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Taiwan Media Roundtable Meeting Minutes Date: July 30, 2013 Speaker: Anand Chandrasekher

Briefing by Anand Chandrasekher Our fiscal 3rd quarter ended on June 30, 2013. We reported results last week. We

delivered another very strong quarter, as our Qualcomms Snapdragon solutions were prominent in a broad set of flagship smartphones and 3G/4G devices; average selling price was stronger than expected. We also focused on return on capital to our stockholders and increased our stock repurchases and dividends paid during the quarter. This quarter, we continued our technology leadership with our Snapdragon 800 processor, powering the first LTE-Advanced smartphone. We continue to see expanding opportunities for growth of 3G/4G devices around the globe driven by the strong pace of innovation in the industry. So the numbers behind the 3rd quarter results: Im giving you the numbers on the basis of using the GAAP accounting principles. The 3rd quarter revenues were $6.24 billion; 3rd quarter operating income was $1.68 billion; our diluted earnings per share were $0.9; and operating cash flow during the quarter was $2.08 billion. Moving beyond the financial results to trends and our investments from a product standpoint, key trends driving innovation in the industry are around three things, as we see it. First is Mobile Redefining Computingand this is where the experiences that consumers are demanding more and more, those experiences are being driven much more by what they are living with and being shaped by from a mobility standpoint. Second is what we call the 1000x Data Challengeand this is because the growth in smartphones and tablets is so fast and so phenomenal that the data traffic is increasing at a tremendous rate on operator networks around the globe. This, in turn, is driving the traffic very fast, and we believe over the next 10 years there will be a need to increase the capacity of these networks by the 1000x factor, and thats driving innovation opportunities. Third is what we call the Digital Sixth Sense, as all of us carry around with us a very smart device, the smartphone. This device has the ability to blur the distinction between the physical world around us and the virtual

world with the device and can really augment, like play, work, and education in a really significant and meaningful mannerand that also creates opportunities. So these are three trends that we see around us in a very significant way and these three trends drive our investment paradigms. So lets dive a little deeper into these. computing. Lets take a look at mobile redefining

Smartphone shipments in 2012 were twice the number of PC shipped in the same time frame. Cumulatively between 2013 and 2017, 7 billion smartphones have been shipped. As consumers get a taste for what this device does, they want the best experience possible. They want a lot of performance; certainly, to be able to use the internet and to do things around that; they want great experience; they want it to be always on; they want to be always connected. But of course they also want a fantastic mobile device: sleek, sexy, durable, fashionable, so that they always have access to the best requirements that they need without the need to recharge these devices. What this means is that its entirely about the mobile experience, and to be able to deliver that great mobile experience given the size of the market. I think were shipping over 1 million smartphones per year now, so thats a very big market. And not everybody that buys a smartphone has exactly the same requirements. Different people, depending on the price point, have different requirements in terms of the experience that they want to enjoy. What we do is cater every product engineer every product that we dofor the experience that is desired at a particular price point by the consumer that would purchase at that level. And we own our own IP building blocks, so we integrate these IP building blocks in a very holistic and systematic manner to be able to deliver the best mobile experience possible for the consumer. This philosophy is rooted in our power efficiencythats a givenbecause all of these have to have great battery life. Its rooted in having the best systems oriented solution, for the highest end of the product all the way through to the most price-affordable product, because we want to be able to bring our best technologies, not only at the top end, but also for the most price-affordable product. And of course, all of these have to be built in with the best modem technology so that the consumer can not only take advantage of the great experience from a graphic sense, CPU sense standpoint, but also have access to fantastic modem bandwidth so they can input and output information at a very, very fast pace.

