The new CEO of Qualcomm Technologies, Inc. believes that by the very next year, his company will have the ideal chip for laptop manufacturers who are trying to figure out how to compete with Apple, which last year introduced laptops using a central processor chip that was specifically designed to have longer battery life.

Apple’s processors are more energy efficient than those from longtime CPU manufacturers Intel Corporation and Advanced Micro Devices (AMD). Cristiano Amon, the chief executive of Qualcomm, told Reuters on Thursday that he thinks his company can produce the greatest chip available thanks to a group of chip architects who formerly worked on the Apple chip but are now employed by Qualcomm.

Despite political chaos, Amon stated in his first interview since becoming Qualcomm’s CEO that the company is counting on revenue growth from China to support its main smartphone chip business. Qualcomm is based in San Diego, California.

He declared, “We will go big in China,” pointing out that U.S. sanctions against Huawei Technologies Co Ltd enable Qualcomm to earn significantly more money.

It was not sufficient to only provide modem chips for phones’ wireless data connectivity, according to Amon, who said that a cornerstone of his strategy was derived from a lesson learned in the smartphone chip market. To transform the phone into a computer, Qualcomm also had to provide the brains, which it now supplies for the majority of high-end Android devices.

According to Amon, Qualcomm is now pairing modems with a powerful central processing unit or CPU, as it attempts to bring a 5G connection into laptops. Qualcomm concluded that if its customers were to compete with new laptops from Apple, they would need custom-designed chips rather than leveraging computing core blueprints from longtime partner Arm Ltd, as it now does for smartphones.

Amon oversaw the $1.4 billion acquisition of startup Nuvia this year as president of Qualcomm’s chip division. The startup’s ex-Apple founders had contributed to the design of some of those Apple laptop chips before leaving to launch Nuvia. Next year, Qualcomm will begin offering laptop CPUs based on Nuvia.

“We needed to have the leading performance for a battery-powered device,” said Amon. “If Arm, which we’ve had a relationship with for years, eventually develops a CPU that’s better than what we can build ourselves, then we always have the option to license from Arm.”

Nvidia Corporation is buying the Arm for $40 billion, and Qualcomm has filed a regulatory complaint against the merger.

Amon stated that Qualcomm has no intentions to develop its products for the other substantial market for CPUs, which are data centers for cloud computing companies. However, it will grant licenses for Nuvia‘s designs to cloud computing companies that wish to manufacture their chips, which would put it in competition with some Arm parts.

Amon stated, “We are more than willing to leverage the Nuvia CPU assets to partner with companies that are interested as they build their data center solutions.”

Challenges

In its most recent fiscal year, $12.8 billion of its $16.5 billion in chip sales came from phone chips. China is home to some of Qualcomm’s best customers, including the mobile phone manufacturer Xiaomi Corporation.

Qualcomm is banking on revenue growth as former owners of Huawei phones, who were driven out of the handset market by Washington’s sanctions, switch to Qualcomm’s Android phones.

Due to increasing U.S.-China tensions, Kevin Krewell, the lead analyst of TIRIAS Research, described it as a “political minefield.” Amon, though, claimed that operations might continue there as usual.

“We license our technology – we don’t have to do forced joint ventures with technology transfers. Our customers in China are current with their agreements, so you see respect for American intellectual property,” he said.

Securing Apple as a customer will be another difficult task for Amon. After a lengthy legal battle, Qualcomm’s modem chips are now present in every Apple iPhone 12 model. Apple filed a lawsuit against Qualcomm in 2017, but later withdrew it and, in 2019, agreed to supply Qualcomm with chips and license its patents.

To replace Qualcomm’s communications chips in iPhones, Apple is now building new chips.

“The biggest overhang for Qualcomm’s long-term stock multiple is the worry that right now, it’s as good as it gets, because they’re shipping into all the iPhones, but someday, Apple will do those chips internally,” said Michael Walkley, a senior analyst at Canaccord Genuity Group.

Amon claimed that Qualcomm has decades of experience creating modem chips, which makes it difficult for any competitors to copy them, and that the gap Huawei has left in the Android market offers Qualcomm additional chances for generating income.

“Just for the premium tier alone, the Huawei addressable market is as big as the Apple opportunity is for us,” said Amon.

Amon, an energetic executive who is passionate on stage during major speeches, may also face difficulties because Qualcomm is not as well known to consumers as Intel or Nvidia, even in Qualcomm’s home country.

“I flew into San Diego and got an Uber driver at the airport and told him I was going to Qualcomm. He said, ‘You mean the stadium?'” said Krewell, referring to the football arena formerly home to the San Diego Chargers.

To try to change that, Amon has initiated a new branding program for the company’s Snapdragon smartphone CPUs.

“We have a mature smartphone industry today. People care what’s behind the glass,” he said.