Qualcomm Says AI Will Demand More Power Than Just the Cloud

Qualcomm Inc. is placing its bets on the notion that the future of AI will demand greater computational capabilities than can be exclusively furnished by the cloud.

According to Alex Katouzian, a senior vice president at Qualcomm, the leading manufacturer of smartphone processors is undergoing a transformation from a communications company to an “intelligent edge computing” firm. The term “edge” refers to the mobile devices that users utilize to connect to networks or services. Katouzian took the opportunity to emphasize the significant market potential of this edge computing sector during his keynote address at the Computex show in Taipei.

Qualcomm’s chips play a crucial role in enabling smartphones to leverage AI capabilities for various tasks, ranging from image processing to malware detection. By highlighting the “AI-capable” features of their products, Alex Katouzian and his team are aligning with numerous companies positioning themselves as beneficiaries of the surging demand for artificial intelligence. According to Katouzian, the company has already shipped 2 billion AI-capable products.

Katouzian emphasized that as the number of connected devices and data traffic continues to escalate, and data center costs rise, it will become impractical to rely solely on cloud-based processing. Moreover, considering concerns surrounding personal information, people will prefer not to send everything to the cloud.

The increasing demand for chips powering AI tools like OpenAI’s ChatGPT has propelled shares of chipmaker Nvidia Corp. to all-time highs. This growing enthusiasm for AI has prompted companies such as semiconductor architect Arm Ltd. and Taiwan’s Asustek Computer Inc. to focus on their AI-related services, with several executives proclaiming the dawn of a new computing era.

In contrast to Nvidia, which exceeded revenue expectations for the current quarter by over 50%, Qualcomm’s outlook fell significantly short due to sluggish global demand for mobile devices. Katouzian anticipates a depletion of the inventory glut in the third or fourth quarter of this year. He also mentioned that some Qualcomm customers have begun increasing orders for smaller components, which serves as a leading indicator for an upturn in demand.