Transcription
Do you like America technology for America or you like America technology for the world? That's a debate we're having now, right? Cristiano, welcome to the CEO moment. As a semiconductor company, Qualcomm sits inside some of the most interesting stories happening today from geopolitics to artificial intelligence. We're looking forward to hearing your perspective on those things. But first, you've said I tell my team we are in the gladiator business. Do you honestly say that and what do you mean by that?
You know, it's interesting. I think what what you see in technology, especially in mobile, right? Especially mobile, that's where we came from. Uh, you know, that's when Qualcomm got placed into the map as what we have done in the wireless and the cellar industry. And in the mobile uh business, you have so many companies that became some of the most valuable companies in the world and they went from hero to zero, right? So, so technology changed so fast.
So that's like being in the coliseum. [snorts] So you have to learn you have to learn how to become nimble and you have to learn that success today doesn't mean anything. So that's how I use this analogy. The reason I use this analogy is because if you're gladiator, you go to the Kazin, there's going to be three outcomes. You're going to win, you're going to lose, or you're both going to lose. So, you go in, you have a 32% chance of success. If you win, the only thing you accomplished, you can go to the coliseum one more time. And I think that's uh how we think about uh, you know, ourselves. I think we have to work very hard. It's a very competitive market. It's uh very dynamic. You have to win on innovation and technology and if you win great you have to do it again. Uh success uh does not mean anything uh because uh you have to win the next cycle.
Whatever success you're having it's it's temporary.
Yeah. And I think that has been the history of Qualcomm. That's why you look of the 40 years of the company is the company had reinvented you know itself so many times. was still doing it and I and part of it is why I think this mentality is so helpful.
You've also said that whatever people believe AI is going to be, it's probably going to be bigger. What makes you so sure?
Look, um I I always like to do comparisons and look how things had play out in the world of technology. Let's go back to the web, okay? Back in the 2000 when people said the internet's going to be big and everybody that said what would be possible the internet if you look now 26 years later the internet is way bigger than people thought by by order of magnitude so many industries enable completely new industries completely new companies it change you know how the world works it fundamentally changed and I think AI is like that AI uh is you know whether you people would argue you you know I yet don't see it is that uh, you know, is this really happening fast enough but when you look at the potential of this technology um is probably underhyped in the long run it's a fundamental change how computers going to be built how we're going to use computers there's so many elements of that it changes the human computer interface we can now interact the computer the way we interact with ourselves that's going to change devices going to change our mobile devices it's going going to change the type of uh programs we run on the computers. You have a software to write itself. It's going to be from OSS to orchestrators and agents from application to skills. It's going to fundamentally change not only your phones or PC or cars. It's going to create a whole new field of robotics. It's going to change the internet. It's going to change search. So, it's very big. It is it is actually that profound of a transformation.
We'll we'll get back to how big it is. But to your original analogy about the gladiator business, you surely recognize as a CEO that a lot of the companies that were on the rise in 1999 2000 are no longer with us today.
We survived and I think that's uh and I think that is absolutely the case. Which means the interesting thing even about AI, I go back to the internet uh comparison. If I had said in the early days of the internet, oh yeah, the social media winner is Orcut, uh, or the social media winner is MySpace. It is done. It's game over. No. The map is Map Quest. No. So, I think I think AI is going to be like that. There's going to be there are a number of different models. They're going to be good for consumer models going to be good for enterprises. They're going to be different companies that are going to provide agents. is also true on on semis and the architecture and the technology. That's why I think my gladiator mentality still apply um on a fastm moving technology industry um you have to keep moving from one fight on the coliseio to the next and to the next uh because the work is not done as the technology continue to evolve the winners could change.
Let's go back to the beginning. You were born in Campanas Brazil.
Yes.
And your father was an electrical engineer.
That is correct.
How did those two things shape you?
I've been uh born and raised in Brazil. Uh went to engineering school in Brazil. My father was electrical engineer. So So I kind of uh that has a little bit out of an influence in me choosing that path. I also remember my father said to me, you can do anything you want when you go to college as long as engineering, law school, medical school.
Those are the options.
