several robotics companies [14].

Investment Rating - The report does not explicitly state an investment rating for the industry or Qualcomm, but it discusses market share expectations and strategic positioning, indicating a cautious outlook on market penetration and competition [2][7]. Core Insights - Qualcomm is accelerating its AI PC ecosystem, challenging the x86 architecture with its Snapdragon X Elite/Plus platform, which boasts 45 TOPS NPU performance. Over 85 Windows 11 AI+ PC models are in production or development, with plans to reduce prices to $600 by 2026 to enhance mid-range market penetration [2][7]. - The company is focusing on a hybrid AI architecture that prioritizes on-device processing for privacy and efficiency while leveraging cloud capabilities for complex tasks. This includes transferring smartphone 5G and NPU capabilities to PCs and robotics [3][8]. - Qualcomm is responding to Xiaomi's self-developed chip strategy by emphasizing the coexistence of self-design and outsourcing, maintaining that Xiaomi will still rely on Qualcomm for critical components [4][9]. - The company is restarting its Arm-based server chip business, launching a data center CPU based on the Nuvia Oryon architecture, and collaborating with NVIDIA to enhance performance and efficiency [4][10]. Summary by Sections AI PC Ecosystem - Qualcomm's Snapdragon X Elite/Plus platform is set to challenge the x86 architecture, with over 85 AI+ PC models in development and a target price of $600 by 2026 to penetrate the mid-range market [2][7]. - The Snapdragon X series supports over 750 applications and 1,400 games, addressing previous concerns about the Arm ecosystem's limitations [2][7]. On-device AI and Hybrid Architecture - Qualcomm's hybrid AI architecture emphasizes local data processing for privacy, while cloud resources are utilized for more complex tasks. The company is also promoting its AI Hub with 75 pre-optimized models to facilitate on-device AI development [3][8]. Competitive Landscape - Qualcomm's response to Xiaomi's self-developed chip highlights the balance of cooperation and competition in the industry, asserting that Xiaomi will continue to depend on Qualcomm for essential components [4][9]. Diversification Strategy - Qualcomm is reviving its Arm server chip business with the Nuvia Oryon architecture and plans to integrate its CPUs with NVIDIA's GPUs for improved performance and efficiency in data centers [4][10].

Group 1 - The COMPUTEX 2025 exhibition will take place next week in Taipei, Taiwan, with a strong focus on "AI" as a key theme for the PC industry [1] - Qualcomm is leading the charge in the PC sector by enabling scalable AI expansion on the device side, aiming to democratize AI access for users [5] - Qualcomm's President and CEO, Cristiano Amon, will deliver a keynote speech at COMPUTEX 2025, discussing the company's latest advancements in the PC industry and the ongoing evolution in the AI era [5] Group 2 - The Snapdragon X series, launched by Qualcomm a year ago, is a groundbreaking platform for device-side and hybrid AI, enhancing productivity and creativity through advanced AI models [5][7] - Consumers can expect exceptional performance and battery life with Snapdragon X, which redefines the PC industry landscape and marks a significant turning point for the Windows PC ecosystem [7] - COMPUTEX 2025 will serve as another highlight for Qualcomm in the PC field, showcasing the exciting experiences brought by continuous innovation in AI PCs [8]

Core Viewpoint - The emergence of DeepSeek's distilled models is significantly enhancing the capabilities of edge AI, allowing for the deployment of larger models on resource-constrained devices, thus marking a pivotal shift towards edge AI as the new user interface (UI) for end-users [2][6][10]. Group 1: DeepSeek and Edge AI Development - DeepSeek's distilled models enable devices that previously could only deploy 7 billion parameter models to achieve performance equivalent to 14 billion parameter models, thus elevating edge AI capabilities [2]. - The transition of AI inference to the edge is driven by the need for real-time processing, privacy, and efficiency, as highlighted by Qualcomm's leadership in this domain [2][10]. - The performance gap between distilled models and large models is narrowing, with over 75% of large-scale AI models expected to have parameters below 100 billion by 2024 [8]. Group 2: AI as the New User Interface - AI agents are set to become the primary interface for user interaction, handling various tasks seamlessly in the background, thus simplifying user experiences [10][12]. - The ability of AI agents to manage complex tasks with unclear instructions enhances user experience, making interactions smoother and more intuitive [12]. Group 3: Hardware and Software Collaboration - Qualcomm's strategy involves creating a comprehensive solution that integrates hardware, software, and ecosystem collaboration to overcome limitations in computing power and application ecosystems for edge AI [14]. - The Snapdragon 8 Gen 2 platform showcases significant performance improvements, with a 45% increase in CPU performance and a 40% reduction in GPU power consumption, facilitating advanced AI applications [15]. - Qualcomm's AI software stack simplifies model deployment and enhances performance, allowing developers to create applications without needing to understand hardware intricacies [16]. Group 4: AI Hub and Developer Ecosystem - Qualcomm AI Hub supports a wide range of models and facilitates easy deployment and optimization for developers, significantly shortening development cycles [19]. - Over 1,500 companies, including major players like Meta and OpenAI, are utilizing Qualcomm AI Hub, indicating its growing influence in the AI ecosystem [17]. Group 5: Multi-Device Coverage - The Snapdragon 8 Gen 2 platform enables AI agents to function as native applications on smartphones, enhancing user interaction through personalized features [21]. - Qualcomm's solutions extend beyond smartphones to PCs, automotive, and IoT devices, providing a comprehensive platform for developers to create scalable AI applications across multiple devices [23].