0000804328-25-000085
SEC filingRevenue grew 14% to $44.3B, but net income fell 45% due to a $5.7B valuation allowance from tax reform.
Qualcomm Incorporated is a global technology leader that enables intelligent computing through foundational technologies including on-device AI, high-performance low-power computing, and advanced wireless connectivity. The company derives revenues principally from sales of integrated circuit products and licensing of intellectual property. It operates using a 52-53 week fiscal year ending on the last Sunday in September.
Qualcomm has three reportable segments: QCT (Qualcomm CDMA Technologies), QTL (Qualcomm Technology Licensing), and QSI (Qualcomm Strategic Initiatives). QCT develops and supplies integrated circuit platforms and system software for mobile devices, automotive systems, and IoT products. QTL grants licenses to use Qualcomm's extensive patent portfolio, including cellular standard-essential patents for 3G/4G/5G. QSI makes strategic investments to open new opportunities for Qualcomm's technologies. Nonreportable segments include QGOV (government solutions) and the Data Center business.
The company's key product families are Snapdragon (mobile, compute, sound, automotive) and Qualcomm Dragonwing (industrial and edge networking IoT). Snapdragon Digital Chassis platforms address automotive connectivity, digital cockpit, and ADAS/AD. Core technologies include Qualcomm Oryon and Kryo CPUs, Adreno GPUs, Hexagon NPUs, and the Qualcomm AI Engine. Snapdragon X Series targets AI-focused PCs. Qualcomm RFFE components and Snapdragon 5G modem-RF products provide comprehensive modem-to-antenna solutions. The company also develops Wi-Fi, Bluetooth, and positioning technologies.
QCT sells products through a purchase order process, allowing customers to reschedule or cancel orders with potential fees. QTL licenses patents directly to equipment manufacturers. Marketing promotes Snapdragon and Dragonwing as preferred platforms. Revenue is concentrated: in fiscal 2025, Apple, Samsung, and Xiaomi each represented 10% or more of consolidated revenues.
The semiconductor industry is intensely competitive. Qualcomm faces competition from multinational companies with broad product lines and from firms focused on single applications. Customers that internally develop integrated circuits also pose competitive threats. Key competitive factors include performance, integration, compliance with industry standards, price, and time-to-market. The automotive sector adds barriers such as long design cycles and stringent qualification processes.
Qualcomm's strategy centers on leading the development of foundational technologies (AI, connectivity, computing) and broadly licensing its intellectual property to drive ecosystem adoption. The company aims to expand beyond mobile into automotive, IoT, and data center markets. Significant R&D investment focuses on 5G/6G, AI, and automotive platforms, supplemented by strategic acquisitions and investments through QSI.
At September 28, 2025, Qualcomm had approximately 52,000 workers, overwhelmingly full-time employees. The workforce is highly educated, with a substantial majority in engineering/technical roles. The voluntary turnover rate was approximately 6% in fiscal 2025. The company emphasizes health, safety, wellness, compensation, and talent development programs to attract and retain top talent.
QUALCOMM reported fiscal 2025 revenues of $44.3 billion, a 14% increase from $39.0 billion in fiscal 2024. The growth was driven by a $5.1 billion increase in equipment and services revenue from the QCT segment and a $143 million licensing settlement. Gross margin declined to 55% from 56%, primarily due to a lower proportion of high-margin QTL licensing revenue. Net income fell sharply to $5.5 billion from $10.1 billion, a 45% decrease, largely because of a $5.7 billion non-cash charge to establish a valuation allowance against federal deferred tax assets following the enactment of the One Big Beautiful Bill Act (OBBB) on July 4, 2025. Research and development expenses increased $149 million to $9.0 billion, while selling, general and administrative expenses rose $351 million to $3.1 billion, driven by higher sales and marketing investments.
