Qualcomm – The ‘Catfish’ stirring up the PC Market

China always had an ‘Oil’ problem. It produced only 30% of its total oil consumption. Even worse, 80% of its oil imports passed through the Strait of Malacca. This ‘chokepoint’ is 2.8 kilometers wide at its narrowest, making it easy to effect a naval blockade.

To reduce its dependence on Oil, the Chinese government went all out to create a domestic Electric Vehicle (EV) industry. In 2019, China took a risky gamble by rolling out the red carpet for American EV maker Tesla. The result is there for all to see – ‘China made up 64% of EV sales in 2024‘.

What’s the connection with Qualcomm and the Personal Computer (PC) market? Tesla’s introduction to Chinese EV sector was described as the ‘Catfish effect’. The aim was to jolt the domestic players out of their complacency and make them ‘swim faster’.

In the premium segment of the PC/Tablet market, Apple had maintained a stranglehold. Tired of the slow pace of innovation by the Intel-AMD duopoly, Microsoft released its own Catfish Qualcomm into the CPU chipset waters in 2024.

Qualcomm made a big splash during the Snapdragon Summit 2023 held in Maui, Hawaii. The big announcement was the launch of the Snapdragon X Elite processors. Microsoft followed this up with the announcement of the Copilot+ PCs, which featured Snapdragon chips exclusively. With battery life up to 22 hours and revolutionary AI features like Recall, Qualcomm was supposed to corner a big piece of the AI PC market.

So what happened? According to Tom’s Hardware, sales have been underwhelming.

Qualcomm sold only 720,000 units in the first full quarter it went on sale; barely 0.8% of the entire market.

Source

This raises several questions. Are AI PCs even a thing? Can Qualcomm live up to Satya Nadella’s expectations? Or will Apple continue to laugh all the way to the bank?

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Table of Contents

• The Catfish Effect – Qualcomm vs Intel/AMD Duopoly
• PC Market Overview – It’s Apple’s world, everyone else is just paying rent!
• ARM vs x86 for PCs
• Qualcomm Snapdragon PC – Reasons for the slow take off in 2024
• Intel – the Empire strikes back but is it a Pyrrhic victory?
• Competition in PC Market is swimming faster – AMD, Nvidia/MediaTek
• Nuvia and Oryon Cores – Qualcomm’s Secret weapon
• 2025 Outlook for Qualcomm’s Snapdragon PCs

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PC Market Overview

It’s Apple’s world, everyone else is just paying rent!

Let’s first look at why Apple is such a big deal. In terms of devices sold, macOS was only 8.7% of the units sold in 2024.

Operating System	Units Shipped (millions)	Market Share (%)
Windows	224.6	85.5
macOS	22.9	8.7

Source – IDC

However, in terms of Revenues, Apple has approximately 21% of the market in 2024. What takes the cake is that Apple probably hogs most of the profit in the global PC market.

We know that in 2013, ‘Apple Sells 5% of World’s PCs, Makes 45% of the Profit’. It would be fair to speculate that in 2024, Apple would have at least 50% of the industry’s profits, given that it quadrupled its market share from 2013.

Apple’s Net Profit Margin is approximately 24% in 2024 vs the wafer-thin margins of around 3-4% of the top 3 PC makers (HP, Dell and Lenovo).

In mobile devices also, Apple gets the cream of the crop.

Apple of course, runs away with 50% of the global smartphone revenues while selling only 25% of the units.

Qualcomm – When AI says Hi to the Edge, Original source

Apple has long held the bragging rights for snob value in the priciest segments of electronic devices. It is in this premium PC/Tablet market that Microsoft wants to establish itself as a credible alternative.

“Apple’s done a fantastic job,” Nadella said in an interview with Bloomberg Television on Monday. “We now want to bring real competition back to the Windows versus Mac.”

Satya Nadella, CEO Microsoft (Source – Bloomberg)

ARM – Apple’s Secret Sauce

Tim Cook, CEO of Apple, is considered to be an ‘operations man’ but in 2020, he took a revolutionary decision. Apple was going to move away from Intel’s chips and use its own home-brewed ‘Apple Silicon’.

