When the chips are down: US semiconductor maker Qualcomm aims to dominate consumer drone market as revenue plummets

Company says global demand for consumer drones will match that for action cameras and DSLR cameras combined

PUBLISHED : Tuesday, 19 January, 2016, 6:01pm
UPDATED : Tuesday, 19 January, 2016, 6:54pm

US chip giant Qualcomm believes the global market for consumer drones, or unmanned aerial vehicles, will ultimately become as big as the combined market for DSLR digital cameras and so-called “action” cameras like those made by GoPro as “flying cameras” become all the rage.

The company has been beset by falling profits of late and may view this market as a way to get back on track. Its total revenue declined over 17 per cent in 2015 while its stock price fell 30 per cent, according research firm Gartner.

But its prospects in China could improve this year as it gambles on drones and also the fruit of a deal signed with the local government of Guizhou province on Sunday to form a of 1.85 billion (US$280 million) joint venture to make high-performance processors for servers.

Qualcomm hopes to lead the race to become the future nerve centre for drones by supplying them with semiconductors. the company is a major supplier of processors for smartphones, which some drones use as remote controls.

“The consumer drone market can be as big as the [two markets] combined,” Hugo Swart, a senior director at Qualcomm Atheros, a subsidiary of Qualcomm that focusses on wireless technologies, told the South China Morning Post late last week.

Hobbyist photographers in China and elsewhere are believed to be driving sales of civilian drones, such as those made by world market leader DJI, based in the Chinese city of Shenzhen.

But the gadgets have a broad range of uses from agricultural mapping to firefighting and delivering packages. Amazon and Singapore Post are just two of the companies known to be experimenting with drone-based deliveries.

China’s gaming and social giant Tencent believes the country’s consumer drone market could reach 10 billion yuan in a few years’ time, it said in a recent report. It said it plans to build a community of people who use drones to take footage of themselves and share it online.

In a bid to tap the niche market for drone chips, Qualcomm has developed an electric board roughly half the size of a credit card to act as the drone’s “brain”. It plans to replicate its smartphone success in the consumer drone market, it said.

WATCH: Snapdragon Flight at CES 2016

The Snapdragon Flight board supports all major capabilities such as the drone’s movement, image processing and internet connection - operations that are usually controlled by separate components in drones, the company said.

The board is powered by Qualcomm’s Snapdragon 801. This ranked as one of the most powerful chips for mobile phones in 2014, and is used to power flagship products like Taiwan’s HTC One and South Korea’s Samsung Galaxy S5.

READ MORE: ‘Game changer for future battlefields’: Chinese military praises stealth drones that use parachutes after tests in Tibet

“Better drones are fairly big and use many components for different functions, but we use one Snapdragon chip to perform [them all],” said Swart.

“[So] we can make drones smaller and lighter with less components and lighter mechanics.”

Swart said that rather than delivering a lower-quality performance, smaller drones offer many advantages.

WATCH: Will folding drones prove the next ‘big’ thing?

Moreover, the Snapdragon Flight system can detect objects in flight, track and record the surrounding environment and record 4K video.

Qualcomm teamed up with Chinese internet giant Tencent and Shenzhen-basd drone maker Xiro to make one of the first drones to use the Snapdragon system.

READ MORE: Drones, robots and a ‘Back to the Future’-esque balance-board lead China’s hi-tech charge at Hong Kong Global Sources show

Called Ying, the foldable drone debuted at the Consumer Electronic Show (CES) in Las Vegas earlier this month. It is roughly the size of an adult’s hand and weighs under a pound.

“The drone market will develop into to two tiers: professional drones and consumer drones,” said Yao Benchao, brand director of Xiro.

Qualcomm aims to tap the latter for the moment. Xiro does not plan to use the Snapdragon chips for its products that cater to professional aerial photography.

“Professional drones don’t need these integrated solutions,” Yao said, adding that they already have sufficient power.

But Yao and other pundits expect such solutions will soon become mainstream for smaller consumer drones.

READ MORE: China rules on drones under way

Qualcomm is not alone in eyeing this emerging market. US semiconductor maker Nvidia, a leader in graphic processors, has developed similar platform. Its Jetson TX1 all-in-one board is also powered by the company’s own chips.

Nvidia has also chosen to enter the market for professional drones and DJI has already developed a US$599 computer powered by its Tegra chip that can work with some of its drones.

Intel is also getting in on the action and has set itself the grand ambition of “revolutionising” the drone industry. It invested US$60 million in Shanghai-based drone maker Yuneec last August and showcased a Yuneec drone with collision-avoidance technology at CES.