QCT segment revenues grew 16% to $38.4 billion, with handsets up $2.9 billion to $27.8 billion, IoT up $1.2 billion to $6.6 billion, and automotive up $1.0 billion to $4.0 billion. The handsets increase was driven by higher average selling prices and favorable mix from premium-tier Snapdragon platforms in Android devices. QCT earnings before taxes (EBT) rose to $11.7 billion, with EBT margin improving to 30% from 29%, supported by higher revenues partially offset by higher operating expenses. Gross margin remained approximately flat.
QTL segment licensing revenues were essentially flat at $5.6 billion, with EBT of $4.0 billion and a stable 72% margin. During the second quarter, QUALCOMM executed new long-term licenses with two key Chinese OEMs and entered into comprehensive 4G/5G agreements with Transsion, resolving outstanding litigation. However, QTL revenues no longer include royalties from Huawei following the expiration of its license.
QSI segment reported EBT of $180 million, up from $104 million, driven by higher net gains on marketable securities from IPOs of certain equity investments.
Management expects on-device AI and 5G to drive adoption beyond smartphones into automotive and IoT. Key forward-looking items include: (1) Apple's increasing use of its own modem will have a significant negative impact on QCT revenues, results, and cash flows; (2) the OBBB's reinstatement of immediate R&D expensing will favorably affect operating cash flows starting in fiscal 2026; (3) capital expenditures are expected to increase to support integrated circuit testing; and (4) the pending acquisition of Alphawave IP Group for approximately $2.4 billion is expected to close in the first quarter of calendar 2026. The company also noted continued monitoring of global trade policy changes and expects intense competition, including from customer vertical integration.
QUALCOMM's 10-K for fiscal 2025 presents a comprehensive and detailed set of risk factors, with no indication of material changes from the prior year's disclosure. The risks are organized into several key categories, reflecting the company's complex business model spanning semiconductor (QCT) and licensing (QTL) operations.
The most prominent risks revolve around customer concentration and vertical integration. The company explicitly states that a significant portion of revenues comes from a small number of customers, particularly in the premium-tier handset market and from Chinese OEMs. A critical new disclosure is the expected negative impact from Apple's increasing use of its own modem products, which will have a "significant negative impact on our QCT revenues, results of operations and cash flows." Similarly, the risk of Chinese OEMs developing their own chips, driven by government policies and trade tensions, is highlighted as a material threat.
U.S./China trade and national security tensions are a major theme. The revocation of the export license for Huawei in May 2024 is cited as a concrete example, eliminating future product revenues from that customer. The risk factor warns that further restrictions could materially harm the business. The licensing business faces ongoing challenges from OEMs seeking to reduce royalties, with legal and regulatory proceedings (including antitrust and FRAND-related challenges) posing a risk of adverse rulings that could force changes to licensing practices, such as reduced royalty rates or a shift to chip-level licensing.
QUALCOMM's fabless manufacturing model creates dependence on a limited number of third-party suppliers, primarily in Asia (Taiwan, Korea). Risks include capacity constraints, sole-source dependencies, and geopolitical disruptions. The company also operates its own manufacturing facilities for RFFE products, which carry fixed-cost risks and environmental compliance burdens. Cybersecurity and IP misappropriation are flagged as significant risks, with sophisticated attacks from state-sponsored actors and the potential for employee or partner misappropriation.
The cyclical nature of the semiconductor industry, susceptibility to global economic downturns, and risks associated with the company's debt are noted. Tax liabilities, including potential changes to U.S. and international tax laws (e.g., OECD Pillar Two), could adversely affect results. The risk factors are extensive and cover all major aspects of the business, with a clear emphasis on the intertwined challenges of customer concentration, vertical integration, and geopolitical exposure.
The provided text is from the 'Exhibits and Financial Statement Schedules' section of Qualcomm's 10-K filing. It lists the financial statements included in the report, including the Consolidated Statements of Cash Flows on page F-6, but does not include the numerical data from those statements. Therefore, no cash flow figures (operating, investing, financing cash flows, capex, free cash flow, share repurchases, dividends, or prior-period comparisons) are available for analysis. The filing date is November 5, 2025, and the fiscal year ends September 28, 2025.