MWC 2024 Day 2 – Qualcomm & Jolla

Qualcomm – Nvidia at the edge

• There is very little that can touch Nvidia at the moment and Qualcomm has wisely decided that if you can’t beat them, you join them.
• The newly launched AI Hub is Qualcomm’s shot at replicating the success of CUDA but to do so for inference on devices rather than training in the cloud.
• AI Hub is a platform that makes it easy to deploy a generative AI service at the edge and provides a remote test bed of real devices upon which apps containing models can be tested before deployment.
• AI Hub is not exclusive to Qualcomm silicon and there are non-Qualcomm devices in the test bed, but it is clear that the real benefit only comes when one uses Qualcomm silicon as this is what the models have been optimised for.
• There are already 75 models supported on AI Hub with a promise to go to hundreds or so in the short term.
• AI Hub covers all types of AI, but I suspect that it will be in generative AI where it has the most impact as these are the hardest to run efficiently at the edge due to their size and power requirements.
• Qualcomm has moved pretty quickly to implement generative AI at the edge and has been demonstrating models running on existing silicon for over a year.
• This means that its silicon offering already stands on its own two feet, but if AI Hub takes off, it will make it more pervasive like Nvidia’s CUDA platform is for AI training in the cloud.
• In the long-term competition to run generative AI inference at the edge is going to really heat up but if AI Hub has become the go-to place to implement AI on edge devices, then it will be much harder for anyone else to put pressure on Qualcomm silicon.
• This means higher market share as well as the ability to earn higher gross margins on its silicon.
• At the moment, this space is almost completely vacant giving Qualcomm first mover advantage.
• Although all the excitement remains about AI, I suspect that the real upside in Qualcomm in the short to medium term is in laptop CPUs which is a big market with high prices.
• Furthermore, revenues from laptops at the moment are almost zero meaning that there is a huge opportunity to grow into at the expense of Intel and AMD.
• This all depends on the quality of the port of Windows from x86 to Arm, but Qualcomm appears to be extremely confident that all systems are go and it is making big investments in the channel and is planning a big push at Computex this year.
• The market appears to give it no credit for this at all and instead spends all of its time obsessing about AI.
• This is the main reason why I have no desire to sell the shares despite a 50% run-up in the last several months as I think there is still lots more to come.

Jolla – Extreme endurance

• In an almost unbelievable feat of endurance, the hardy sailors (see here) at Jolla have returned to MWC with their business intact and an AI product that is focused on privacy.
• The history of this company is that it spun out of Nokia when Nokia decided that it was not going to use Linux as a replacement for Symbian with the aim to sell its Sailfish OS to device makers who wanted an alternative.
• Since that time, it has been smashed, crashed, chewed up, spat out and turned into fish bait but somehow it has survived.
• Its most recent brush with death was that Rostelecom owned a significant stake which put the company in extreme peril the minute that Russia invaded Ukraine.
• Once again, it has defied the odds as Rostelecom is gone from the shareholder register with management now owning most of the company and no debt on the books.
• The products are:
  • First, Sailfish OS: which is a smartphone OS for those who want nothing to do with Apple or Google such as governments or the military.
  • Second, Android emulator, which allows Linux-based systems to run Android apps which has found some traction in the automotive industry.
  • Third, Jolla Mind 2: which is a small piece of hardware that one keeps within one’s network (eg next to home PC) that tracks all your personal data with an assistant that can answer queries about that dataset.
  • This is very much privacy-focused and could serve as a simple way to be able to access one’s history without having to send data to the cloud and into the hands of those that one would rather not have it.
• There are small niche markets for all of these products and Sailfish and the automotive product have historically been able to win some customers.
• Hence, I have no idea whether the new AI product will be successful, but it comes at the right time just when everyone seems to be asking for these sorts of things.
• The one thing I am sure of is that no matter what the business does, this company will survive as its crew has a knack for escaping death that has to be seen to be believed.