Snapdragon Summit Day 2 – The “How”

Day 2 – Chips that are ready for AI when it comes.

• Qualcomm launched its next series of chips that up the game in smartphones and PCs, which improve devices such that, when the AI services turn up, the devices will be ready to run them.
• In the meantime, the devices are going to be sold anyway, and so these upgrades are just as much about keeping the competition at bay and growing market share in PCs against x86.
• All of these new chips use the 3^rd generation Oryon CPU and include:
  • First, Snapdragon 8 Gen 5: which is the smartphone version where Qualcomm claims a 20% single-core improvement over the previous generation, 17% multi-core improvement and a 35% improvement in power efficiency for the CPU.
  • The Hexagon NPU has also been improved, supporting 2-bit inference for the first time and a 37% improvement in overall performance and 16% improvement in efficiency over the previous generation.
  • This is a good performance improvement, but I think it is the 2-bit inference that is the most interesting.
  • This is because models that were previously running in 4-bit will now take up half the space and require half the compute power to run.
  • This is a step forward for running AI on edge devices, as a year ago, engineers were scratching their heads and wondering how they would be able to get 2-bit inferencing to work.
  • The guest from Microsoft also confirmed that 2-bit was a viable proposition and said that it has Phi Silica running on Snapdragon at 2-bit with a good level of performance and accuracy.
  • Qualcomm has launched a very capable processor and keeps its edge over the competition when it comes to high-end smartphones.
  • It is also more AI-ready than before, meaning that as developers start writing their apps to the NPU (and there were a few examples of this Adobe, ArcSoft, etc), they will run better and faster than before.
  • Second, X2 Elite: which represents a substantial upgrade, as there was no X Elite PC processor using the 2^nd Gen Oryon CPU core that was launched in 2024.
  • This offers a 31% performance improvement and 43% less power consumption over the X Elite.
  • The NPU is upgraded to 80TOPS (77% improvement) and is significantly more power efficient.   
  • Third: X2 Elite Extreme Edition: which was where Qualcomm really stuck the knife into the x86 crowd.
  • This has more cores and provides a performance improvement over X Elite of 50% in CPU, 100% GPU and 70% in NPU and is the first Arm processor to run at 5Ghz.
  • The key to competing against Intel and AMD in this space has always been performance per watt rather than pure performance.
  • Here, the X2 Elite Extreme Edition produces 44% more performance than x86 at the same level of power consumption on single-threaded performance.
  • On multi-threaded performance, Qualcomm claims a 75% performance advantage at comparable power consumption, and that x86 consumes 222% more power at peak performance compared to X2 Elite Extreme Edition.
• Qualcomm then rolled out a slate of partners to express support for the new chips, which was headed by Google, Samsung and Adobe, all of whom are present in person.
• Google is an increasingly important partner, as Gemini is already a leading LLM, and it will be optimised to run on the Hexagon NPU.
• Adobe has leading content creation tools, the generative AI functions of which will now also be optimised for the Hexagon NPU.
• While the partners did not say very much that was not already well known, the fact that they took the time to come to Maui demonstrates their level of commitment and increases the likelihood that these promises will be actioned.
• Qualcomm is also beginning to address Windows on ARM’s biggest weakness, which is gaming, where both Epic Games and Razer are optimising their products to run on the X2 Elite.
• When it came to smart glasses and the Metaverse, Google strongly endorsed its partnership with Qualcomm, but unfortunately, from Meta, the gorilla in this space, there was not a peep.
• This was somewhat unexpected, as Meta at least recorded a message from Mr Zuckerberg last year, and this lapse was explained as being too close to Meta Connect 2025, which was held last week.
• Some have put this down to a weakening of the relationship and potentially market share loss to competitors, but I have seen no real concrete evidence of this, as all of the Meta products launched last week use Qualcomm at least for the SoC and in some models, other things as well.
• The net result is that the presence of partners in Maui is almost as important as the new products themselves, as it is the products and services that these partners build that will make use of the new capabilities offered by the silicon launched today.
• Hence, while AI agents and the use of on-device AI by consumers remain nascent, Qualcomm products are ready to support these services as they become available.
• This is what puts it in a position to continue to grow revenues and profits even if AI takes longer than expected to materialise on devices than in the cloud.
• I do not doubt that it will come as it makes more economic sense for a service provider to run AI at the edge than in the cloud, and so it is just a question of when as opposed to if.
• Hence, the growth trajectory of the company as it diversifies away from just doing smartphones remains intact, as does my faith as a shareholder that it will continue to deliver value.