Ladies and gentlemen, thank you for standing by. Welcome to Qualcomm's fourth quarter and fiscal year 2023 earnings conference call. At this time, all participants are in a listen-only mode. Later, we'll conduct a question-and-answer session. If you'd like to ask a question during this time, press star, then the number one on your telephone keypad. To withdraw your question, press star, then the number two. If you're using a speakerphone, please pick up your handset before pressing the numbers. Please limit your questions to one question and one follow-up. As a reminder, this conference is being recorded November 1st, 2023. Playback number for today's call is 877-660-6853. International callers, please dial 201-612-7415. The playback reservation number is 13741657. I would now like to turn the call over to Mauricio Lopez-Hodoyan, Vice President of Investor Relations. Mr. Lopez-Hodoyan, please go ahead. Thank you, and good afternoon, everyone. Today's call will include prepared remarks by Cristiano Amon and Akash Palkhiwala. In addition, Alex Rogers will join the question-and-answer session. You can access our earnings release and its live presentation that accompany this call on our investor relations website. In addition, this call is being webcast on Qualcomm.com, and a replay will be available on our website later today. During the call today, we will use non-GAAP financial measures as defined in Regulation G, and you can find the related reconciliations to GAAP on our website. We will also make forward-looking statements, including projections and estimates of future events, business or industry trends, or business or financial results. Actual events or results could differ materially from those projected in our forward-looking statements. Please refer to our SEC filings, including our most recent 10-K, which contain important factors that could cause actual results to differ materially from the forward-looking statements. Now to comments from Qualcomm's President and Chief Executive Officer, Cristiano Amon. Thank you, Mauricio, and good afternoon, everyone. Thanks for joining us today. In fiscal Q4, we delivered non-GAAP revenues of $8.7 billion and non-GAAP earnings per share of $2.02, above the high end of our guidance. Revenues from our chipset business of $7.4 billion reflect a more stable Android handset environment. Licensing business revenues were $1.3 billion. During the quarter, we also made significant progress on our leading technology and product roadmaps while improving operational efficiency. We remain fully focused on our future growth and diversification opportunities. Let me now discuss key highlights from the business. As we enter the age of generative AI, we're seeing an unprecedented pace of innovation. On-device Gen AI is evolving in parallel with Gen AI in the cloud, enabling entirely new use cases. It has the potential to change how we interact with our devices, making the user experience more natural, intuitive, relevant, and personal, with increased immediacy, privacy, and security. We have quickly established Qualcomm as a leader in on-device Gen AI for smartphones, next-generation laptops, XR, and automotive, and we are well positioned to benefit from this opportunity. We expect high-performance on-device AI to become a requirement over the next few years, driving content, units, or both. Our Snapdragon platform is highly differentiated from its competitors. First, we significantly increased the AI processing performance and power efficiency of our best-in-class NPU, CPU, and GPU. Second, we are collaborating with multiple partners and ecosystems to enable a host of consumer and productivity-based AI models running natively on our platform. Third, we're enabling multi-billion parameter Gen AI models to run continuously and concurrently for multiple use cases, including multimodal. For example, in the latest Snapdragon 8 Gen 3 smartphone platform, state-of-the-art large language models, such as Llama and Baichuan, up to 10 billion parameters, are running at up to 20 tokens per second. Large vision models, such as Stable Diffusion, can generate images from text in less than one second, with ultra-low power consumption. As always running on-device, Gen AI becomes pervasive. We believe it will create one of the most significant changes in user experience, similar to the transition from the feature phone to the smartphone and the introduction of the graphical user interface for PCs. Snapdragon will play a significant role in this transformation. We also reached an important milestone in our expansion into PCs with the announcement of our Snapdragon X Elite platform. It is the result of a relentless pursuit to create the ultimate intelligent computing experience and establish Snapdragon as the industry leader in performance and power efficiency. The Snapdragon X Elite includes our first implementation of the custom Oryon CPU, which exceeds the multi-threaded CPU performance of any x86 or ARM competitor in its class.... It also matches the single-threaded CPU peak performance of the leading x86 CPU competitors at 70% less power. Additionally, our premium integrated Adreno GPU delivers up to 2x faster performance than the competition at ISO power or matches competitor peak PC performance at 74% less power. Snapdragon X Elite also features our newest Hexagon NPU. With 45 TOPS of performance, the Hexagon NPU is capable of running Gen AI models with over 13 billion parameters on device. In total AI