So I said, if I go to law school, I'm going to have to read a lot of books. I don't want to do that. If I go to medical school, I'm going to have to deal with blood. I don't want to do this. I like science. I like math. So, engineering seems like a good path. And I was uh interested in electronics and semiconductor and communications. I I always like wireless communications. When I got out of school, it was the beginning of cellular. And I feel I've been, you know, I've been privileged to have be able to work to every single transition of cellular from analog walkie-talkie type phone all the way to now 5G and future 6G. And uh but anyway, that's my story.
You left Qualcomm in the 1990s eventually to run a company in Brazil. That company was nearly bankrupt when you took it over. What did facing that kind of failure teach you?
This is a great question. I actually love talking about this. Qualcomm was a minority shareholder. that company and uh and uh and and they wanted to put together a team to go restructure that company and try to make you know that company viable. So I volunteered to go because I always thought that um, you know, I had experience in a fast growing company but I want to get experience in the distress environment and I thought, you know, it'll be a great I think uh management experience for me and I it turned out to be in the almost three years that was there uh I I think I learned 10 uh of experience in three years. If you're in a distressed environment, you're trying to worry about how you make payroll, how to pay taxes, and how to how you keep the lights on.
What about you, do you think made you seek that out?
I always have this uh thought process that if you want to be a well under executive, you need to get experience how to grow a business fast, how to uh optimize a business in steady state, and how to deal with the stress environment. And I thought that was a great opportunity. Uh I like the challenge. I like I like to take things they're very difficult to do and uh it was great experience for me and I think when we stabilized the company to positive EBIDA the operator got sold uh to a bigger op operator and then Qualcom asked me to go back and uh go work on the semiconductor business.
Well, let me ask that question a little bit differently. You've been at Qualcomm for most of your career, but what did you learn about the company that you could have only have learned by leaving it? At the time it was the beginning of broadband in cellular. This is prior to the smartphone. And actually one of the things I did there was this first time that somebody got a megabit data speed on on a cell phone. It was a technology that Qualcomm created at the time called EVDO. And being in that company was one of the first deployments that of EVDO Latin America. So I always knew that um the direction that Qualcomm was going it was it was a very successful direction ability to predict what's going to happen in wireless that was kind of also eager to go back to Qualcomm in San Diego after that mission was accomplished.
You're the fourth engineer in a row to run Qualcomm. Do engineers make better CEOs than MBAs?
Engineers make good CEOs at Qualcomm and the reason is because we're engineering company first. I think the majority of employees and engineering we we invest significant amounts uh in technology innovation.
This summer you'll be recognizing your fifth anniversary as CEO. You started um during the global chip shortage. Looking back on that period, is there anything that you would have done differently?
I don't know. I think possibly I at that time uh we you know we were starting the process of transforming the company. We just had some uh some challenges that we had to overcome on on a legal battle overcoming you know a hostile acquisition attempt very challenging time and uh and one of the things I did at that time was I said we needed to accelerate the technology transition uh to be able to change the direction of the company. So we actually in the middle of the biggest adversity which is right before the chip shortage uh we kind of accelerated 5G by 2 years which created a new cycle in the wireless industry and then as we deal with the transition in and the massive shortage we have on chips. I think we did the best we could to continue to be focused on the diversification of the company. One thing, if I had the crystal ball, right, if we had a crystal ball, we had to make priority choices at that time. And uh and we decided that we needed to uh stabilize the company, build uh the adjacent business and wait until we execute on our data center plan. In hindsight, uh, you know, we probably should have started back then, but
you you fear you were too slow to that.
We had to make priority calls and we didn't we we didn't have all the assets that were necessary to succeed in the data center. So, we kind of prioritize other opportunities. In hindsight, if I could go back in time, knowing what I know today, we'll probably will find a way to accelerate our ability uh to build a data center plan. You envision a world where how humans interact with information moves beyond the smartphone. History makes me very nervous about this prediction. We have uh that company called Humane and their pin. We had Google Glass. We had specs from Snap. We even had our adventures in the metaverse. None of these things really took off the way that the profits of these devices said they would. Can you convince me now that that future that we've been waiting for is finally here?