Given the diverse needs of the consumers in the smartphones segment, we offer a very broad range of products, and this broad range of products is intended to satisfy the needs of the consumers from an experience standpoint at all the various price points. So our goal is, of course, to provide superior mobile experience at every price tier. Our 800 and our 600 products are targeted at premier and high-end smartphones, tablets, and mobile computing devices. We have over 200 designs in development using the Snapdragon 600 and the Snapdragon 800. Snapdragon 600-based commercial devices are already shipping to the marketplace, and the 600-based devices deliver up to 40% better performance than our Snapdragon S4 Pro which we shipped last year, which was the highest performing product as of last year. So we had the highest performing product last year, we have the highest performing product now, and its 40% faster than what used to be the previous standard. Our Snapdragon 400 and 200 are shipping into the mid-tier segments, and in the entry-level segments, and we bring our premier leading-edge technology to more people, making it accessible because these price points are a lot more affordable. As a result of our intense focus and engineering excellence to be able to deliver the great mobile experiences, we find ourselves at the heart of the devices you love. Our design traction remains strong. Weve just crossed a new milestone with more than 1,000 designs announced or shipping, with Snapdragon processors, and we have over 500 designs in the pipeline. Were also seeing increased momentum in tablets, as OEMs leverage our phone designs for tablets, with over 40 designs in the pipeline, including the recently announced Nexus 7 by Google. Flagship devices launched this year include Samsungs Galaxy S4, the HTC One, the Sony Xperia Z, ZTE Grand Memo, Nokia 920 and 928, Blackberry Z10 and Q10, Google Nexus 4 and Google Nexus 7, LG Optimus G Pro, and the Xiaomi MI2S. Those are just a few of the beautiful designs that were very proud of, the work that our partners have been doing. And I want to talk a little bit about our Qualcomm Reference Design we programmed. We started this a few years ago to enable high volume mobile devices. It really is a brand new channel for us to be able to ship products, and its really a brand new market for us as well. Weve had very good success here, and out of the thousands of design that I indicated that we announced or are shipping, over 200 of those designs are from our Qualcomm Reference Design. So were very pleased with the progress here and we continue to see great traction with this program. I now want to go deeper into solving the 1000x Data Challenge. Demand for

wireless data clearly continues to grow beyond initial expectations. And this is not going to stop; its just going to continue. If you just look at just the 3G/4G growth in the emerging regions, you can see there were about a billion 3G/4G connections in 2012, and its now about 3 billion connections expected in 2017. Thats over 190% growth in expected connections. About two thirds of the 3G/4G connections in 2016 are expected to be in the emerging regions. About 45% of the population in the emerging regions is expected to be penetrated with 3G/4G by 2016. So clearly there is a lot of room for growth, but at the same time the demand for the capacity, the demand for the data networks also continues to increaseso clearly something has to be done about this. Now if we take a look at China, in 2012, smartphone shipments in China alone were 200 million, about a 132% year over year growth, clearly driven by increased penetration of 3G, but also driven by increased affordability of smartphones. It is a very vibrant ecosystem and all of this contributes to increased data traffic. Affordable smartphone initiatives in China are a big component of whats driving the growth, and the vibrant ecosystem that new entrances are leading internet companies getting into mobile. Now all of this drives increased data traffic, mobile internet users exceeded fixed in China, according to Baidu. Average time spent on the mobile internet per user exceeded that of fixed in July 2012. Big opportunity for all of us players in these marketplaces and also a big opportunity for all of us to drive innovation to drive more mobile bandwidth into the marketplace and at the same time benefit the consumers as they enjoy the growth of smartphones. As a result of this, our deep partnerships with China Unicom, China Mobile, and China Telecom, as they drive fast towards LTE is very important, as they use LTE to provide increased bandwidth that is being desired by the mobile consumers in China. So, for instance, China Mobile is planning to do a large scale LTE trial towards the latter part of this year, and we have 30 new designs in China Mobiles business. So its very significant, as the market desires more capacity because theres more traffic. Our innovations and increased mobile bandwidth and data telecommunications via LTE and beyond drive these innovations into the market place, benefitting the operators, helping them with the capacity, and in turn helping their consumers get a fantastic mobile experience. Our partnerships are deep and very wide. In 2013, very recently, about a month or

so ago, we participated in China Telecoms Tianyi Handset Fair and Mobile Internet