performance of the Snapdragon X Elite across CPU, GPU, and NPU is 75 TOPS, the highest in the industry. Microsoft is redefining the entire Windows experience with the AI Copilot, and the Snapdragon X Elite is built from the ground up for this opportunity. We look forward to PCs powered by Snapdragon X Elite from leading OEMs starting mid-2024. The merging of physical and digital spaces remains a significant future opportunity for Qualcomm, and we recently launched the Snapdragon AR1 platform, our first dedicated platform for smart glasses. AR1 Gen 1 was developed in close collaboration with Meta and powers the new Ray-Ban Meta smart glasses. It features a dual ISP camera system for premium photos and videos, as well as powerful on-device AI for image enhancement, virtual assistants, real-time translation, visual search, and more. Together with Meta, we're developing next-generation technologies to create the future of spatial computing. The AR1 Gen 1, along with the previously announced Snapdragon XR Gen 2, are a testament to the strength of this long-standing partnership. Across the industry, Snapdragon remains the platform of choice for all leading VR, MR, and AR designs. In networking, we continue to be a global Wi-Fi leader across enterprise and home networks, as well as broadband gateways. Our Wi-Fi 7 solutions are seeing strong traction with more than 350 design wins across all categories to date. We recently announced several new collaborations, including with Charter Communications in the U.S. and EE in the U.K., both of which are preparing to roll out enhanced next-generation Wi-Fi 7 connectivity to their residential and small and medium-sized business customers. We're excited about the launch of our fiber gateway platform, which adds 10 Gb passive optical network capabilities to our portfolio. With fiber, in addition to 5G and Wi-Fi 7, we're now positioned to lead in next-generation broadband solutions. Additionally, our unique Service Defined Wi-Fi technology, a signature feature introduced with our Wi-Fi platforms, offers a unified data flow management architecture from cloud to device. It delivers orchestration, classification, scheduling, and insights to enable the end-to-end management of home networks and real-time optimizations across devices. In automotive, the digital transformation of the industry continues to bring new levels of computing, intelligence, and cloud connectivity to the vehicle. These trends are driving new user experiences, advancements in driver assistance, autonomy, and safety. They also offer the potential for new revenue opportunities as vehicles gain the ability to evolve with over-the-air updates and digital services. The vehicle is becoming software-defined, and the Snapdragon Digital Chassis remain at the center of this transformation. We are pleased that our digital chassis solutions will bring advanced capabilities to the upcoming Cadillac Escalade IQ, which is planned for commercial production in 2024. The Cadillac Escalade IQ will be equipped with the Snapdragon Cockpit, Snapdragon Auto Connectivity, and Snapdragon Ride platforms. Additionally, we're proud of our partnership with BMW for all vehicles, as well as the upcoming Neue Klasse. We're also excited that the Snapdragon Digital Cockpit and Connectivity solutions now power the new Mercedes-Benz user experience, starting with the 2024 E-Class sedan. We recently expanded our digital chassis offering with the launch of two new platforms for two-wheelers and other vehicle classes, such as motorcycles, e-bikes, scooters, and all-terrain vehicles. Our new platform design wins and launches with Gogoro, Harley-Davidson, and others are receiving positive feedback from the ecosystem on their ability to advance technology development and bring new user experiences to these vehicles. Finally, we announced a new long-term relationship with Amazon Web Services to enable automakers to integrate cloud technologies into their vehicle development lifecycle. The offering combines the Qualcomm Cloud AI 100 solution, our Snapdragon Ride platforms, as well as AWS breadth of services and capabilities. This will advance the future of software-defined mobility and change how vehicles are designed and developed. In handsets, we announced our latest premium mobile platform, the Snapdragon 8 Gen 3, which delivers industry-leading performance … and extraordinary experiences to consumers for the upcoming GenAI era. Some key features include intelligent capture with the world's smartest AI-powered camera, console-level gaming with ray tracing with global illumination, studio-quality audio, the world's first XPAN technology, best-in-class connectivity, and the world's fastest on-device AI processing on a smartphone. We look forward to flagship device launches, powered by the Snapdragon 8 Gen 3, by global OEMs and smartphone brands, including Xiaomi, HONOR, OPPO, vivo, OnePlus, Sony, and more. In addition, we recently entered into an agreement with Apple to supply Snapdragon 5G modem RF systems for smartphone launches in 2024, 2025, and 2026. This agreement reinforces our track record of sustained leadership across 5G technologies and products. We are proud of our ongoing relationship with Apple. As we look forward, our technology roadmap has never been stronger, and the fundamentals of Qualcomm's growth drivers remain unchanged, with significant opportunities in the coming years. We continue to focus on stockholder returns and executing on our ongoing