Yes, I am going to go back to history, but I'm going to go to back to history a little different than you did. You have to really zoom out so you can see the whole picture when we think about transitions in mobile. So, I'm going to tell two stories. One story is you had phones and digital seller 2G, everybody had a phone. That was the feature phone that started showing up. Candy bar, flipper phones and all of that.
I was playing snake on my Nokia.
Yes. and uh and then you started to see those phones getting color display. They play music and etc. On the other side you have PDAs. You have palm uh PDAs. Remember the palm the sharp you have PDAs. So Qualcomm we we started to think about this is way before the smartphone. We started to think about it. What if we combine the two? you know, we have the PDA and a phone together. So, the first we put uh, you know, a 3G card into a PDA and then the company that we sold the Tokyo Sera we because we used to make phones did the first uh palm with in a cell phone form factor. But those things were early concept. There were a lot of missing things around it. You still don't have broadband. You still don't have the ability to run a high level OS. You still don't have a mature concept of an application ecosystem. But you could see the direction that this was going. When you had ability to now do broadband, you have now a mature internet. Um, and then all of a sudden you have the processor. You figure out I can now make this into a computer. I can have a whole OS. I'm going to app store broadband. And the smartphone revolution changed with a trajectory that was unbelievable. And I think today we started to think about it. How could we not have smartphones? Right? The first time that we work on the meta rayband glass llama didn't exist. So what was the idea that you're going to be walking around and there's cameras and you see something like you press a button, you generate a story, you post on Instagram, but then something happened. Llama happened. All of a sudden I can connect to an agent. I can ask a question, translate this, read this. Who's this person? Who's that? And then you started to change it. every new big transition uh you have a lot of experimentation like right now I have 40 different designs today of people doing personal AI devices there are companies doing glasses which is uh obvious their jewelry their pendants their pens their bracelets their watches everything that can connect to an agent there's even something that look like an alarm clock that you can talk to it what all those been out. I don't know. I tell you what, right now I'm very comfortable making one bet. Glasses will because this is a prime real estate. It's close to my eyes, to my ears, to my mouth. When I turn my head, you see what I see. And then the real question to drive success is how much does AI mature so that gradually workload starts to shift. So tomorrow there may be things that you do on your phone today and it's going to be just more convenient you may going to do in your glasses like you got a bill in a restaurant you look at the bill and you say please pay this bill right now uh with my checkings account and that's it. We see some use cases that I may be talking to you and then I have I go somewhere else and the agent will say Cristiano I notice you have a break right now. Can I talk to you about a conflict in your calendar? He said yes. Said there's this meeting that pop up. Which one's higher priority? this meeting is high priority. Can I schedule the other one? Yes, please do. And actually, I saw some applications the agent actually call a person and negotiate a time for another meeting. So, if those things start to get a hold of new friction, people are going to interact with the computers a little bit different and that could be a different device.
I understand all the ways in which this innovation is going to bring down friction, but I I also think about all the ways that it will create new types of friction. Um,
what concerns do you have about say privacy concerns? You're describing a world where there are recorders all all the time in my glasses, maybe maybe in my ring. Everyone around me is recording what's happening perhaps to help them live a more optimized life. But what about for those of us who don't want to sacrifice the the the way some of the ways of life that we have today?
Look, this is a so this this is a great conversation. Let me go to the worst case scenario and then we bring it back. Let's assume that uh smart glasses are going to be useful devices not only for consumers but they could be a very useful devices for enterprises. For example, an enterprise could have an operator in an oil rig and I'm going to say I'm just going to see his camera feed right now. So you have a bunch of different applications for this that can be very useful, can can teach people new skills or can help you as a consumer because he sees what you see and can engage with you in real time. one of the features of the upcoming transition to 6G transform all of us in walking cameras in this world. So now uh in that case you're going to say wow it's better be from a trusted company with uh with somebody that's going to respect my private choices.
But as a human surely you know the feeling of sitting on an airplane or being on a subway or being at dinner and you notice that someone's turned their phone at you and what that feels like. And the world you're describing is one where that's happening all the time to all of us. That that doesn't concern you at all.
