U.S. chipmaker Qualcomm (QCOM) is staking more of its future on automotive technologies as it wraps up a deal to buy Arriver, a company that specializes in self-driving software. The move brings together software needed to run mobile phone-based processors and sensors, creating a more appealing package for automakers.
“Our strategy is to become the preferred partner for [Original Equipment Manufacturers] OEMs, what we call the digital chassis solution,” Akash Palkhwala, chief financial officer at Qualcomm, said in an interview on Yahoo Finance Live (video above).
Bringing chips and software together in-house
Arriver builds software that interprets a vehicle’s surroundings and makes decisions about what it should do in certain situations, a key part of driver assistance and self-driving technology.
But such software requires processing power, and automakers also must consider the portability and power management capabilities of the microchips used. Qualcomm says its Arriver deal provides an answer to this issue by bringing everything in-house.
“We thought the best way to address that market is to have a combined chip-and-software solution,” Palkhwala said, highlighting Qualcomm’s existing strengths in mobile phone technology, 5G radio technology, and its Snapdragon line of processors.
Qualcomm’s decision to buy Arriver from SSW Partners builds on an existing partnership with the company on its Snapdragon Ride Platform. The terms and value of the deal were not disclosed, though Qualcomm noted it will have more financial information at the company’s earnings call in April.
The move comes as chipmakers increasingly consider autonomous and electric vehicles a key part of their strategies.
William Stein, managing director at Truist Securities, told Yahoo Finance that demand from automakers will increase pressure on chipmakers and create shortages as more car makers pursue electrification and self-driving technology. Part of this comes from the fact that electric vehicles contain roughly double the semiconductor content.
However, the current chip shortage hasn’t “been limited or even over-focused in the electric vehicle market,” Stein said. “It’s been fairly significant through the whole industry, especially the internal-combustion cars.”
Stein explained that there are two camps of thinking around the adoption of autonomous vehicles. The first contends that the market should move entirely to self-driving vehicles in one major step. The other approach is for automakers to reach self-driving in smaller steps; for instance, by focusing on safety technology and using it as the basis for self-driving technology.
Automakers “are going to achieve that objective slightly better each year and each model and each release of the new technology,” Stein said. “Eventually, perhaps we get to a point where we have autonomous driving.”
Qualcomm, meanwhile, is banking on increasingly tech-heavy vehicles overall. “It’s not just electrification of cars,” Palkhwala said. “You’re seeing cars becoming smartphones on wheels.”
Mike Juang is a producer for Yahoo Finance.