diversification opportunities while maintaining operating discipline. I would now like to turn the call over to Akash. Thank you, Cristiano, and good afternoon, everyone. I'll start with our fourth fiscal quarter results. We delivered non-GAAP revenues of $8.7 billion, and EPS of $2.02, which is above the high end of our guidance. QTL revenues of $1.3 billion and EBT margin of 66% were in line with our expectations. QCT delivered revenues of $7.4 billion and EBT margin of 26%, which were near the high end of our guidance on strength in handset and automotive revenues. Handset revenues of $5.5 billion increased 4% sequentially and were higher than expectations due to the benefit from the early stages of recovery in Android demand. IoT revenues of $1.4 billion were down 7% quarter over quarter, including softness in industrial IoT demand. Automotive revenue grew 23% sequentially to $535 million, making this the 12th consecutive quarter of double-digit percentage growth on a year-over-year basis. Non-GAAP operating expenses decreased 1% sequentially to $2.2 billion. Before turning to guidance, I'll summarize our fiscal 2023 results. We delivered non-GAAP revenues of $36 billion and EPS of $8.43, despite the challenging macro environment. We remain focused on our strategic priorities of extending technology leadership and driving revenue diversification, while taking significant steps to improve our operating efficiency. We continued our strong momentum in automotive and delivered record revenues of $1.9 billion, with year-over-year growth of 24%, progressing towards our target of greater than $4 billion in revenue by 2026. We exceeded our fiscal 2023 cost action target, reducing non-GAAP operating expenses by 7% relative to the fiscal 2022 exit rate, executing on our commitment to manage the cost structure, given the current operating environment. Our business continues to generate strong free cash flow with a record of $9.8 billion. Lastly, our balance sheet remains strong, with $11.3 billion in cash and marketable securities. Now, turning to guidance. We are seeing early signs of stabilization in demand for global 3G, 4G, 5G handsets. We now estimate that calendar 2023 handsets will be down mid- to high-single-digit percentage relative to calendar 2022, an improvement from our prior expectations. In the first fiscal quarter of 2024, we are forecasting revenues of $9.1 billion-$9.9 billion and non-GAAP EPS of $2.25-$2.45. In QTL, we estimate revenues of $1.3 billion-$1.5 billion, and EBT margins of 70%-74%, with sequential growth driven by an increase in global handset units for the holiday season. In QCT, we expect revenues of $7.7 billion-$8.3 billion and EBT margins of 26%-28%. On a sequential basis, we estimate double-digit percentage growth for QCT handset revenues and anticipate both IoT and automotive revenues to decline consistent with last year. QCT handset revenue forecast includes the benefit of normalization of Android channel inventory and higher demand due to the acceleration of flagship launches with our newly announced Snapdragon 8 Gen 3 mobile platform. Notably, QCT handset forecast includes sequential revenue growth of greater than 35% from Chinese OEMs. QCT IoT revenue forecast reflects the industry-wide cyclical factors we have previously discussed, including lower demand and elevated channel inventory. Lastly, we expect non-GAAP operating expenses to be flat relative to the fourth fiscal quarter. As we enter fiscal 2024, we are encouraged by the early signs of demand stabilization in handsets and our strong competitive positioning across revenue streams. Key industry trends, such as heterogeneous mobile computing and on-device generative AI, provide a strong foundation for content growth and expansion to new device categories, driving growth opportunities for Qualcomm. In closing, I want to thank our employees for their hard work and dedication and for remaining focused on execution and continuing to deliver industry-leading products. This concludes our prepared remarks. Back to you, Mauricio. Thank you, Akash. Operator, we are now ready for questions. ... Thank you. To queue a question, press star, then the number one. To withdraw your question, press star two. If you're using a speakerphone, please pick up the handset before pressing the numbers. One moment please, for the first question. The first question comes from Samik Chatterjee with JP Morgan. Please proceed with your question. Yep. Hi, thank you. Thanks for taking my questions, and, congrats on the results here. I guess if I can start with Cristiano, your comments about on-device AI becoming pervasive in a few years. I think investors are largely looking for more sort of evidence and validation that this is going to be a key focus area for a lot of OEMs, smartphones, and other device OEMs. So as you look over the next sort of 12-18 months, what should investors look at in terms of more validation of either wins or revenues that you expect from the monetization of the trend in relation to what investors can really look to as milestones to validate that this is actually going to be sort of playing out over the next three to four years? And I have a follow-up. Thank you so much, Samik, for your question. For those that have not seen, I think I would recommend to see the highlights of our Snapdragon Tech Summit that just happened a couple weeks ago, when we announced the results of our investments in GenAI. I'll tell you, Samik, that on-device