This is a nent area of technology transition. I think there's going to be a lot of regulation. This is still still early. But I expect that privacy u by definition is going to I think to require a lot of user permission. And then there's a lot of things that yet to be decided how you're going to use this technology. That's why I think adoption of those things are probably going to be use case by use case.
Is it important for you for Qualcomm to be seen as an AI company?
We are no more just a communications company. We're doing computing devices. We have one of the fastest processors for smartphones. We enter the PC space. Uh we have an incredible amount of computing in car. The car is primarily now becoming a computer on wheels and uh and we're going to extend our computing to the data center. The future of computing is AI. So by definition, if we're a computing company, we're going to be an AI company. Uh those things are no longer separate.
I feel I feel watching your appearances, watching other companies communicating, maybe how you talk to Wall Street, a kind of pressure to say, "Hey, we're an AI company, too. You should see that." Is that not the case?
No, that's not the case. Absolutely not. We created a new business, the automotive business. Uh investors in the very beginning were 100% skeptical. Oh, this is a crowded space. There's so many players in the automotive. You have no experience in automotive. We're now going to be the largest provider semiconductor in automotive. We just update our our design wing pipeline to $65 billion and uh we have an a run rate now of $6 billion and and we're going to go to $10 billion. We don't have the need to say look at us we are an AI automotive company. The BMW highway autopilot certified now in 60 countries run on our AAS tech that by definition is AI. Assisted driving is AI. I said this for two years ago before it was popular. AI is going to be distributed. AI is going to run on on the edge. I even said resistance is futile. uh and but to many that probably interpreted look at Qual and try to apply an AI sticker to their other business, that's not the case. It's happening.
I want to dig into the the company's strategy there. On the one hand, uh you've praised Edge AI, right? This is the ability to run AI on local devices like your phone. On the other hand, you seem to be making significant challenges to companies like Nvidia and to give Qualcomm a bigger role in centralized compute running AI on the cloud. What's going on here? Can you do both these things at the same time?
Yeah, why not? Uh, look, I go back to the company strategy. When I became CEO 2021, we're primarily a mobile company. I said primarily we provide Snapdragon as a processor for phones and provide a modem uh to iPhones. That was primarily the company's doing. That's the big business the company. We said we're going to take this first step. We're going to diversify the company because we believe our technology can be disruptive to everything on the edge. and we said we're going to go after automotive the PC space going to expand into broadband and we're going to go into robotics everything that is not in the data center. So people said, "Well, that's a lot. Can you prioritize one?" I said, "No, we get we we have the technology to do all of those markets." We built an automotive business and we're starting to be very well positioned in in robotics and in in broadband is now a mature business. So the next thing is we're going to extend RP to the data center. And I think the exciting part is we have technology trends and growth in all of those different business. And we did this without compromising the operating margin of the company. So if we can do all of this, why not do it?
And to the skeptic who says this isn't about confidence and transformation, it's about fear over your existing business model that this is about a dwindling handset mobile business and Qualcomm has to invent its way out of it.
It's a question that I often get asked. What are the things at Qualcomm that make this possible? And I'll start with the number one is our incredible engineering capability and technology capability that allow us uh to take very complex technical challenges and for a lot of the things that we do we develop a lot of technologies ourselves. The second thing is the culture and this culture of of gladiator this culture of focus on the mission is very important. The number three thing is we are used to deal with a brutal competitive environment. Brutal. So we learn how to compete. We survive uh in highly competitive environments. And I think that those three things combined set the foundation for us to do those things we're doing right now.
Speaking of fear of failure, one of the bets you're making is on autonomous vehicles. What would it mean to Qualcomm if that the success there was further into the future than you think it's going to be?
Um no. I I think we're getting there. Important to understand some of the bets that we made. Uh first of all, we provide silicon. We provide processor for autonomous vehicles and we work with anybody's stack. That business is scaling right now. You have to have a very power efficient processor. It took several years to get to this point. But I think the level of technology maturity is we're now few years away for having address to address supervised self-driving.
What does a few years mean?
2028, you should expect that for a premium car that's table stakes.
You recently accompanied President Trump to his meetings with Chinese President Xi Jinping. What did the trip tell you about the future of the semiconductor supply chain?