The surprising part was Apple’s decision to use the ARM architecture for its chips instead of x86 architecture pioneered by Intel.

ARM-based chips were mainly used in mobile or IOT devices due to their power efficiency. The conventional wisdom was that ARM was just not powerful enough for PCs.

The move to ARM provoked some dismay. PC World headlines screamed:

“Why Apple’s move from Intel to ARM means we should stop buying Macs”

Source

All fears were laid to rest when the Apple team, led by chief CPU architect Gerard Williams III (remember the name), launched the M1 chip based on ARM architecture. It simply blew away all competition.

At the time of its introduction in 2020, Apple said that the M1 had “the world’s fastest CPU core in low power silicon” and the world’s best CPU performance per watt.

Source

Since then, there has been no other PC/Tablet that can come close to Apple’s domination in the high-end segment.

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Qualcomm to the Rescue

So why didn’t Microsoft become a ‘fast follower’ and get ‘inspired’ by Apple’s ARM-based chipset designs? It has never been shy about adopting Apple’s innovations like Graphical User Interface (GUI).

Well, Microsoft tried twice to get ARM to work on Windows. Both attempts, incidentally with Qualcomm, failed. Third time seems to be lucky.

Qualcomm Reboots Windows with ARM

2024 will be remembered as the year things finally worked out for Windows on ARM.

The first wave of Windows PCs based on ARM was released on May 20, 2024. These Copilot+ PCs were running on Qualcomm’s Snapdragon X series chips. The much hyped Snapdragon chips didn’t disappoint. It was clear that they were far better than the existing Intel & AMD chips. Qualcomm had the temerity to say that these were even better than Apple’s chips.

Tech journos and bloggers finally got a chance to test the Snapdragon PC chips.

Turns out that the Snapdragon chips were really good.

• AI Performance – These chips could easily achieve 45 TOPS. Intel and AMD were nowhere close at that time. (A speed of 45 TOPS meant users could run AI tasks on the PC directly rather than on the cloud)
• Battery life – Under certain conditions, Snapdragon’s battery lasted around 27 hours. Intel/AMD chips were left far behind. The battery life even beat Apple in some benchmarks.

The stage was all set for Qualcomm and Windows on ARM to gain market share and take the fight to Apple.

In my previous article on Qualcomm, I had speculated:

The Wintel era in the 1980s and 90s saw two behemoths shake hands to dominate the PC market – Microsoft with its Operating System/Windows suite and Intel with its CPUs. If Qualcomm retains its edge in NPU processing and battery life, we could see the emergence of WinComm.

Qualcomm – When AI says Hi to the Edge

But we know that in the second half of 2024, Qualcomm has managed to get only 0.8% of the PC Market. So what went wrong?

Reasons for the slow take off

There were several reasons why Qualcomm didn’t make a dent in the PC market.

• No Killer App for AI – On-device AI was supposed to the next big thing. In 2024 though, it didn’t take off as there was no compelling reason to own an overpowered PC with 40 TOPS of NPU muscle.
  
  
• Apps compatibility – Most programs/apps for Windows OS are developed keeping in mind an x86 architecture. This meant that a lot of programs/games would not work on the latest Qualcomm PCs. And Apple does cast a long shadow, as explained below.
  
  • “The state of Windows on Arm is still lacking compared to macOS with Apple Silicon. Developers are less incentivized to create apps for Arm64 Windows-powered devices due to Apple’s larger user base. “
    
  • “A glaring example is that Google’s Chrome browser will not run natively on the X Elite chip. Qualcomm wagering on the hardware being powerful enough to offset the performance penalty of running in emulation.” Source 
    
    
• Gaming Performance – ExtremeTech noted that the gaming performance “simply unremarkable”. This was related to the earlier point about games running in ’emulation’ mode instead of ‘natively’.
  
  
• Older chip design – The latest and best chips are made by TSMC. Apple is TSMC’s largest customer and gets first rights to the best chips. Its financial muscle also helps to ‘secure’/’reserve’ the latest nodes. The revolutionary design of the Snapdragon X Elite chips were just not enough to match the latest 3nm chips. As XDA-Developers noted:
  • “While still impressive on many fronts, the Snapdragon X Elite lags behind the M3 in one crucial aspect: the manufacturing process. Apple’s latest silicon is built on the more advanced 3nm manufacturing process, whereas the X Elite utilizes the older 4nm one.”