Forum in Guangzhou. It has become the worlds largest mobile phone fair. More than 20,000 industry players and around 300,000 consumers attended, and by May of 2013, China Telecom Tianyi handsets exceeded 31 million units being shipped. Also at that same conference, Qualcomm announced a partnership with Chinas Youku, where to optimize the video using H.265, because the ability to compress data is significantly better with H.265 and that helped Youku to be a more friendly application service provider on top of the operator networks. So were doing a lot of things to partner with our operators and our ecosystem players to deliver a great mobile experience to consumers in the marketplace. As a result of this incredible growth in data traffic, operators are driving a very fast adoption towards LTE. Across 75 countries on a global basis, 194 networks have launched on LTE. Qualcomm has been investing here very aggressively; we shipped our first LTE modem in 2010. Were now on our third generation of LTE with Cat 4; thats up to 150 megabits per second, and it includes carrier aggregation. So were on our third generation of LTE while many of our competitors have not yet shipped their first LTE modem. We support world mode, and were the only one today that supports the world mode, that means all major cellular modes are supported. We also introduced a capability from an RF standpoint called Qualcomm RF 360, which addresses many of the technical challenges that our OEMs face in launching an LTE products that can be used on a global footprint. So, many, many innovations here because our operators demand more bandwidth and aggressively launch LTEQualcomm is matching the demand so that our operator partners can partner with our device OEM partners to be able to deliver a fantastic experience to mobile consumers. I want to talk now about the 1000x Data Challenge, going beyond LTE. As global mobile traffic doubles every yearand its been doing so for the last three yearswere planning for a 1000x increase in data demand and were working with the industry to address these needs. To do that, we clearly have to have improvements in network efficiencyso evolve the 3G to 4G and beyond. We have to be able to support broadcast capabilitiesso you can use the existing networks more efficiently. We have to be able to allow new service opportunities, peer-to-peer offload and discovery. But we also need to be able access more spectrum, both licensed, unlicensed, and have them work together. Deployment of more and more small cells, closer to the consumeror extreme densificationis going to become more important because that allows for a higher degree of efficiencyand the paradigm shift here is from an outside-in to an inside-out approach to be able to

deliver our cellular capability. Now I want to talk a little bit about that paradigm shift to an inside-out deployment model. Extreme densification of the network is very key using small cells, because it brings the network closer to the consumer and it allows more bandwidth and more efficiency. Effectively what this does is it allows indoor small cells to provide coverage outdoors. It provides capacity in a very localized manner, and expands coverage to a point that small cells reach each other. Coverage and capacity will then be available to process by even from ability. Now our analysis and our modeling show that even for very low penetration of small cells, you can achieve a significant gain in capacity. So, for example in a very densy area, we have found that 50% of the consumers could be offloaded to small cells, with small cell penetration at 2%. Thats huge. And a 20% penetration of small cells enables a 1000x increase in medium throughput. Key to getting this done is interference management and, of course, getting the cost down. Cost is going to be an issue we address because you want small cells everywhereso to be able to get small cells everywhere, you clearly have to get the costs low. Size is important and ease of deployment. So weve been working on that. These small cells can effectively build more like a phone versus a base station. The components that are used, necessary to build a small cell are effectively components that are inside a phone already. So were very well positioned to develop these chipsets, and are in fact doing so. And the innovation is on many fronts: its on integrated 3G plus 4G plus Wi-Fi; its integration of interference management technology. We also acquired design our networksa company out of Israel offered us SoCs for small cell base stations and remote radio heads. So, all of this comes together in a solution. And as recently as today, Qualcomm announced a partnership with Alcatel Lucent to accelerate and develop next generation of small cells for ultra broadband wireless access. Lets skip the digital sixth sense section. So summary, we delivered another strong quarter, as our Qualcomm snapdragon solutions were prominent in a broad set of flagship smartphones and 3G/4G devices, and our average selling prices were stronger than expected. We also focused on return on capital to stockholders and increased our stock repurchases and dividends paid during the quarter. This quarter we continued our technology leadership, with our Snapdragon 800 processor powering the worlds first LTE advanced smartphone,

