QUALCOMM INC/DE

Qualcomm operates in the global semiconductor and wireless technology industry, developing and commercializing foundational technologies including on-device artificial intelligence, high-performance and low-power computing, and advanced wireless connectivity. The company's platforms power intelligent devices across handsets, automotive, and the internet of things (IoT). The mobile industry continues to transition to 5G technology, with 5G network deployments and device launches continuing particularly in emerging regions. For calendar year 2025, management estimates that consumer demand for smartphones will remain approximately flat relative to calendar year 2024, including expected mid single-digit percentage growth in 5G handsets. According to analyst data cited in the filing, 68% of new vehicles produced in 2030 are projected to have embedded cellular connectivity, with 48% of new vehicles featuring 5G connectivity compared to 21% in 2025. Analysts estimate that the share of new light duty vehicles sold globally with Level 2 or higher autonomy will grow from 24% in 2025 to 52% in 2030.

Qualcomm's primary competitors named in the filing include Broadcom, HiSilicon, MediaTek, Mobileye, Nvidia, NXP Semiconductors, Qorvo, Samsung, Skyworks, Texas Instruments, and UNISOC. The company states that its patent portfolio is the most widely and extensively licensed in the industry. Qualcomm has licensed or otherwise provided rights to use its patents to hundreds of companies. The company believes that the mobile communications industry generally recognizes that any company seeking to develop, manufacture and/or sell certain cellular products requires a license or other rights to use its patents. In fiscal 2025, revenues from Apple, Samsung, and Xiaomi each comprised 10% or more of consolidated revenues.

Qualcomm derives revenues principally from sales of integrated circuit products, including its Snapdragon and Qualcomm Dragonwing families of highly-integrated, system-based solutions, and licensing of its intellectual property, including patents and other rights. The company has three reportable segments: QCT (Qualcomm CDMA Technologies) semiconductor business, QTL (Qualcomm Technology Licensing) licensing business, and QSI (Qualcomm Strategic Initiatives) which makes strategic investments. QCT develops and supplies integrated circuit platforms and system software for use in mobile devices, automotive systems, and IoT products. QTL grants licenses or otherwise provides rights to use portions of Qualcomm's intellectual property portfolio, including certain patent rights essential to and/or useful in the manufacture and sale of certain wireless products. QTL licensing revenues consist primarily of per-unit royalties, with licensees paying quarterly royalties based on their sales of products incorporating or using licensed intellectual property. The vast majority of QTL revenues have been generated through licensees' sales of OFDMA-based products, such as smartphones and other devices.

QCT's integrated circuit products are sold across three revenue streams: handsets, automotive, and IoT. In fiscal 2025, QCT handset revenues were $27.793 billion ¹, automotive revenues were $3.957 billion ², and IoT revenues were $6.617 billion ³. QCT's products include Snapdragon mobile platforms powering Android devices, Snapdragon compute platforms, Snapdragon sound platforms, Snapdragon automotive platforms, and Dragonwing industrial and edge networking IoT solutions. Each platform consists of application processors and wireless connectivity capabilities including cellular modem, Wi-Fi, Bluetooth, and global positioning functions. QCT also designs and supplies supporting components including RF transceiver, power management, audio codecs, speaker amps, and additional wireless connectivity integrated circuits. QCT's portfolio of RF products includes Qualcomm RFFE components designed to simplify the RF front-end design for 5G, including sub-6 GHz and mmWave, as well as for 4G LTE multimode devices. QCT also offers standalone Wi-Fi, Bluetooth, application processor, and Ethernet products, and networking products including Wi-Fi, Ethernet, and passive optical network chips, network processors, wireless access points, routers, broadband gateway equipment, and software.