For all these reasons, most reputed websites cautioned against buying a Snapdragon laptop.

“First Copilot+ PC Reviews Show It’s a Good Idea to Wait for Intel and AMD“

ExtremeTech, Jun 2024

Intel – the Empire strikes back

Besides the factors above, Intel surprised everyone by coming up with a competitive offering to Snapdragon X series chips.

In 2024, Intel’s stock had fallen to the level it was trading in 1998! The former Titan of Technology seemed to be in terminal decline. Surprisingly, even after a decade of freefall, Intel managed to hold around 76% of the Windows PC market share. AMD had steadily gained market share at Intel’s expense and now Qualcomm seemed poised to deliver the coup de grâce.

But Intel had one big fight still left in it. The Intel Core Ultra series would stand toe-to-toe against the upstart Snapdragon X series and wrest the initiative back.

Intel Core Ultra 9 showed a superior performance against Snapdragon X Elite chips in terms of multi-core performance and higher RAM support. Snapdragon performed better at single thread processing (simple tasks like browsing, viewing videos etc.). It was to be expected that the battery life for Snapdragon would be superior. What surprised many, however, was that Intel actually come close to matching the battery performance of Qualcomm’s premium chips.

Wasn’t the ARM architecture that Qualcomm used more battery efficient? How did Intel with its x86 architecture come close to Snapdragon’s world-class battery performance?

Intel – A Pyrrhic Victory?

Intel did come up with several Architectural considerations and innovations such as Foveros 3D packaging for the Core Ultra series chips. It also took, however, some help from competing ‘chip making Fab’ TSMC.

Intel is the only major company that designs chips and also manufactures them. TSMC is a pure-play foundry and they make 90% of all advanced chips in the world. For Intel to outsource the manufacture of the Graphics tile of Intel Core Ultra series was akin to McDonalds getting its patty supplies from Burger King.

Besides the TSMC outsourcing, the Core Ultra series also had its memory inside the same chip package as the CPU. Normally the memory is a separate module in the motherboard. While this helped Intel match Snapdragon chips, it came at a prohibitively expensive price. The CFO admitted this in the Q4 Earnings Call.

As you know, Lunar Lake has the memory in the package. That affects the gross margins, and I think it’s going to weigh down the gross margins on the product side of the business for us in ’25.

Q4 2024 Intel Corp Earnings Call

Products, or the PC segment, is the main business for Intel. Its Foundry business is running at a loss, surviving on hope and grants from the US government. The performance of Core Ultra chips came at such a prohibitive cost that it weighed “down the gross margins” of the entire Products division!

At considerable cost, Intel managed to deny Qualcomm market share in 2024 and live to fight another day.

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The competition is swimming faster – AMD, Nvidia/MediaTek

Intel and AMD were busy eyeing the massive profits that Nvidia was making in the Artificial Intelligence Data Center space since the ChatGPT release. Distracted by Nvidia’s success, they got blindsided by Qualcomm in PCs.

But they got their act together quickly enough.

AMD – Intel’s bete noir

AMD’s entire business model is to do what Intel does but better.

They have been gradually encroaching Intel’s market over the past decade. PCs, Servers, GPUs – there hasn’t been an area where Intel hasn’t ceded ground to its relentless rival.

Consumer PCs was the last bastion of Intel but AMD has made steady inroads.

It took AMD six years to capture 20% of the laptops/PC market from Intel (the first-gen Ryzen PC chip was launched in 2017).

Qualcomm – When AI says Hi to the Edge

When Qualcomm released Snapdragon X series chips, they were significantly better than AMDs offerings available in the market – 45 TOPS vs 39 TOPS for AMD’s best chip. This meant that AMD wouldn’t get the coveted ‘AI PC’ tag.