GenAI, as I mentioned in my prepared remarks, are evolving in parallel to the cloud, and it's going to have a significant impact in how you change the user experience. Just think about a simple use case as you're texting. Every single text that you write could be an input to a model, and that could bring prediction of your behavior and bring other applications. We demonstrated a number of use cases that are under development by many other OEMs. There are a number of different models, from large language models to large visual models. One unique position of Qualcomm, we have many of those models running natively on a platform. We're creating a model zoo for Snapdragon. And you saw announcement from Microsoft, from Meta, from what we're doing with Android, we're doing our Chinese partners. And you're gonna start to see those signs, especially with flagship devices launching in 2024, as you started to see those use cases, changing photography, changing messaging, changing scheduling, changing assistance. How you should think about this financially for us, you have the potential to create a new cycle for phones, and it will have an impact on increased silicon content. Just to put in perspective, we have a significant increase the processing performance of our AI processing in the device or NPU. It's gonna have silicon content. It's gonna have an impact on mix, and it's gonna have an impact on unit of all of it. And, it's likely gonna start as use cases get developed with flagships launching in 2024, but it could be very significant as you look at the next two to three years. Okay. Okay, got it. And for my follow-up, I guess, you're sounding a lot more positive around the recovery in the Android OEM, so the smartphone market. I think investors, at the same time, are grappling with the potential sort of puts and takes, particularly when it comes to your primary or large Android customer, Samsung, using more in-house solutions, going forward. So when we think about sort of seasonality beyond the December quarter, particularly around the launch periods, how should we think about your market share with Samsung progressing, and what impact does that have on relative to your typical seasonality from December to March? Thank you. Very good question. Let me unpack that question. Let's divide the conversation in two. I think the first part of the conversation, as we said in the prepared remarks, we're happy that the inventory dynamics that we have seen within the Android business are largely behind us right now. And one data point that we provided in Akash's, I think, remarks, is sequentially, from Q4 fiscal to our guide, we're seeing a total growth of revenue from Chinese OEMs, both in China and outside China, of 35%. And I think that shows that our customers are in a great position, I think even facing new entrants in the market. And it's also a strength of our roadmap and the stabilization of the market. The second question is about Samsung. Look, we're happy with our partnership with Samsung. There's the upcoming launch of the GS24. We expect to have the majority share. Our product is really great. I think as I said, we probably have one of the best product roadmaps in the history of the company, especially in the GenAI processing capabilities, and the product is getting better. We were happy to talk about what we have done in PC with our new Oryon CPU. That CPU is coming to mobile, especially in 2025, and we expect even more, I think, evolution of GenAI. So the roadmap gets better over time. Overall, we're positive about our relationship with Samsung. Thank you. Our next question is from Matt Ramsay with Cowen. Please proceed with your question. Thank you very much, guys. Good afternoon. I guess for my first question, Cristiano, I did pick up on the 35% growth sequentially with China OEMs, but you guys... The question I've been getting a ton is around Huawei and what they're doing. So you guys called out, I think, last quarter, that they were gonna be getting some supply on 7 nanometer from SMIC and being able to do some devices themselves... and you called out an impact to your revenue. But I think longer term into all of next calendar year, there's some expectation that they might get some more supply, some of it from SMIC on 7, some of it from SMIC on 16. And that might be a unit headwind to some of your other OEM customers. Maybe you can sell into them as well on 4G. So, if you could unpack a little bit of what's going on with Huawei and how you see it impacting the market in China, that would be helpful, and I have a follow-up. Thanks. Thank you for the question, Matt. I think maybe separate and first, as we indicated in the last earnings call, I think we indicated that we don't have any more projection of selling our 4G, I think, SoCs to Huawei. And going forward, we don't expect to have any significant... It's gonna be a very small, I think, contribution from Huawei. This - I think the more interesting answer to your question, and that's the reason I provide the 35% data point, is, as Huawei launched the device, we - what we are seeing from our customers is continue, I think, growth from our customers on the Android side. We see a mixed improvement of our customers moving towards flagship, and it's kind of reflected in our numbers. So it does not change, I think, the trajectory that we have with our Android customers in China. And there is a possibility, I think, that Huawei, as upgrading, their existing customer base, you