and we continue to see expanding opportunities for growth of 3G/4G devices around the globe driven by the strong pace of innovation in the industry. That concludes my formal remarks. Media Q&As Q: One question about the shipment. Could you break down the share for Snapdragon 800, 600, 400 and 200 for the past quarter? How much will the shares be for Snapdragon 200 in the coming quarter? A: We dont break out share by the various tiers; we are seeing strong demand across all of our products. We have seen a bit of a mix ship, which we talked about during our earnings call. And as our QRD program and as our emerging market program gain traction, were certainly seeing a bit of a mix ship but seeing strong demand across all of our products. Q: Recently we have heard from the market that most people are quite conservative when looking at the future for high-end smartphones. Do you see a slowdown from your customers in launching their flagship models and do you think that will have an impact on the shipment of your 800 series? A: Actually, as we have pointed out during the last couple of years, were seeing rapid adoption of mobile technologies and rising average selling prices in our device ASPs. Overall, as the shift from fixed broadband alternatives to mobile broadbandour devices are getting excellent acceptance and utility. Specifically with regards to the Qualcomm Snapdragon 800, those devices are still launching over the course of the second half of this year, theyre not all out, but certainly we have some flagship designs, and were anticipating quite a bit of excitement around them as they come out into the marketplace. So in our earnings call we talked about ASPs going upso just pointing back to the earnings call. Q: For entry level models for the emerging markets, how many cores do you think will be the mainstream? What is your view on your competitor launching an octo-core product? A: For the entry level market, as in any other segmentwhether its entry level, mid-range, or high-endwe think it starts with the experience. And we always do our engineering on the basis of what the consumer is experiencing, what do they want. And clearly the first thing in a mobile device the consumer is going to want is a great modem, because without that theyre going to get a lousy experience. Next, there are several other things that go into that, but certainly battery life is extremely

important. And then an affordable price pointwhats the best level of performance you can deliver via multimedia, graphics, and of course CPU. So we take all of those things in the balance, as we do it, and we dont believe the best experience is defined by the number of cores. Thats actually a very silly way to think about delivering the capabilities that the consumer needs. What do I think about my competitors octo-core? Im not a huge fan of what they are doingI personally dont think it is going to be very successful in the marketplace. You cant take eight lawnmower engines, put them together and now claim you have an eight-cylinder Ferrari. It just doesnt make sense. Q: I want to talk about the eight-core. Will Qualcomm launch or develop eight-core processors in the future, or what is your strategy in this area? A: Our strategy is to deliver the best experience that the consumer demands. That is based on understanding what the consumer wants and then engineering a product that meets all the demands of the consumer. So, clearly, great modem experience, great battery life, fantastic multimedia experienceall of that put together in a beautiful package that they can go buy, because these are all fashion statements in addition to being utilitarian devices. And there are different segments in different price points that the consumer wants, but at each price point, they all want the best experience possible in that price point. So, I go back to what I said: its not about cores. When you cant engineer a product that meets the consumers expectations, maybe thats when you resort to simply throwing cores together that is the equivalent of throwing spaghetti against the wall and seeing what sticks. Thats a dumb way to do it, and I think our engineers arent dumb. Q: A follow-up question. Can I interpret your previous answer as meaning that Qualcomm will not launch an octo-core product? A: We dont do dumb things. Q: You mentioned strong growth in the emerging market and your QRD program. Do you think that your ASP for the second half of the year will continue to go up? A: I think the guidance we gave in the earnings call I would stick to that. If you need more detail, then please refer to the earnings call transcript. Q: Your Snapdragon, the clock is up to 2.3GHz. So for 2014, will Qualcomm focus on speeding it up, or a better GPU? A: I wont give any specific guidance for what our products look like for 2014.

Our products for 2013 havent hit the market yet, and theyre extremely exciting. Qualcomm Snapdragon 800 is a very, very exciting product, and I urge you, if you havent bought one when it comes out, go buy one. As always, what we do is look at what is the best experience we can deliver to the customer in the consumer space at each price point. So what we look atwhat do we need to do with graphics, what do we need to do in CPU, what do we need to do in the dsp, so that we can optimize the overall consumer experience for the best possible thing. And its not about simply raising the clock speed, its part of it, but its not just about increasing the clock speed. So I would encourage our readers think about us as looking at the overall system performance at every price point and trying to get the best engine developed to deliver a great consumer experience. Q: Anand, we know that you used to work for Intel. At CES, Intel announced a solution that they claimed to be better than the arm architecture in terms of extending the battery life, and they said that the solution will be addressing the need for the mid-tier mobile handset market. Whats your comment on that, and what will its impact be on Qualcomm? A: We dont see any impact from any of Intels claims on current or future products. I think the results from empirical testers on our products that are currently shipping in the marketplace is very clear, and across a range of reviewers from Anandtech to Engadget, Qualcomm Snapdragon devices are winning both on experience as well as battery life. What our competitors are claiming are empty promises and is not having an impact on us.