But AMD isn’t one to sit idle. In Jan 2025, it released the AMD Ryzen™ AI Max Series processors. With 50 TOPS, it got the coveted AI PC title and beat Qualcomm’s 45 TOPS. It also performed better on most performance benchmarks against Qualcomm. This was not a big surprise though. Newer chips are always faster as they are built on the latest TSMC nodes.

That said, AMD’s latest offering is also based on x86 architecture – same as Intel. x86 is not very power efficient compared to Qualcomm’s ARM-based chips. It remains to be seen the kind of trade-offs AMD had to pull off to make Ryzen competitive with Snapdragon X series.

Nvidia isn’t weeping, there are still worlds left to conquer

“Alexander the Great of Macedonia wept when he realised there were no more worlds left to conquer”.

There are no historical sources for this quote but Hans Gruber made these lines sound sufficiently classical (and menacing) in Die Hard.

Nvidia is the number one company by market capitalization for most of the past 6 months but that hasn’t deterred it from entering new markets.

In 2014 Jensen Huang sent out an email to everyone in Nvidia effectively stating that Nvidia was now an AI company. Sequoia Capital partner Roelof Botha called this ‘one of the most remarkable business pivots in history.’ Jensen gained a 10-year lead because of his clairvoyance and used this time to deepen the strength of the Nvidia Moat in software (CUDA), hardware (cutting edge GPUs, DPUs, CPUs, Interconnects) and networking (InfiniBand).

“Every CEO’s job is supposed to look around corners,” Huang said. And Jensen must have seen that AI will move to the Edge – PCs and Smartphones.

As a logical next step, Nvidia announced Project DIGITS on January 6, 2025, during CES 2025 and brought the roof down. Why the excitement over the launch of another PC model? The Verge captured it best.

If you were looking for your own personal AI supercomputer, Nvidia has you covered.

Source

A Digits PC could run 200 billion parameter AI models locally, without going to the Cloud!

This product is meant for developers and data scientists who can now experiment with AI models on their local machines. Digits is based on ARM architecture and MediaTek helped Nvidia optimize Digits. MediaTek is Qualcomm’s rival in smartphones. It also has considerable experience in designing energy-efficient ARM products.

China’s Deepseek showed that world-class models can be run on consumer-grade PCs locally. With specialized equipment like Project Digits, even high end Deepseek models can also be run on a PC.

Project Digits is a niche product and not something that will affect Qualcomm. However, Nvidia and AMD are collaborating on another ARM-based PC, this time for a broader audience. It will be based on the latest TSMC 3nm node and is expected to come out by 2025 end. This new product will be the only competitor to Qualcomm Snapdragon in the ARM-based AI PC market and will definitely take some market share away from Qualcomm.

Nuvia and Oryon Cores – Qualcomm’s Secret weapon

ARM, the company that owns the ARM architecture, sent a shiver down the spine of the entire semi-conductor industry when it filed a lawsuit against Qualcomm in October 2024. Who sues their number one customer? And why now when ARM’s revenues were about to expand to the Windows PC market?

The demand was to terminate Qualcomm’s license to use the chip designs of Nuvia, a company Qualcomm acquired. Qualcomm’s entire PC range and upcoming mobile phones were based on Nuvia’s designs. This made everyone from Microsoft to Dell to Samsung nervous about their own upcoming product launches. So what was so special about Nuvia’s designs?

In March 2021, Qualcomm acquired Nuvia for $1.4 billion. Nuvia was founded by Gerard Williams III. Yes the same person who was Apple’s chief CPU architect and pioneered the ARM-based CPU design of the M1 chip! In the arcane field of semi conductor design, Gerard is considered a wizard.

“Some say I put fairy dust on the processors or that I violate the laws of physics!”, laughs the fifty-year-old.”

Gerard Williams interview

Gerard had worked his magic on the design of Oryon cores. These cores were used in Snapdragon X series PCs. The Oryon-powered PCs finally achieved parity between Windows and Apple’s best offerings. Apart from PCs, the Oryon cores would also turbocharge smartphones.

How good are these Oryon cores that prompted the lawsuit? According to the insightful and irreverent Irrational Analysis, “Oryon v2 is very good.”

“So good that it seems to be a completely new microarchitecture.”