know, there is a data point, there's about 100 million Huawei former customers with a 4-to-5-year-old Huawei phone, and that could have an impact on increasing the TAM. Thank you, Cristiano. I guess as my follow-up, it was very impressive, some of the products that you put forward for the PC market at the latest Snapdragon Summit. I think you were right to call out the performance levels, the power levels, and the much, much different support from Microsoft. I guess what I'm trying to understand a little bit more is support for ARM PCs, whether in gaming or in enterprise use cases by other ISVs, so folks that might need to use other end applications that wouldn't be touched directly by Qualcomm or directly by Microsoft. Cristiano, could you give us a little bit of an update there? What are you seeing from the ISV ecosystem, and in what parts of the PC market do you see potential momentum for your products? Thanks. Look, there's a lot to unpack here. I can speak about this for a whole day, but I'm going to try to be succinct. First thing, we're incredibly proud of the accomplishments of our team. I think, Snapdragon X Elite took the leadership position in this space for any mobile computing device. We're incredibly happy with performance of the new CPU, both single-threaded and multi-threaded performance. But not only that, I think it's important to highlight the AI processing capability, because that's key to answer your question. If you look, versus announcements on NPU or some of the other ARM competitors, we had 45 TOPS performance on the NPU, with a total TOPS performance on X Elite of 75. And that aligns with the transition that Microsoft is making towards a Windows AI future, especially the new services with the Copilot and everything we're doing with Microsoft on-device, working together on-device AI with the cloud and with the Azure endpoint. We're excited about that, and you should start thinking about the PC business, almost like the auto business. We're focused on next-generation PCs, not existing PCs, and as those Windows started to switch to Windows AI and our platform launches, it create, you know, opportunity, for us to start gaining scale. Specifically to your question, Microsoft has been very active, together with us, of bringing a lot of applications natively, to the platform. I think we had a significant progress made across consumer and commercial applications. You continue to see announcements, and Windows 11 can also run every x86 32- and 64-bit to the Microsoft emulation. We also made significant strides in the emulation performance. So I think Snapdragon X Elite represents the results of this Microsoft-Qualcomm collaboration. And I'll finish the answer by saying, if you look at the announcements of other computing companies talking about having an ARM-based PC processor, that is validation that that's our TAM now. It is going to be part of the expansion of TAM for Qualcomm. We're a new player, and we look at this as a growth opportunity. We're excited about it. Our next question comes from the line of Mike Walkley with Canaccord Genuity. Please proceed with your question. Great, thanks. A quick question for Akash. You know, strong cost execution coming in ahead of plan for exiting the fiscal 2023, and flattish into the start to Q1. How should we think about OpEx levels planned for the year? Is there more areas to cut, or you think you'll remain kind of flattish for the year from, from the good start? Yeah, thanks, Mike, for the question. Yeah, we're very happy that we set a target for fiscal 2023 of a reduction of 5% relative to the 2022 exit rate, and we came in at 7%. As we've continued to mention, we're committing to operating discipline, and we did implement additional actions this quarter proactively. And the way we are managing our portfolio is really, while we are reducing cost, we want to ensure that we continue to invest appropriately in technology leadership and diversification in some of the areas that Cristiano just went through. So that's the balance we are trying to strike. And as we look at the rest of the year, again, we're committed to maintaining operating discipline as we move forward. I think we're in a very good place from an OpEx perspective. We are investing in the right areas, and we'll focus on those that scale. Great, thanks. And kind of building on that, my follow-up question to you, Cristiano, just to follow up on the on-device Gen AI opportunity, how should we think about the increased dollar content per device for Qualcomm or increased ASPs relative to your high-end Snapdragon chip today? Thank you. Look, let me start and see if Akash wants to add any, something else to the answer. The way we think about this is, you know, rather than provide a specific dollar content, it has a mix improvement. It will drive towards a richer mix of higher and premium tier devices. It has an ASP increase, especially because of the accelerated performance for AI, and we're combining that with significant advancements in CPU and GPU as well. And it has the opportunity to drive units, whether it's a new upgrade cycle or share gains. Akash, I don't know if you want to add anything. Well, and maybe just the other thing to keep in mind is outside handsets, as we talk about the PC opportunity, of course, our AI leadership becomes extremely important there. And then also within IoT, we think about Gen AI as something that's gonna be a key technology going forward. It'll expand our addressable