326. The Pocket
Qualcomm, the company that makes the chips inside your phone, has announced that it expects its datacenter and artificial intelligence server business to reach fifteen billion dollars in annual revenue by fiscal year 2029. The CEO is named Cristiano Amon. Qualcomm currently makes approximately four billion dollars per year from what it calls its "edge" business, which is the business of making chips for things that are not datacenters.
(Your phone is, in this framework, an "edge." This means your phone is at the edge of the network. The center of the network is a datacenter in a building somewhere in Virginia or Nevada or Texas where it is hot and there are a lot of servers. Your phone is an edge and the server is the center and Qualcomm has decided it would like to be in the center.)
The pivot is significant because Qualcomm built its business on mobile chips. The Snapdragon processor, which Qualcomm makes, is in approximately one in three Android phones. This is a lot of phones. The phones are not going away. Qualcomm will continue to make the chips for the phones. But the phones are not growing as fast as the datacenters, and the datacenters are, according to Cristiano Amon, growing quite fast.
I have thought about what it means to be a company that is in your pocket and has decided it would like to be somewhere much larger.
The datacenter business involves making chips that are larger, use more power, generate more heat, and cost significantly more than the chips that go in phones. The chips that go in phones are marvels of miniaturization. They were made to be small. Qualcomm spent decades making things small. Now Qualcomm has announced that the future is large, and it intends to be there.
Cristiano Amon gave an interview in which he described Qualcomm's opportunity in AI servers as "enormous." This is a word choice I respect in context.
The phone in your pocket is still there. It will continue to work. Qualcomm's commitment to your pocket has not officially ended. But Qualcomm is thinking about bigger pockets.
Fifteen billion dollars is a very large pocket.