Irrational Analysis

Another chip analyst states that Oryon represents a ‘step change in performance’.

Why are Oryon cores so important? Put simply the promise of these Oryon cores is that they provide a step change in performance for processor cores used in power-constrained devices like laptops and mobile phones.

The Chip Letter

The ARM-Qualcomm lawsuit is technical and boils down to the royalty rate Qualcomm needs to pay for using the Oryon cores. Some of the speculation is that the Oryon cores will be adopted across industries such as PC, mobiles and even Data Centers. In such a scenario, the royalties will be significant. Significant enough for ARM to risk the ARM ecosystem it had nurtured.

Eventually Qualcomm won the lawsuit and ARM has decided not to contest it further. With this pesky lawsuit out of the way, Qualcomm looks to bring its Oryon cores to smartphones and even Data Centers. Funnily enough, Nuvia had originally developed Oryon for Data Center CPUs. The launch of a Oryon-backed product in this hot segment will be a homecoming of sorts.

Things are looking up

A 0.8% Market Share in PCs is hardly enough to meet Qualcomm’s vaulting ambitions.

The good news is that 2025 began on the right note as some sources claimed Qualcomm had managed to get 10% of the ‘above $800 laptop market’. Timothy Arcuri, a UBS Analyst, tried to confirm this with the CFO Akash Palkhiwala during the Q1 FY25 Analyst call but it couldn’t be verified.

2025 could be the year Qualcomm consolidates on its promising start in the PC segment.

80 Design Wins

Intel had indulged in some gamesmanship when it alleged that Qualcomm’s Snapdragon laptops have “high return rates”. Qualcomm quickly countered and said returns are “within industry norm”.

To bolster its claim, Qualcomm also announced more than 80 ‘design wins’. This meant that major PC manufacturers like Acer, ASUS, Dell, HP, HONOR, Lenovo, Microsoft Surface, Samsung, and Xiaomi had committed to produce devices featuring Snapdragon X processors.

To compete with old foes Nvidia-MediaTek’s upcoming launch of Project Digits, Qualcomm also announced ‘mini desktop AI PCs’ with Lenovo.

Compatibility for Apps

One of the biggest problems for chipmakers moving away from x86 to ARM architecture is compatibility with existing apps. Software in modern PCs have been designed for x86, not ARM.

The initial models of Snapdragon X platform faced issues due to lack of compatibility as several apps didn’t work on Qualcomm PCs. Higher end games also didn’t run as well as they did on x86. The website XDA Developers noted:

A glaring example is that Google’s Chrome browser will not run natively on the X Elite chip. Qualcomm wagering on the hardware being powerful enough to offset the performance penalty of running in emulation.

XDA Developers

Microsoft finally got its act together and we should be seeing fewer compatibility issues going forward.

“Late in 2024 Microsoft released a major Prism emulator update that added support for AVX2 instructions, one of the more complex (and still highly prevalent) instructions from x86 that hadn’t yet mapped over to Arm. This meant that more applications that were not on the compatibility list, like some content creation tools from Adobe, were finally able to get up and running.

As Microsoft pointed out at its Ignite event this year, more than 90% of the app minutes for users of non-x86 Copilot + laptops are now running natively, highlighting a breakthrough in redefining compatibility beyond traditional x86 dominance.”

Source

Oryon v2 technology

We saw that the first generation of Snapdragon X chips smoked the Intel & AMD chips while being competitive with Apple’s offerings. This was despite Snapdragon being fabbed on an older process node (TSMC’s 4nm instead of 3nm).

It is exactly this kind of performance, equivalent to fighting with one hand behind your back, that is adding to the mystique of the Oryon cores. The processing speed is so good that most users cant make out the difference even as they run ‘non-native’ Apps via an Emulator.

The first gen Snapdragon chips were based on Oryon v1 technology. Oryon v2 is now here and available on smartphones in early 2025. One can detect a sense of wonder about the new chips from the reviews of experienced Tech journalists.

What is certainly true is that Oryon v1 delivered Arm cores that were, for the first time outside of Apple, competitive with x86 designs.