It it was a great trip. I felt privileged to be able to be part of the small group of CEOs that got invited. There was uh a formula which is about you know uh companies that have successfully done trade with China and the opportunity to actually uh, you know, expand I think the trade relationship. I think we always been on the right direction of trade. I also I believe there is value in in the strong trade relationships between us and our Chinese counterparts because those relationships actually serve as a a a force of a stability uh in the in the dialogue. I came out of the trip uh uh optimistic. There's value in providing you know uh semiconductors and American technology stack um to companies in China. they have a global business. Uh we have not been restricted uh for the business we do in China as a diversified company. Our business in China expanded uh from from uh phones to computers to automotive to industrial even robotics and uh but having said that I think uh like any other semiconductor company you have to monitor the space and you have to adapt.
There are reports that you're in talks to sell chips to bite dance Tik Tok's parent company. Should Americans be concerned if you sell advanced chips to Chinese companies?
Look, uh, not commenting on this, but I'm going to tell you this. Chips are in everything right now. Chips are in every consumer electronic device and in cars and appliances and everything. There's a lot of value in the United States companies and uh to provide uh the technology to economies not only in China, other economies that make things for the world. is a pretty easy to understand statement when if I ask people to answer the following question. Do you like America technology for America or you like America technology for the world?
That's a debate we're having now, right? You present it as if there's one obvious choice, but there are lots of voices that would disagree with you.
Look, at the end of the day, it's just math. You just look of uh the global economy, you look at the contribution to GDP, and I'll answer the question a little bit different. every semiconductor company that has scale half a percent of China business and the it's just a function of GDP. The United States is the biggest GDP in the world. China is the second GDP and then China has a lot of the uh companies including American companies and other European companies and Japanese companies and Korea companies that make things in China. So this as as manufacturing becomes more geographically diversified and that's a good thing. There's a lot of initiatives to bring manufacturer back in America to geographically diversified. That's a very good thing. But you also have to to you have to step back and you look how the award economy works. You have this interesting dynamic. You may sell a product to an European company and then or you can sell a product to a Japanese company and the Japanese company will manufacture that product in China. So it's it's very easy to look at those numbers within context. I think the reality is uh every leading semiconductor company right now have uh, you know, exposure in business in China and that's a good thing. There is competition between the United States and China. So there is a debate which is not it's not our job to debate. I think uh we've been focused on developing the technology about uh are there certain enabling technologies for certain applications that uh you have um export control and this has been a reality of the industry for a long time. There's nothing new and I think that continues to be part of the debate and I think the semiconductor companies just adjust uh to to the policy we have to follow. All right, we're at the tail end of our conversation, so I'd like to do what we do with all of our guests on the CEO moment, which is what we call the leadership test. I'm going to ask you a series of questions. Give me your first answer that comes to mind. What's the best summer job you ever had?
I It's interesting. Summer in summer in America was kind of
Your best winter job, I suppose.
My best winter job and it has a lot to do with how I am and how I think about including my future. My best winter job is every winter my mom will send me uh to my relatives uh farms in a different state in Brazil and I work in the farm with my cousin. So I will milk the cows, I will I will go get the cows on horses. I'll feed the pig and that was a great winter job.
What's the phrase you use too often?
Trust but verify.
How many direct reports do you have?
Uh don't know for the top of my head. I think some number between uh uh probably 10 and 15.
When do you feel most focused?
Driving.
When are you not checking your phone?
Sleeping.
How many minutes is your commute?
15.
How many hours of sleep a night do you get?
I'm happy when I get seven. Uh I think it's kind of six is the average.
Have you ever been fired?
No.
What's your coffee order?
Black. No sugar. How many meetings a day do you have?
A ton.
What's a ton?
From the day I I start until when we have to end. It's a lot. Some I don't have uh I often complain that I need some time. I need to respond to email. I need to get out of the meeting. But there's a lot of meeting. We have a big m meeting culture.
What's the one question you ask in every job interview?
Interesting. more lately. I think uh I I will ask the question is do you want do you understand what the job is? What success look like to you?
When did you last change your mind?
Uh yesterday.
Cristiano, thank you very much for joining the CEO moment. We really appreciate having
No, I I'm happy to be here and thank you for the conversation.