market, expand the dollars we make per device on, in that area as well. So it's a much broader play for us, including automotive with ADAS, IoT and PC. Our next question comes from the line of Stacy Rasgon with Bernstein Research. Please proceed with your questions. Hi, guys. Thanks for taking my questions. For my first one, I wanna ask the March quarter seasonality question a little more directly. Akash, can you just give us some of the puts and takes on that March quarter seasonality? I mean, we've got a strong Apple quarter, presumably in December, that rolls off. We've got Samsung that, that, that launches, although, you know, we've, we can question what, what the share is. We've got other things going on. Just how do we think about that seasonality in the context of everything that's going on? What should we be expecting? Sure. So let me maybe try to address the shape of the year as a broader comment. I mean, we, we do expect the first quarter and the fourth quarter to be the strongest quarters within the year. And then third quarter, as you know, is typically the lower quarter because we don't have a flagship phone launch that happens during the quarter. But, when you step back and kinda look at as we enter fiscal 2024, we're, we're very happy with kind of the early signs of stabilization in the global handset market, and so we are cautiously optimistic as we go forward. With that stabilizing and the normalization of Android channel inventory, we are on a strong trajectory as we go through the year. Got it. That's helpful. For my second question, I wanna ask about the new Apple agreement. So you put that out a little while ago. You're modeling 20% share now in the phone that launches in 2026, so that'll be primarily a fiscal 2027 issue. How should we think about the shape of that in 2024 and the launches that happen in 2024 and 2025? Do we assume that you've got close to 100% of the majority of the units there, and then it drops down, for modeling purposes, to 20% on the 2026 launch? Or, like, what, what, what does that look like? Yeah. So the way you should think about the new agreement, without kind of going into specifics, the framework is very consistent with the previous agreement. It covers three, three launches, so the launch in 2024, launch in 2025 and launch in 2026. And, again, the framework is consistent with what we had before. For financial planning purposes, we're taking the same approach as we did with last agreement, and that's the 20% you mentioned, where in the last year we are planning as if we're gonna get 20% share. But, you know, to the extent that we get more than that, that'd be upside for our plan. Our next question is from the line of Ross Seymore with Deutsche Bank. Please proceed with your questions. Hi, guys. Thanks for letting me ask a question. I just wanted to dive a little bit into the automotive and IoT sides of things. Just a clarification for your fiscal fourth quarter guide, Akash. I believe you said they'd be somewhat similar to last year. I just wondered what you meant by that. And then a bigger cyclical question, we've heard a number of different companies talk about inventory burn in those two markets. You guys highlighted it in IoT, so I wondered where we were there, and are you seeing anything in automotive? Sure. So, the financial guidance we gave is that the quarter-over-quarter trend, from September quarter to the December quarter, in automotive and IoT, will be consistent with last year. So if you look at last year, automotive was down, I think, 1%-2%, and so we're guiding effectively down 1%-2% or flat for automotive. We obviously had a very strong quarter in the September quarter. The business traction continues to accelerate for us. The product roadmap is great. As Cristiano outlined in his prepared remarks, the relationship with the customers is very strong as well. So we continue to be optimistic, and we're well on our way to execute on the financial targets we have given long term. From an IoT perspective, again, the same guidance that it's consistent with last year, what the trend we saw between the September and December quarter. Really, when you think about IoT, we're seeing some of the same factors that other players in the industry are seeing. Some demand weakness coupled with channel inventory.... As we look forward, we think of first quarter as the bottom for the year for IoT. We expect to strengthen from that point on, and especially as we get into the second half of the fiscal year, with the environment normalizing, but then also, very increasingly strong traction for our products, we think we'll, we'll have a strong second half in IoT. Yeah, I just want to add that color. Just wanted to ask a follow-up on the gross margin side of things. Cristiano, you talked about AI at the edge and across a number of different products, whether it's the PC side, the handset side, et cetera. I just wondered, what does that mean to the gross margin within QCT? It seems like it opens up new TAMs on the unit side, outside of handsets, probably increases the TAM from a dollar content on the handset side. Does that yield upside to gross margin? About the same? Just what are the puts and takes as we translate all that to the profitability side? Sure. So from a shorter term perspective, as you'll see from our guide, we did, we did very well in September quarter. We're guiding in line for December quarter. I think your question is more of a longer-term opportunity of, the expansion