Now, Qualcomm is using Nuvia-derived Oryon v2 technology in its Snapdragon smartphone SoCs. The Second Generation Oryon cores provide Qualcomm with a claimed step change in the performance of its smartphone SoC cores.

Source – The Chip Letter

Another review of the upcoming Oryon v2 powered chips.

With Oryon, Qualcomm could elevate smartphone performance to a different level. If they get the optimization right, this promises to change smartphones as we know it right. The possibilities are endless for phones having PC level performance.”

When the next generation of PCs running on Oryon v2 hit the markets, we could see Qualcomm wrest the title of the most high performance PCs back from Intel and AMD.

Source

We know the extreme lengths Intel went to make sure their PCs remain competitive with Snapdragon X series. The additional cost of ‘memory in the package’ had to be recovered by pricing the laptop outrageously vis-a-vis Qualcomm.

The Qualcomm-based, 13.8-inch model starts at $999, while its larger 15-inch sibling starts at $1,299. Meanwhile, the Intel-based, 13.8-inch model starts at $1,499—a staggering $500 more than its Qualcomm-based opponent. Although Microsoft didn’t give a starting price for the larger 15-inch model, we’re assuming it’ll start at $1,799.

Source

Mass Market Entry – sub $600

Qualcomm’s initial offerings were in the $1,000 + PC category. The market for such premium PCs is around 20-25% according to some estimates.

To gain market share, Qualcomm has now entered the sub $600 PC market.

The sales of Qualcomm’s premium offerings under the Snapdragon X Elite brand were hamstrung because some softwares or games didn’t support ARM. The performance for such computationally intense apps (3D design etc.) or games were sub par. To be sure, these are teething issues that would be eventually resolved as Microsoft is throwing the full weight of its developer ecosystem to fix them. However, this uncertainty was enough for the niche users to stay away from the latest entrant in the PC market.

In the mass market segment, no such concerns exists. Most users want to either browse the web or use MS Office. The key criteria in this segment is price and battery life. And Qualcomm’s battery life is legendary, especially its ‘performance consistency‘.

Another interesting observation and differentiation was highlighted late in the year at a Qualcomm press event, showing that performance consistency was better on its processor than on the x86 competitors, including the most recent releases from AMD and Intel.

This performance consistency when comparing how your system would perform in real-world tasks when it is plugged in to the wall (on AC power) versus how it performs when you are truly mobile (running on the battery, DC) with the X Elite contrasted with other Windows x86 platforms that saw performance FALL by as much as 50%.

Signal65

Conclusion

Satya Nadella is smiling, his ploy has already worked. Windows PCs have closed the gap with Apple in terms of raw performance, especially in the premium segment.

Qualcomm though, still has a mountain to climb. In 2024, it barely made a dent in the PC Market, less than 1% of the market.

2025 looks to be better. Tesla, the original Catfish, first created supercars and then entered the affordable segment. Winning the high-end market is difficult if you come from humble origins. Qualcomm’s launch of a halo product first (Snapdragon X Elite) and subsequent entry into the broader market makes sense.

With unmatched battery life, Snapdragon PCs have a clear lead over its competitors. The premium segment should also see a revival with “more than 90% of the app minutes” running natively. And once Oryon v2 cores are combined with TSMC’s latest N3 node, a beast of a machine will be born.

In 2024, it was assumed that Snapdragon chips would conquer the PC market. Canalys forecasted that ‘ARM-powered PCs will make up 30% of the PC market by 2026’. Rene Haas, CEO of ARM, was even more optimistic and predicted a 50% market share by 2029. My own assessment was more modest and assumed a 20% market share by 2029.

It is 2025 now and we know that the going will not be that easy for Qualcomm. Counterpoint has now estimated a more modest 5% market share for Qualcomm by the end of 2025.

The disappointment of 2024 belies the fact that Qualcomm now has a firm foot in the door of a very lucrative $30 billion market. And it has take a giant step towards diversifying its business away from the cut throat smartphone industry.

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Appendix

• Apple’s 21% market share of PC Revenue in 2024
  • global PC sales revenue – $220 billion
  • global tablet sales revenue – $53.7 billion
  • Apple Mac Computers and iPad sales – $56.5 billion

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