QTL licensing revenues were $5.582 billion ⁴ in fiscal 2025, with earnings before income taxes of $4.043 billion ⁵ and an EBT margin of 72% ⁶. QTL grants licenses to use Qualcomm's cellular standard-essential patents (including 3G, 4G, and 5G) for cellular devices on a worldwide basis. A significant portion of QTL's licensing revenues is derived from licensees under Qualcomm's cellular standard-essential patents. Licensees manufacture wireless cellular products such as mobile devices, other consumer devices, plug-in end user data modem cards, embedded modules, connected vehicle units, connected vehicle modules, wireless access points, and small cells. QSI segment reported equipment and services revenues of $0 ⁷ in fiscal 2025 and EBT of $180 million ⁸. QSI makes strategic investments primarily through Qualcomm Ventures, focused on expanding or opening new opportunities for technologies, with investments in early-stage companies in industries including 5G, AI, automotive, consumer, enterprise, cloud, IoT, and XR.

During fiscal 2025, Qualcomm executed final agreements for new long-term licenses with two key Chinese OEMs and entered into comprehensive 4G and 5G license agreements with Transsion, resulting in dismissal of all outstanding litigation between the parties. In the second quarter of fiscal 2025, QTL revenues included $143 million ⁹ from a settlement of a licensing dispute. On June 9, 2025, Qualcomm announced an agreement to acquire Alphawave IP Group plc at an implied enterprise value of approximately $2.4 billion ¹⁰ as of the announcement date. In May 2025, Qualcomm issued $1.5 billion ¹¹ of unsecured fixed-rate notes, consisting of $500 million ¹² of 4.50% notes due 2030, $400 million ¹³ of 4.75% notes due 2032, and $600 million ¹⁴ of 5.00% notes due 2035. During fiscal 2025, Qualcomm repaid $1.4 billion ¹⁵ of unsecured fixed-rate notes that matured in May 2025. The company repurchased 56 million ¹⁶ shares of common stock for $8.791 billion ¹⁷ at an average price of $155.43 ¹⁸ per share, and paid $3.805 billion ¹⁹ in cash dividends at $3.48 ²⁰ per share. On November 6, 2024, Qualcomm announced a $15.0 billion ²¹ stock repurchase program with no expiration date.

Total revenues for fiscal 2025 were $44.284 billion ²², an increase of 14% ²³ compared to $38.962 billion ²⁴ in fiscal 2024. Net income was $5.5 billion ²⁵, a decrease of 45% ²⁶ compared to $10.1 billion ²⁷ in fiscal 2024. The decrease in net income was primarily driven by a $5.7 billion ²⁸ charge to income tax expense to establish a valuation allowance on federal deferred tax assets resulting from the One Big Beautiful Bill Act enacted on July 4, 2025. QCT revenues increased by 16% ²⁹ in fiscal 2025 compared to the prior year, primarily due to higher handsets, IoT, and automotive revenues. QTL revenues remained approximately flat in fiscal 2025 compared to the prior year. Gross margin percentage was 55% ³⁰ in fiscal 2025 compared to 56% ³¹ in fiscal 2024. Net cash provided by operating activities was $14.012 billion ³² in fiscal 2025 compared to $12.202 billion ³³ in fiscal 2024.

Qualcomm expects on-device AI and high-performance, low-power computing combined with cellular technology such as 5G to continue driving adoption of technologies commonly used in smartphones by industries and applications beyond mobile handsets, such as automotive and IoT. The company believes it is important to remain a leader in technology development, standardization, intellectual property creation and licensing, and a leading developer and supplier of integrated circuit products to sustain and grow its business long-term. Qualcomm expects to continue investing in key growth and diversification initiatives. The company also expects its share-based compensation expense to increase as it has replaced annual cash incentive awards for fiscal 2026 and 2027 with a two-year equity award for its broader non-executive leadership team, designed to motivate and retain the team to execute the long-term diversification strategy.

Qualcomm expects leading process technology nodes to continue to drive product cost increases from certain of its key semiconductor wafer suppliers, which may negatively impact margins. The company expects continued intense competition, including from vertical integration by certain customers such as Apple and Samsung. Qualcomm expects that Apple will increasingly use its own modem products rather than Qualcomm's products in its future devices, which will have a significant negative impact on QCT revenues, results of operations, and cash flows. The company expects capital expenditures to increase from fiscal 2025 levels in the near term primarily to support the testing of its integrated circuits.