of our gross margin as we get into these new areas. And, and we definitely agree that I think as we scale in, outside handsets, especially in automotive and IoT, we have an opportunity for margin expansion. You know, Ross, this is Cristiano. Just two things I wanna add real quick on the first question and then on this. As we gain scale in markets, for example, such as Auto and in certain segments of the IoT, like PCs, XR, those things, they also have the opportunity to give us operating margin efficiency because our R&D is highly leveraged, especially on the computing and the connectivity part. So the more that we get scale, we'll continue to probably be accretive to margins. I wanna make a quick comment on your IoT. You should look at our IoT dynamics. Not all IoT are created equal. I think we have a lot of things within our IoT. So there's existing business that are subject to the, some of the inventory dynamics, but there are new growth opportunities there. One of... I remind everyone, the PC is in there, which is, likely gonna be, material in fiscal 2025, if you think about devices with the X Elite are launching towards the second half of 2024. You have XR, which was still in the early phase of that opportunity. It has networking, we have fiber. We didn't have it before, so I think we're positioned now to expand in networking with fiber and 5G and Wi-Fi 7 is positive, and, you know, it has still an opportunity to move, processing to the edge when IoT next. So we're gonna be-- those are less subject to the some of the cyclical dynamics we're seeing right now for existing business. Thank you. Our next questions are from the line of Christopher Rolland with Susquehanna. Please proceed with your questions. Thanks for the question, guys. How are you guys thinking about global handset units over your next fiscal year? And then also, given your new product launches here, how should we think about Qualcomm ASPs, as we progress for the next fiscal year as well? Chris, it's Akash. So, as we mentioned on the call, we've seen kind of early signs of stabilization in the handset market, including in China. And for calendar 2023, we now expect mid- to high-single-digit versus 2022, which is an improvement from what we had before. As we look at 2024, the recent demand stabilization obviously provides a positive setup as we go into the year, so we are cautiously optimistic on how 2024 plays out. But specifically on 5G units, which is really our target market, we expect high-single-digit to low-double-digit growth from 2023 into 2024. So that's kind of the market that we pursue, and we think there's growth opportunity there going into next year. From an ASP perspective, because of all the factors we discussed earlier in the call, with the chips becoming way more capable, especially with GenAI, we think we are on a good trajectory to continue to expand our ASP, consistent with the last three-year trend. So if you look at our last three-year trend, we've added, approximately 10% increase in any tier of chipset every year, and we think as we look forward, we have the opportunity to do that, going forward. That's a great update. Thank you. Another question for you quickly. There was some new language in your 10-K around the European Commission proposing regulations around standard essential patents, potentially devaluing those patents. I wasn't familiar with this. How serious do you think that risk could be, and are there any other meaningful developments in any other geographies, or are we all kind of status quo? Yeah. So thanks for that question. This is Alex. So we've been tracking these developments in the European Union. There's actually a variety of parts to this proposed regulation, ranging from wanting more transparency and ownership of SEPs and essentiality of SEPs, to other issues relating to kind of pre-legal processes and other sorts of regulations that would affect the licensing and go-to-court process. The European Union right now is in what they call a trilogue process. It's going to take a while to get through parliament, and the member states are gonna weigh in. The commission's gonna weigh in. The European Patent Office is actually opposed to parts of the regulation. Ericsson and Nokia, of course, weighing in as well. ... So this is going to be a fairly messy, just call it legislative process, that will take some number of years to sort out. It's being followed in other jurisdictions. We're following it here in the U.S. The U.S. Patent and Trademark Office has weighed in somewhat negatively, I think, and it's being followed in China as well. So this will kind of play out over some years. It's not that unusual to have a variety of different SEP-related policy initiatives underway in different jurisdictions. Our next question is from the line of Chris Caso with Wolfe Research. Please proceed with your questions. Yes, thank you. Good evening. The first question is regarding, you know, the overall handset demand, and I understand the comments you made about 5G units going into next year. I guess one part of the question is, with the increase that you saw in the China business, how much of that do you believe was associated with just inventory normalization as opposed to, you know, actual, you know, more end market units? And then what does that mean for QTL, which has also been, you know, somewhat depressed because of the lower handset market? You know, what should we expect on that as we go into next year? Yeah, Chris, it's