As smartphone sales decline, chip companies like Qualcomm ( QCOM ) are looking for new ways to demonstrate growth to investors, and artificial intelligence might be one new direction that proves fruitful. 

The pressure is on. It’s a paradox of market leadership that top companies in a given industry are subjected to extra skepticism when they look to expand into new and untested areas. 

To be sure, chip companies will continue to serve the smartphone (and tablet) industry; it’s their core market. But questions about continuing growth are real and investor skepticism is a given.

Qualcomm AI ambitions are not small.

Among other things, the company is focused on power efficiency, conducting R&D on deep learning techniques for low-overhead implementations and optimization across hardware, algorithms and software — ”with a focus on fundamentals to accelerate deep learning workloads at low power to maximize overall efficiency,” the company says.

Personalization is another area of development. The idea is that AI, through continuous learning, helps devices better meet and anticipate user needs and deliver better experiences.

And Qualcomm is looking to enabling AI to achieve — become ”ubiquitous” — by making efficient hardware, advancing algorithmic science, and raising the bar on software tools the company makes available to developers and OEMs.

So how viable is the AI opportunity for Qualcomm? On one hand I agree with the company: AI will without doubt play an increasing role in the wireless industry and the ecosystem of other industries that depend on wireless. That’s the good news.

The bad news is that the history of market leaders’ staking out new markets is decidedly mixed. Some have been moderately successful; others have been complete failures. Apple, for example, building on the success of the iPhone, created new products like the iPad, Airpods, AirTag and more. None has come close to the iPhone (though Airpods’ growth has been impressive). 

AT&T (), looking to feed its own growth-hungry investors, acquired Time Warner, CNN, Warner Brothers Studio and more — and created WarnerMedia. After several years of trial and error, the company ultimately failed and exited this new segment. Fortunately, 5G has proved to be a real growth opportunity, and that’s where their focus is today.

Verizon ( VZ ) had much the same problem. It too saw wireless growth slowing, and made some acquisitions (AOL and Yahoo!). After several years, Verizon too admitted defeat and exited. The company has been looking for new growth for a while now.

Today, both AT&T and Verizon are solid wireless carriers, but they are still licking their wounds from past strategic digressions. 

In fact, in the late 1990’s AT&T failed spectacularly. It acquired TCI and became the largest long distance and cable television giant in the industry. That lasted for a brief and shining moment, then the whole thing collapsed. A much smaller and weaker AT&T ultimately sold itself off. 

So the challenge Qualcomm faces is quite daunting. They have been touting their movement and expansion into new segments like autonomous driving, healthcare and more — none of which is going to pay off in the short-term.

Mentioned in this Article
Qualcomm, Inc.
AT&T, Inc.
Verizon Communications Inc