Qualcomm expects to continue making strategic investments and acquisitions, the amounts of which could vary significantly. The company expects to issue new debt in the future, with the amount and timing depending on factors including maturities of existing debt, acquisitions and strategic investments, interest rates, and changes in corporate income tax law. Qualcomm currently intends to continue to pay quarterly cash dividends, subject to capital availability and the company's view that cash dividends are in the best interests of stockholders. At September 28, 2025, $7.2 billion ³⁴ remained authorized for repurchase under the stock repurchase program. The timing of future stock repurchases and the number of shares to be repurchased will depend upon prevailing market conditions and other factors.

Qualcomm continues to monitor recent changes in global trade policy, including tariffs and related trade actions announced by the U.S., China, and other countries. The degree to which such tariffs and other related actions impact the business, financial condition, and results of operations will depend on future developments, which are uncertain. Changes to global trade policies may negatively impact demand, pricing, and cost for products and technologies, and contribute to inherent uncertainties in estimating future customer demand, which may result in increased excess or obsolete inventory or reserve charges. U.S./China trade relations and/or national security protection policies may negatively impact the business, growth prospects, and results of operations. Qualcomm expects that certain companies may be dissatisfied with the need to pay reasonable royalties for the use of its technologies and may continue to challenge the business model in various forums throughout the world.

Qualcomm expects that the combination of AI and cellular technology such as 5G will increasingly enable more immersive, intuitive, and interactive experiences. The company expects continued advancement in the generative AI capabilities of edge devices and increased adoption of generative AI capable technologies in handsets and other edge devices. Qualcomm also expects companies and regulators will continue to focus on responsible AI, data privacy, and security to ensure the responsible development and deployment of these technologies. The company envisions 6G will integrate advanced capabilities including AI, sensing, digital twinning, and a variety of new system features enabling higher levels of efficiency and performance.

Qualcomm derives a significant portion of revenues from a small number of customers and licensees, particularly from their sale of premium-tier handset devices. In fiscal 2025, revenues from Apple, Samsung, and Xiaomi each comprised 10% or more of consolidated revenues. The company expects that Apple will increasingly use its own modem products rather than Qualcomm's products in its future devices, which will have a significant negative impact on QCT revenues, results of operations, and cash flows. A significant portion of business is concentrated in China, with risks exacerbated by U.S./China trade and national security tensions. In May 2024, the U.S. Department of Commerce revoked the export license under which Qualcomm previously sold 4G and certain other integrated circuit products to Huawei, and the company does not expect to receive any further product revenues from Huawei. Qualcomm recorded a $5.7 billion ³⁵ charge to income tax expense in the fourth quarter of fiscal 2025 to establish a valuation allowance on federal deferred tax assets as a result of the One Big Beautiful Bill Act enacted on July 4, 2025, and expects to be subject to the corporate alternative minimum tax beginning in fiscal 2026. The company faces risks related to its patent licensing practices being challenged through governmental investigations and legal proceedings, with unfavorable resolutions potentially requiring changes to licensing practices including reducing royalty rates or the base on which royalties are calculated.

Management's message emphasizes Qualcomm's position as a global technology leader helping to bring intelligent computing everywhere through the development and commercialization of foundational technologies including on-device AI, high-performance and low-power computing, and advanced wireless connectivity. The filing states that for 40 years, Qualcomm has been a leader in helping set industry standards and creating era-defining technology breakthroughs, continuing to play a leading role in developing system-level inventions that serve as the foundation for multiple generations of advanced wireless technologies. Management highlights that the company owns significant intellectual property, including patents, patent applications, and trade secrets, applicable to products that implement cellular technologies including 4G and/or 5G. The strategic priorities emphasized include extending technologies and products into new and expanded product areas and industries beyond mobile handsets, particularly automotive, IoT, and data center; continuing to invest heavily in research and development including AI and generative AI from fundamental research to platform and applied research; and maintaining leadership in 5G and next-generation technology development, standardization, intellectual property creation, and licensing. Management notes that the company expects to continue investing in key growth and diversification initiatives and that share-based compensation expense is expected to increase as annual cash incentive awards for fiscal 2026 and 2027 have been replaced with a two-year equity award for the broader non-executive leadership team.