Akash. So, the way we think about the handset market is we've seen a stabilization in the market, and we're projecting forward, especially into the December quarter and QCT-QTL's guide, as something that a stable market represents. And so we're guiding a midpoint of $1.4 billion, sequential growth of 11%. From in terms of breaking down the revenue growth in QCT, between inventory and market, obviously, it's kind of difficult to do over a quarter. But we do think that, inventory is a big part of it, and it's really the market is stabilizing where it's at, with inventory really driving a majority of the improvement, in addition to our market share position and revenue growth that comes with, content increase as new chips get launched. Got it. And with regard to QTL then, you know, I guess I'd assume with... To see the QTL numbers come back closer to, you know, where we've seen them in the past, that's gonna require some more improvement in end market demand. Is that accurate? Yeah, that's right. I mean, QTL revenue forecast is really a function of the scale of the overall handset market, and so as the scale changes, it would improve QTL revenues as well. Our next question is from the line of Brett Simpson with Arete Research. Please proceed with your questions. Yeah, thanks very much. My question was really on fiscal 2024 Android smartphone outlook, and I guess there's a lot of moving parts here with Huawei building up their own chipset, and we've all seen the volumes they're talking about for next year. And you've also got a fairly high share in flagship segments with Samsung. So just, you know, looking at fiscal 2024, can you perhaps just provide us a framework for whether or not Qualcomm can grow Android handset sales in fiscal 2024? Thank you. Brett, we're not, we're not guiding the full year at this point. We gave you the guidance for first quarter, and I gave you an outline as well of how we expect the shape of the year to play out for the overall company, and I think, those pointers should give you a sense of, our view into the year. Okay. And maybe just to follow up, Akash, in terms of your OpEx plan for fiscal 2024, I mean, we've seen your sales in fiscal 2023, decline, and operating profit down, you know, pretty significantly in fiscal 2023. How are you thinking about the OpEx for fiscal 2024? And I guess, and specifically, when I look at Qualcomm's headcount, you have over 50,000 people in the business, and a lot of your large fabless peers have about half that headcount. How do we think about, you know, the sort of spending plan for next year, just giving the puts and takes here? Thank you. Yeah. So Brett, as you're aware, through calendar, through fiscal 2023, we took action on cost reductions a couple times. And as I also mentioned, this quarter, we've taken additional action. So the idea is how do we maintain operating discipline while continuing to invest in the diversification initiatives that are so important for the company going forward? And what you're seeing in our forecast is a representation of those factors. Thank you. Our final question is from the line of Tal Liani with Bank of America. Please proceed with your questions. Hey, thank you so much. I wanna ask about market share. Next year, MediaTek is saying that they're doing great, and they're gaining share. Huawei published now their target for 100 million units versus 60 million that they had before. The question is: How do you feel about your market share for handsets sourced within China? What are the areas maybe that you are strong at? What are the areas that, you think you'll see more competition? Thanks. Akash, I will start, and maybe you'll add some more quantitative comments. Tal, I think I will say, just to recap, in fiscal 2023 that just ended, we had a share increase, both globally and in China, of sell-through. And we like, I think, the direction that we have been going. As we said, we'll continue to retain majority share at Samsung. We feel good about their relationship going forward, and we have seen traction from premium and high-tier with our Chinese OEMs. This in spite of the launch of and the successful, I think, initial sales of a newcomer, and that's kind of also reflected in the sequential 35% growth. Akash, I don't know if there's anything you'd like to add. No, I'll, I'll just say, this competitive environment is no different than what we've had in the past. And really, if you look at our current products and going forward, we think our competitive differentiation is actually accelerating, both with our custom CPUs coming into our handset product line and with Gen AI, in addition to other factors that differentiate us. So, we're pretty confident as we go forward, we're in a good place from a competitive positioning perspective and content increase. Thank you. Thank you. That concludes today's question and answer session. Mr. Amon, do you have anything further to add before adjourning the call? Thank you all for listening to and participating in the call. I just wanna say thank you to our employees, our support suppliers, our partners, and I think we've been focused on the things we can control and really focused on building incredible, I think, products as we continue to change Qualcomm from a communications company to a connected computer company and go into new markets. Thank you again, and looking forward to talk to you all next quarter. Ladies and gentlemen, this concludes today's conference call. You may now disconnect.