PATEO, the Hong Kong-listed Chinese automotive supplier, has signed a strategic memorandum of understanding with Arm to work on physical AI for cars. The two signed in Shanghai on September 22. PATEO calls itself a Tier 1 supplier with “software, hardware, chip and cloud” capabilities. Its core business is intelligent cockpits and connected-car systems for Chinese automakers. Arm designs the processor architecture inside most automotive chips. What they’ll work on The MoU covers next-generation AI workloads in the vehicle, meaning systems that perceive and interact rather than just respond.

Arm reported first-quarter revenue of $1.29 billion, up 22% year over year against a $1.26 billion consensus, with royalty revenue up 22% to $715 million and a second-quarter profit forecast above estimates. Qualcomm reported third-quarter revenue of $9.95 billion, down 4%, guided fourth-quarter profit below estimates, and told the market that revenue from Apple will fall faster than previously expected. The stock dropped more than 7% after hours. Those two prints describe the same handset market from opposite ends of the value chain, and only one of them is shrinking.